bipan chandra, 19th c economy critique of colonial economy

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Indian Economic & Social History

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DOI: 10.1177/001946466800500103

1968 5: 35Indian Economic Social History ReviewBipan Chandra

Reinterpretation of Nineteenth Century Indian Economic History*

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Reinterpretation of Nineteenth CenturyIndian Economic History*BIPANCHANDRAHindu College, Delhi

It is axiomatic that a proper interpretation of the economichistory of India during the nineteenth century is important both forhistorical and contemporary reasons. It is very important to under-stand the nature of Indias economic backwardness and of its lagvis-a-vis developed countries and the causes of this backwardnessand this lag because the nature of the economic and political reme-dies to be applied depends on this understanding. Every set of eco-nomic policies competing for acceptance today is based on its ownbroad set of ideas regarding the nature of British impact on Indiaand the nature of structural weaknesses which emerged as a resultof interaction between the indigenous socio-ecomomic structure andBritish imperialism. Academically, the history of nineteenth centuryIndia is just beginning to be investigated on a large scale. The typesof hypotheses with which research is carried on and the types ofquestions asked will have an abiding impact on the fruitfulness of theharvest. I have taken up Dr. Morriss interpretation for detaileddiscussion because he has summed up in one place and at a highlevel of generalization and cogency one of the two sets of ideas onthe subject.

IIn a detailed critique of an author, it may not be far wrong tostart with the title of his work. How far is Morris D. Morris mov-*My thanks are due to Dr. Irfan Hab ib, Mr s. Saira Hab ib, Dr. Bernard C.Cohn, Dr. Martin D. Lewis, Dr. C. M. Hanumantha Rao, and Dr. S. A. Shah fortheir comm ents on an earlier draft of the article. Responsibility for any error infacts or interpretation is , of course, entirely mine.I . Morris D. Morris, Towards a Reinterpretation of Nineteenth Century

Indian Economic History, Journal of Economic History, Vol. XXIII, No. , 1963,pp . 606-18.

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36 BIPAN CHANDRAing towards a new interpretation or reinterpretation ?Throughout the second half of the nineteenth century andthe first of the twentieth a debate has gone on between twoopposing schools of economists and economic historians on thenature of the economic process India underwent under British rule.One school declared that India was growing more prosperous aswell as undergoing economic development as a byproduct of p a xBritannica (ending a long anarchy), law and order, an efficientadministration run by the most honest and efficient bureaucracy inthe world, development of railways, growing commerce, especiallyforeign comrncrce, increased irrigation and increase in the area ofcultivation. The other school believed instead that British rule wasnot leading to nor had led to industrial growth, or an industrialrevo-lution, or economic development, or even to the economic improve-ment of the lives of the mass of the people, that British rule had pro-duced economic changes in the country without generating economicdevelopment, and that, on the other hand, the rule as a system hadgradually become the main obstacle to the countrys economicdevelopment and modernisation whose removal was an essential,though not sufficient, condition i f India was to develop.As students of Indian economic history and of its various inter-pretations we would be well advised to keep the above fact inview. And when we are tempted to describe the second school asnationalist-I would prefer to call it anti-imperialist2-we shouldacknowledge the existence of the first school, which may very pro-perly be described as the imperialist school. Among the chiefspokesmen of the latter have been the Strachey brothers, GeneralChesney and Lord Curzon (and numerous other officials) andlater T. Morison, G . F. Shirras, L.C. A. Knowles, and to a lesserextent, Vera Anstey. We may not use these classifications as nor-mative, except that in so far as we use one as a hallmark of bias soalso can the other be recognised as such. Such a classification cannotprove the validity or otherwise of a basic approach. But, equallyobviously, the opposite of the adjective nationalist is not objec-

2. For almost from th e very bcginning of the discussion, a large number offoreigners starting with Marx and Hyndm an and Digby and ending with R. PalrneDutt and a host of other British, American, Russian, and other foreign writers haveadoptrd the broad approach of this school.



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REINTERPRETATION OF l!bH CENTURY INDIAN ECONOMIC HISTORY 37tive but imperiali~t,~specially as on the basic issue there canbe no m iddle ground-one or the o ther is valid.It may now be noted that Mo rris is not presenting a newinterpreta tion of nineteenth century econo mic history, but onlyrearticulating with a bit more of modern economic terminology-but not much more of that either since his economic framework isthat of luissezjaire free enterprise-the ninetee nth centu ry imperialistapproach which underlies most of British official and unofficialwriting of the time.4 This is not, of course, to assert that w hatM orris says is incorrect. Certainly old theories are not t o bedeclared false simply because they are old. But, then, they maynot be accepted as new inte rpretation s either.In fact, one is surprised at M orris shying away from acknow-ledging his intellectual de bt to, or the existence of, his predecessorsin the interpretation. In the very beginning he states that therehave been tw o sets of economic writers : Indian writers typicallystress the exploitative features of British rule as the cause of nine-teenth century decay. Western scholars, to the extent that theydo not accept the exploitative thesis, attrib ute the failurz of theIndian economy to respond to the warming influences of the Indus-trial Revolution, to the societys othcr-worldliness, to its lack ofenterprise, and to the caste-exclusiveness of groups within thesociety. But as a student of British economic an d adminis-trative writing on India soon notices, this second has always beena minor, and a mo re defensive posture-a postu re of retre at onemight say. Th e major posture, especially in the nineteeth century , hasbeen that of quiet confidence in the beneficent results of the British

3. This distinction is of wider import. It has become a fashion today amongsome people t o talk of nationalist or ideological distortions of historians withoutdiscussiug the far more przvalcnt imperialist distortion, which is almost universallypresent in the writings of the academic historians belonging to the imperial coun-tries, and which was inevitably reflected in the works of some of the academichistorians of the colonies who werc both economically aod intellectually dependenton the colonial power an d its academic establishment. For example, in asemioar on Indian historiography organised a few years ago at London, there wasa paper on and discussion of the nationalist school of Indian history but nodiscussion of the imperialist school. Or, to take another example, Kingsley Davisin his scholarly work on the population of India clearly describes R. P. Dutt,Kumar Ghoshal. and Kate Mitchell as pro-nationalist but he nowhere describes asingle one of the large number of British authors he relies upon as pro-imperialist.Many scholars even now adopt, though perhaps unconscioyly, the imperialistapproach in order to avoid the so-called nationalist distortions.4. There is hardly a proposition in Morriss article which John Strachey,Lord Curzon, etc., have not earlier put forward, though Morris has discarded a lotof their excess baggage and adopted some modern economic terminology.



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38 BIPAN CHANDRAruj, with the existing lo w level of production and standard of livingexplained by the still lower level from which the British rule had tostart.Secondly, Morris has not so much refuted the anti-imperialistschool as caricatured it and poured ridicule over it, often dismissingi t as virtually infantile. For example, he writes that both inter-pretations suffer from internal contradictions which become quicklyapparent when exposed to the touchstone of he simplest economictools, and that neither of these interpretations has any substantialsupport, because there has been no solid research on which tobase the conclusions. Now, apart from the fact that Morrissexamples of application of such simple tools land him into makingstatements which make us suspicious of the applicability of suchtoolsor ven their existence, or that his refutation of the basic anti-imperialist thesis does not stand up to a ctitical examination, Iwould stress at the very beginning that the issues that the anti-imperialist writers raised were far too basic and deeply thought outto be so simply dismissed or characterized. This is not the place togo into their basic approach a t length, but it may be pointed ou tthat the main issue they raised was not that o f p e r capita income ordestruction of handicrafts but of economic development. The mainquestions they asked were whether British rule after 1858 wasinimical or favourable to economic development, and whether theeconomic structure the British ruj helped evolve was favourable todevelopment or not. When they found that India was not success-fully following the road to industrialism, they asked why not, whatfactors were holding back the progress, and what was the role ofBritish imperialism in i t all. Only after subjecting the structure ofIndian economy and the British role in its formation and mainte-nance to a thorough examination did they brand the period of Britishrule as one of exploitation and decay and frustration. They nevercriticised it for not maintaining and continuing the old, but alwaysbecause the new, i.e., modern economic development, was frustra-ted. In fact, they raised precisely those issues which Western growtheconomists began to raise after World War 11. Furthermore, only

5. One is surprised at th e off-hand, cavalier treatment of scholars andeconomists of the calibre of Dadabhai Naoroji, G . V. Joshi, Justice Ranade, R. C.Dutt. K. T. Shah, Radbakamal Mukerjee, Brij Narain, D. R. Gadyil, R. P. Dutt,among others.



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REINTERPRETATION OF 1 9 ~ ~ENTURY INDIAN CONOMIC HISTORY 39some of the latter have just begun to reach the vantage position ofthe former-the capacity to link and integrate economic ideas tothe socio-political environment and to look at all aspects of theeconomy simultaneously so as to form an integrated and interrela-ted picture of it. In the end these writers became anti-imperialist.They came to believe that British rule must go before the industria-lisation of the country could be accomplished. In the course oftheir analysis, they made full use of contemporary economic theoriesfrom those of Mill, List and Carey, to later those of Marx,Marshall, and Keynes. Also they tried to utilise the experience ofcontemporary developing societies, not only of Britain, France,Germany, and U. S. A , , but also of Japan and later of the SovietUnion.

Interestingly Morris also accepts in the end this basic criterionof structural analysis for he writes : In recent years, economistshave been so preoccupied with output as a measure of the tempo ofeconomic development that they have neglected the structuralchanges through which an economy must go-changes which mayinitially appear to be accompanied by stagnating output. But hehas forgotten this injuction in his treatment of the reinter-pretation of nineteenth century economic history for he does notdiscuss any aspect of economic structure as it developed during thenineteenth century or the relationship of the structural changes to theprocesses of actual economic development. He has not taken upbasic questions like the structure of agrarian relations or evenmethods of produclidn in agriculture, the structure of the capitalistclass or of the saving and investing classes or their pattern of sav-ings and investment, the machine or capital goods or technologicalbasis of the industrial effort, the relation between foreign capitaland indigenous capital, the structure of the indigenous market ordemand, the structure of social overheads (means of transport,education, technical know-how, etc.) and their relation to Indianeconomic life, the pattern of Indias involvement with the worldeconomy, and so on. The only major economic question he tacklesis that of per capita income growth or physical unilinear movementof national product (precisely the question he declared in the abovequotation to be less meaningful if not entirely meaningless) andthen, relying on simple economic tools assumes that law and order,peace, the establishment of the liberal state, development of transport,



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40 BIPAN CHANDRAat least to the extent of linking India with the world market, andgrowth of coninierce, would take care of the question of economicdevelopment. I am afraid t ha t t he questions of structural changeand economic development are far more complex than that.That Morris does not perhaps fully understand what is involvedin the traditional debate between the imperialist and the non-imperialist schools is also brought out by his belief that the anti-imperialists believed in a crude theory of the disintegration and decayof the Indian economy in the nineteenth century. He quotes Marxwith approval on the question. One does not know what he hopesto prove by this quotation. For Marx not only said that bourgeoisindustry and commerce create these material conditions of a newworld,O but also, and in the same article, that

All the English bourgeoisie may be forced to do willneither emancipate nor materially mend the social conditionof the people, depending not only on the development ofthe productive powers, but on their appropriation by4hepeople. . .The Indians will not reap the fruits of the newelements of society scattered among them by the Britishbourgeoisie, till in Great Britain itself the now ruling classesshall have been supplanted by the industrial proletariat,or ti11 the Hindus themselves shall have grown strongenough to throw off the English yoke al t~g et he r. ~

The important point here is that most of the major anti-imperialist writers would agree with Marx. They all without excep-tion, accept that the English introduced some structural changes andnearly all of them welcome these changes as the entry of theprogressive wind from the West. In fact, they all bend over back-wards in stressing the constructive role of British rule.8 Theircriticism was never merely or even mainly that the traditional socialorder was disintegrated by British rule but that the structuring andconstruction of the new was delayed, frustrated, and obstructed.

.

6. Quoted by Morris, p. 607 f a .7. K. Marx and F. Engels, On Colonial ism, MOSCOW,o date, p. 80.8. It is to be noted that once Marxs writing or formulation on the dualcharacter o f the impact o f British rule b ecame available to Indians, nearly everywriter of the anti-imperialist school, for exarnplz, J . L. Nehru, K. S. Shelvankar,Wadia and Merchant, K.P. Dutt, unhesitatingly accepted it and freely quoted it.In fact, if the debate was u p to this point, there wou ld be little controversy leftbetween the old and the new interpretations.



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REINTERPRETATION OF 19TH CENTURY INDIAN ECONOMICHISTORY 41From R. C. Dutt, Dadabhai Naoroji and Ranade down toJawaharlal Nehru and R. P. Dutt, the anti-imperialist writers havenot used the words economic decay to mean decay of handicraftsbut to signify the arrested nature of Indias industrialisation andmodernisation. None of them have really condemned the destruc-tion of the pre-British economic structure, except nostalgicallyand o u t of the sort of sympathy that any decent man would have,that, for example, M arx showed for the poor Hindus loss of theold world. Even the first generation nationalist writers rejectedthe classical economic or Zuissez faire approach not because itwas relentless in its modernity promoting the disintegration of theold order, but because its application in India tended to perpetuatethe old legacies and inherited weaknesses and the ancientbondage of feudalism and tatu us."^ In fact, their main fire wasalways. concentrated on the present-present poverty, present lackof industry, present remedies-not on the past. Even their criticismof the destiuction of old industries was made to point out theneglect of Indian interests in the past so that the present interestsmight be looked after better. And what was their criticism of theruin of Indian industries ? That the old industries were not helpedto make a smoother transition to new patterns of industrialisation10-an entirely sound proposition by any economic criterion.One more general remark before we take up Morriss newinterpretation issue by issue.

The basic question before the economic historians of modernIndia is : why was India in 1947 so backward, so far away fromeconomic development or the take off ? why was the economicdistance between India and Britain widened between, say, 1818 and1947 instead of being narrowed down ? why did the Indian economynot generate economic development when U. S , A,, France,Germany, Canada, Italy, Russia, and even Japan did ? This givesrise to questions in which nearly all the major anti-imperialistwriters were basically interestcd :what is the relationship of Britishpolicies, British Indian administrative and political structure, andthe British impact on Indian socio-economic structure to the problem

9. M. G . Ranade, Essays air Indian Economics, Bombay, 1898, pp. 23 an d 65 .10. See, for example, G. V. Joshi, Speeches an d Writings. Poona. 1912, pp.680, 785; G . S. lyer in Indian Pol i t ics, Madras, 1898, p. 193; R.C. Dutt, EconomicHislory of I nd ia itr the Victorian Age , 6th ed.. London, pp. 163, 518-9.



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42 BIPAN CHANDRA of economic developm ent ? M orris does no t answer any of thesethree questions in an, all-sided manner. An d in fact in terms ofMorris new analysis, the absence of economic developm ent becom eseven m ore difficult t o comprehend. According to him, (a) Indiahad a framework of the nineteenth century liberal nation state, (anadvantage which Russia, Japan, Germany, and half the time Francedid not have) ; b) a government whose general object.. .was thewelfare of the society (I wonder whether that could be said ofRussia o r Japan or even any other government !) ; social structurewhich did not hamper economic development (see his work onBombay labour and f. nr 17, p. 610) ; plenty of surplus land (hisown analysis) ; o over-population (according to him war, famine,an d anarchy h ad kept dow n Indias population till the British rajcame. And durin g the nineteenth century it grew at a very slow rate) ;a rising per capita income including rising per capita agriculturaland industrial output (his own view) out of which there shouldhave been no difficulty in getting savings (at least he has not evenhinted at any such difficulty) ; a huge export surplus at the levelof commodities and bullion ; la w and order ; an administrationof a high degree of stability, standardisation, and efficiency(p. 611) ; fairly substantial system of road and rail transport(p. 611) ; ational taxation and commercial regulations (p. 611) ;an d we m ay ad d the guiding hand of the most advanced countryof the world. In fact early nationalist writers started with similarassump tions but they soon came up against the facts of life. Theygradually traced the economic and political physiognomy of theraj and then began to say tha t British policies were imperialistic(exploitative and anti-industry), British administration was inimicalto growth tendencies (civil service, financial administration, lack ofstate support), there was foreign expropriation of national savingsan d capital, an d econom ic structure in agriculture (high taxation,landlordism, money-lending, restriction of national market) andin industry (domination by foreign capital, abseace of machineindustry, virtual absence of social overheads) ham pered economicdevelopment. This is the political econom y of the anti-imperialistschool and not a crude theory of disintegration (p. 607, f.n. 5)or the theory of infinite and increasing misery (p. 608, f a . 7).On the other hand, contemp orary defenders of the ru j , the Stracheysan d others, emphasised the benefits arising o u t of the end of anarchy,



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REINTERPRETATION OF 1 9 ~ ~ENTURY INDIAN CONOMICHISTORY 43the benefits of law and order and justice, efficient administration,benevolence of th e raj, pax Brirannica, growth o f trade, constructionof the railways, an d growth in area under cultivation. They thenclaimed that progress had occurred, that Indians were better offthan Europeans or even Englishmen . They firmly rejected the arre s-ted growth thesis. But faced with the evidence of the extremepoverty of the land, they blamed it on Indias size, pre-Britishbackw ardness, Ind ian peoples prolifera ting proclivities, their socialorganization and customs and habits, the climate and weather(gamble on the monsoons), and the lack of natural resources.I1Some of them also put som e blame on British democracys addic tionto laissezfaire doctrines.M orris tends t o igno re the basic question but when pressed forsome explanation basically falls back upon the prqtwe ntieth centuryimperialist explanations and treatment.

What are the basic factors in the economic development ofIndia in the nineteenth century? Firstly, says Morris, the rate ofgrowth of population was not high and therefore the economy wasnot burdened by a high rate of population expansion (p. 61 1). Onpage 608(f.n. 7) growth of pop ulation w as regarded a s a sign of econo-mic progress, on p. 61 1 its low rate of growth is a factor in develop-men t and prosperity. By this reason ing the seventeenth century was aperiod of prosperity of even a higher orde r since along with law andorde r, the population burden was even smaller. But, of course, th ewhole issue is brought in uselessly for i t plays no role in the analysisof the econom ics of growth of the nineteenth century. High o r lo wrates of population growth can affect the econom yeither way. Itis more likely to happen in the nineteenth century demographicsituation that a high rate of population growth is accompaniedby a high rate of economic development while a low rate ofpopulation growth is accompanied by a low rate of economicgrowth. High and low rates of population growth may be similarlylinked w ith econom ic stagna tion or econom ic decline up to a point.One might also point out in this context that this makes

11. See my The Rise and Growth of Economic Nationalism i n India, New Dclhi,(1966), Chapter I.



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44 BIPAN CHANDRAMorriss simple economic tools appear of rather doubtful validity.On page 608, f.n. 7, he has used such a demographic theory toknock out what he calls the theory of infinite and increasingmisery. It cannot embrace, he says, two fundamental pieces ofevidence, the growth of population and the apparent lengtheningof life expectancy. Now, unfortunately, we have still the over-population experts who say that it is the biggest cause of povertytoday and it may be conceded that there are many countries wherepopulation has increased without economic development or evenexpansion. The type of crude Malthusian checks Morris expectsprevail in extreme situations and usually through failure of cropsand famines and diseases. In fact, one is surprised to hear that inthe modern era population cannot grow at the rate of .4% perannum or so in a situation of economic stagnation and increasingmisery. Secondly, where is the proof of apparent strengtheningof life expectancy? K. Davis gives the following table of lifeexpectancy and death rate.

Period Life expectancy Death rate1871-18811881-18911891-19011901-19111911-19211921-1 93 11931-1941

24.625.023.822.920.126.831.8

41.344.442.648.636.331.2

Thus life expectancy did not lengthen till 1921, if anything it fell !Similarly, death rate fell only after 1921, infant mortality rate alsofell after 1921.13 So out goes the refutation. On the other handpopulation increased not by .4% but by 1 per cent when accordingto G. Blyns estimate published in 1955 the index of per capita foodoutput was declining from 90 in 1916-17-1925-26 to68 in 1936-37-1945-46 (with 100 as the base in 1893-84 to 1895-96).14 Accordingto the recent estimate of Blyn, the per capita availability of food

12. K. Davis, The Population of India a ndPakistan , Princeton. 1951, p. 36.13 . Ibid.. p. 31 .14. Quoted by Daniel Thorner in Simon Kuznets and others, Economic G r o w f k :Brazi l , India, Japan. Durham, 1955, p. 123.



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REINTERPREIATION OF 19TH CENTURY INDIAN ECONOMIC HlSTORY 45declined during 1911-1941 by 29%.15 Similarly, according to Blyns1955 figures per capita agricultural product declined from 98 in1916-17-1925-26 to 80 in 1936-37--1945-46.@ Per cupifaagricultu-ral output declined by 4% from 1921 to 1931 and 10% froni 1931to 1941, according to his recent study. Similarly, it may be notedthat infant mortality and death rate decreased and average lifeexpectancy went u p precisely in this period when every index ofindividual prosperity was minus.18All this exercise in demography, etc., has been necessary toshow that simple economic tools are neither as efficient nor istheir application as easy as Morris implies on page 608 andf.n. 7. Nor can he dismiss other writers with a flourish of thewand. Nor were they, therefore, so stupid as to have said thingswhich could be disproved by being exposed to the touchstoneof the simplest economicNext to the population factor comes an important politicalfactor : The British ra j introduced the political framework of thenineteenth cenfury iberal nation state, italicsmine This is an advanceover even the Strachey brothers, etc., for they claimed the raj to be abenevolent despotism suited to Orientals. No comment is necessary.Morris insists throughout his essay on regarding law and orderand efficient administration-without defining efficient in what-asa factor that must have led to economic growth (p . 611) and ittherefore needs to be pointed out that there is n o such correlationbetween the two or even between law and order and economicwelfare. Obviously, there cannot be economic growth if adminis-

15. George Blyn, Anriculiurul Trends in Ind in , 1891-1947, University o f Peon-sylvania Press, 1966, p. 102.16. Quoted by Daniel Thorner, op. cit . , p. 123.17. Op. it., p. 122. Similarly per capita income was also declining during th eperiod 1921-1951. See M. Mukherjee. A Preliminary Study of the Growth ofNational Income, Asian Srudies in Itzcome nnd Wealth, Bombay, 1965, p. 101.Even more interesting exercises could be conducted. I n Bengal, Bihar and Orissa,total agricultural output fell by .45% per year from 1891 to 1941 while populationincreased by .65% per year (Blyn, op. cit., p. 119). Food availability in the threeprovinces declined during these years at the rate of .46% per year (ibid.,p. 104).18. Economic history of other countries also shows that high or lo w deathrates are not necessarily linked to standards of living. See Habakkuk and Deane.The Take-off in Britain, in Economics of Take-off, d. by W.W.Rostow, 1965,p. G8.19. la fact there are economic tools and economic tools !



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46 BIPAN CHANDRAtrative anarchy prevails, but the converse is not necessarily !me.*OIt all depends-.on what the law and order i s used for. Thehistorian has precisely to analyse the impact of an adminis-tration on welfare as well as growth.*l On e cann ot assumethat it works one way or the other. In fact law and order is a basicnecessity not only for economic growth and welfare but also forany system atised exploitation. After all the Mug hals maintained lawand order in India, without generating economic development,22and the decline of the Mughal Empire came not because la w andorder failed but law an d order failed because the Em pire waseconomically weakened.eaAn other positive aspect of British rule from the growth poin tof view, according to Mo rris, was that taxation and comm ercialregulations were rationalised (p . 611). But the fact of the matter,accepted by most if not all research workers, is that rationalisationof land revenue resulted in tremendous hardship as well as dissavingamong the agriculturists, definitely during the first half of thenineteenth century and more problematically u p to the end of i t .Similarly, commercial regulations were rationalised only by the1840s. Till then, as R. C. Dutt shows, internal customs dutieshampered Indias internal trad e an d industry. Late r rationalisationof customs revenues in th e 1870s became, and rightly so, th emain grouse of nationalist op inion.In fact, it may be suggested as an alternative hypothesis, as

20. But anarchy itself is hard to define. Th e them e of political anarchy ineighteenth century India has been, as has been shown by Satish Chandra. PercivalSpear, an d oth ers, exaggerated beyond any resemblance to reality by nineteenthcentury writers and administrators. I t may also be noted that , according to E.Phelps Brown, high incom e per head prevailed in fifteenth century Britain desp ite th eW ars of Roses. Th e Growrh ofBri tish Industrial Relations, 1959, p. 2.21. Af ter all it is by now well-known tha t British administration. with its pro-money-lender and pro-landlord judicial system, its pro-landlord bureaucracy, itshighly oppressive and corrupt village-level administration and police system, wasa major barrier to economic growth as well as general welfare in the village. Lawand ord er arc, after all, not neutral terms either in economic organisation of societyor in its general organisation. In any case, the historian of India has to be verychary of accepting claims of British justice an d law an d order so fa r as the peasant

an d the poor were concerned.22. Though, M ughal rule-as stable administration in other stagnant socie-ties-also may have led to growth of population an d national income aad even of p e rcapita income, it did n ot initiate the process of economic development.23. We may put the issue in another way : he question is not whether therecould be econom ic development without law and order: nor whether law and ordercould have prevailed without British rule; but rather why there was no economicdevelopment i n spite of law and order?



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REINTERPRETATION OF 1 9 ~ ~ENTURY INDIAN CONOMICHISTORY 47was done by the anti-imperialist writers, that rationalised taxa-tion, the pattern of comm erce, law a nd order, and judicial systemin time led to an extremely regressive (in every sense of the term)agrarianNext, M orris cites the developm ent of a substantial system ofroads and railway tran sport. But development w as not significant sofar as roads are concerned.Railways, on the other h and, were rapidly built. It has, how -ever, been widely pointed ou t that their con struction was not co-ordinated with the economic needs of India, that they were builtat the cost of other social overheads and industries, tbat theirbackward and forward linkages had their positive effects inBritain,25 that their dem onstration effect was severely limited, th attheir impact on economic development was far less than shouldhave been, th at they created an enclave economy, an d th at theywere, therefore, not so much a means of developing India as ofexploiting it.2e In fact, this aspect has been gone into by histo-rians as well as economists. A fresh analysis would, however, bemost welcome.

I11M orris suspects tha t average agricultural ou tpu t per acre an d24. O n e can speculate whether a liberal natio n state would dare, anywh ereelse in the world, to collect 55% of economic rental as the British said they weredoing even in the hey-day of land revenue reform in the nineteenth century.25. It w ould be wrong to call them leakages as they were planned 2s such.26. Th e point t o consider here is not th c potential benefit of railways but th enature of their impact on the economy and the reasons for their failure in havinga full an d a truly many-sided impact. Secondly, th e admirers of railway construc-tion in India forget th at at an y point of time the real econom ic question is tha t ofthe maximum use or a t least of the better use of the available resources. In fact,a s th e anti-imperialist writers po inted o ut . the m anner in which the railways wereconstructed and operated in India itzcrcased Indias dependence on agriculture.They also pointed out that the basic question involved was whether an alternativeus e of the sam e amo unt of capital on industrialization or irrigation would not yieldhigher rates of economic growth (see my book cited above, Chapter 5 ) . Veryrelevant an d apt are in this respect th e rem arks of Prof. Coo tner in the Economicsof Take-of cited above. He points ou t that If there w ere no reasons for expecting

railway building to set off oth er industries or to reduce the dependence of a regionon agriculture, there is no reason why railroad building should lead to growth(p. 455). Also : If th e period before th e asset in question could be fully used was avery long one it might well be better to use the c apita l elsewhere, depending on theinter& (p. 456). He also denies any special role for social overhead capitalineconomic development. particularly if on e think s of development in t e r m of th egrowth of the manufacturing sector (p. 261). He points out that the realadvantag e of building social overhead capital in th e underdeveloped country m ayaccrue not t o that country but the users of its products (p. 275).



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48 BIPAN CHANDRAper man rose during the nineteenth century (p. 612). This suspicionrests on three grounds.FirstIy, he feels that the wide fluctuations in land under culti-vation ceased and more land was brought under cultivation. Thisis a statistical question and should be so discussed. Undoubtedly,a large increase in area under cultivation occurred. But the processwas uneven in time and space. Moreover, whether this increaseoccurred to match up population pressure on land or vice versa isitself an important question. Morris does not discuss the questionwhether there was any increase in rural savings and in investmentin agriculture. In effect no direct evidence on the question is yetavailable. Throughout the first half of the century, land revenuewas often in arrears in large parts of the country. Unchecked andcontinuoxs growth of indebtedness and the general and growingubiquity of the money-lenders during the century would indicatethat there was no continuous or general increase in rural savings orinvestment; that the government demand, population pressure o nland, landlords, and money-lenders rapidly skimmed off any surplusthat arose, while famines and scarcities, to obviate which little wasdone in the nineteenth century, wiped out a n y net savings and per-haps created net dis-saving; and that, therefore, hardly any econo-mic growth or welfare was generated in this process.Secondly, Morris says that an increase in average output peracre occurred (p. 612). What are the grounds for this belief whichis contrary to the prevailing opinion of the nineteenth century?

(i) Political stability. But this can at the most have a shortrun,one-shot effect on productivity per acre. It cannot have along term effect and Morris is after all discussing a ten-dency for an entire century.(ii) Introduction of superior technology (p. 612). There isnot a single piece of evidence that any changes in methodso f production or techniques of production were broughtabout during the nineteenth century. In fact, this is one ofthe major criticisms of British rule. To my knowledge, noecononiic historian or writer or administrator has claimedthis. It is, on the other hand, difficult to believe thatMorris does not know the meaning of the term he is using.Therefore one can but await the evidence for his statement.



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REINTERPRETATION OF 19TH CENTURY INDIAN ECONOMIC HISTORY 49In the meanwhile, the existing evidence is as follows :(a) Instruments : N ot to mention machinery, in 1952 therewere 931,000 iron ploughs and 31.78 million woodenBlyn says of the period 1891-1911: very littlechange occurred in the type of equipment used.28(6) Fertiliser : To quote Blyn : The benefits from useof chemical fertiliser were generally not known andthe am ou nt used was insignificant. Imports, w hichmay be taken as a sufficiently appro xim ate measure ofuse, were less than 2,000 tons average per year during1598-99-1923-24. .. ronically, exports of fertilizermaterial, mostly cattle bones an d fish soil, were larger

Blyn also points o ut th at there was no measurable in-crease in the use of night-soil.*o( c ) Seeds : In 1922-23, only 1.9 per cent of all crop acre-age was under improved seed. By 1938-39, i t hadgone up to i l . l % . 3 1( d ) Agricultural Education : This is another indicator ofthe extent of technical change. I n 1916, the numberof agricultural colleges in India was 5 and their stu-dents 445. Th ere was also one lower level school with1 4 ~ t u d e n t s . ~ ? s is known, there was hardly anyspread of rural primary education.

. than imports,2e

The re was, therefore, n o change in technology in Indian agri-culture in the nineteenth century. Th is is when India was ruled byagriculturally th e m ost advanced country !Perhaps M orris is talking only of irrigation. Now irrigationis hardly a n element of new technology. It was known to Indians-~ 27. G. Kotovski, Agrarian Reforms in India, 1964, Delhi, pp. 29-30. Theagicultural departments sold only 17,000 improved ploughs in 1925-6. Report of

the Royal Commission o n Agriculture in India, 1928, para 105.28. Op. c i t ., p. 203. 29. Ibld., p. 195.30 . Ibid., p. 194. Also se e Report of tRe Royal Commission o n Agriculture inIndia, 1928. paras 80 and 91.31. Blyn, op. c i f . ,p. 200.32 . Ibid., p. 202.



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50 BIPAN CHANDRAfor centuries; in fact, Morris says that Indian civilization was basedon settled irrigation agriculture. But there was undoubtedly somegrowth in area under irrigation. R. C. Dutt has catalogued theseadditions joyfully but also pointed ou t that in totality they didnot amount to much in the nineteenth century. Statistics shouldbe able to give us an idea, when collected. But in 1891-92, BengalBihar, and Orissa, the single largest chunk of India had less than1.5% of its area under irrigation; C. P. 3.3%; Madras, 24.3%; U.P.29.3%; Bombay and Sindh 12.8%; Panjab, Delhi and N. W. F. P.,38.2%.= It may also be noted that there wasno improvement in thesystem of land utilisation. To the contrary, factors which wbuldtend to reduce productivity per acre may be noticed. There wasincreasing sub-division and fragmentation of holdings.* There wasalso growth in tenant-cultivation and share-cropping.

Thirdly, Morris believes that commercialisation helped produc-tivity per acre. The first question here again is how much increasein commercial cropping did occur. In 1891-92, o u t of total acreageof 168 millions, only 27.9 million acres were devoted to non-foodcrops,Is that is, 16.5 per cent. Obviously, the view that commer-cialisation galloped forward and gave a big push to agriculture isoverdone, especially if we keep in view that Indians previously alsoproduced large quantities of cash crops, including cotton, gur, oilseeds, jute, groundnut, and spices. (Comparison with Mughalperiod would be very interesting).

Moreover, commercialisation as such need not and did notintroduce higher technology. It may just lead to specialisation ofland, Le., shifting of good land from subsistence crops to commer-cial crops. In any case, we know that n o superior technology wasintroduced. Commercialisation did not even promote capitalistagriculture. Often it intensified tenancy and share-cropping. Com-mercialisation in India merely meant producing crops for sale,Moreover, if the limited commercialisation is in response to pressureof land revenue demand, rent and interest, and is merely an effort

~~ 33 . Statistical Abstract of Briiish India. 1882-3 to 1891-2, No. 7, p. 142. Thetotal acreage under irrigation at the time was 27.6 millions. Of this 10.1 millions wereunder canal irrigation.34 . We may here take note of the view that sub-division of holdings mayincrease productivity per acre though not productivity per head due to greater labourinput.35. Blyn, o p . cir., p. 316. .



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REINTERPRETATION OF 1% CENTURY NDIAN ECONOMIC HISTORY 5 1to sow a costlier crop, it i s nota source of strength to the peasantbut a mere recourse.of the urban sector and foreign rule to increasethe drain from the countryside by forcing the peasant to specialisewithout supplying any inputs or making any institutional change.I t becomes an instrument of exploitation and may even impoverishthe peasant by making him a helpless victim of the forces, mecha-nism and fluctuations of the market. This is what seems to havehappened, at least during the nineteenth century. And the benefitsof increased commercialisation-and also irrigation, since high irri-gation rates forced the peasant to produce commercial crops-werereaped by the government, landlord, money-lender, merchant, andforeign exporter. The peasant often found himself in deeper debtand even less able to improve agriculture.Morris here entirely ignores the significance of the crucial ques-tion :who was appropriating the surplus generated by agricultureand then putting it to what use ? Did any of it flow back into agri-culture or industry, as apart from money-lending activity, purchaseof land, or consumption by the extracting classes ? This was infact the crux of the problem. And R. C. Dutt, Ranade, Joshi, Dada-bhai and later Radhakamal Mukerjee and R. P. Dutt tried to dis-cuss it and find an answer to it. Whatever their answers, they wereat least heading the right way.%Thus, there is nothing automatic in law and order or commer-cialisation which increases productivity per acre or per man, apartfrom the deeper question of their impact on agrarian structure andtotal economic structure. The point is that such increases must beshown to have occurred. There is nothing in economic history or

36. I may quote here the words of a growth economist : .. t does notnecessarily follow that any efficient development of natural resources resulting inan increase in total output will always and pari passu reduce the backwardness ofpeople. On the contrary, the problem of economic backwardness in many countrieshas been made more acute, not because the natural resources have remained. under-developed, but because they have been as fully and rapidly developed as marketconditions permitted while the inhabitants have been left out, being either unable orunwilling or both to participate fully in the process . . Thus again, we are led backfrom the consideration of the total quantity of investment and the total volumeof out-put and economic activity to a consideration of the type of investment and the distribu-tion of economic activities and economic roles between the backward peoples and theothers. And regarding the framework of the liberal 19th century state he writes:The formal framework which offers perfect equality of economic rights offers noprotection. and the result of the free play of economic forces under conditionsof fluctuating export prices is the well-known story of rural indebtedness, landalienation, and agrarian unrest. H. Myint, An Interpretation of Economic Back-wardness, in The Economics of Underdevelopment, ed. by A. N. Agarwal and s.P.Singh, New York, 1963, pp. 96,106, and 125,



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52 BIPANCHANDRAsimple economic tools w hich should lead us to assume it .In fact the three factors which could hav e increased agriculturalproductivity were : a ) capital input, ( b ) intensification of labourinput per acre, ( c ) social incentives. I n view of the fact that thepeasant was losing land an d becoming a rack-rented tenant, even ongrounds of economic theory one would look f o r an explanation bothf o r increase in acreage and f o r increase in productivity, if any, to thesecond fact or , which can be explained onZy by the increasing pressureon land,87 unless man-land ratio had reached a stage where addi-tional inp ut of lab ou r would no t increase productivity a t all. But,then, increase of food supply becomes not a cause of populationincrease nor a sign of prosperity but rath er the primeval response ofthe people to meet population increase and the pressure on land.I t then becomes an aspect of a stagnant economy. Moreover, asthe nationalists pointed o ut, this increase in agricultural productionwas a reflection of the British desire to make India an agrarianhinterland of Britain so that India could, by increasing its agri-cultura l production, sup ply its raw material and food needs as wellas act as a market f or her industrial prod ucts an d capital. After all,i t was no part of imperialist econom ic interests to produce all roundstagnation, thou gh tha t might be the indirect consequence of theirpolicies and therefore on e of the co ntradic tions in which imperialismgot involved.

IVPerhaps the most imp ortant re-writing that M orris suggests ison the question of the ruin of Ind ian handicrafts and relativeruralisation of the country. Here two points may be re-empha-sised : (1) I have already pointed ou t tha t this question was no timportant for the anti-imperialist approach which was oriented to-wards British im pact on econom ic structure and tha t the nationalistsdid not give this ruin undue importance. They were more interestedin the quality of economic life and less in the more short-runavailability of goods. (2 ) In his re-writing of the question, Morrishas offered pure suspicions, hunches, etc., or relied o n economictools but has not offered an iota of qualitative or quantitativeevidence or testimony. I37. Apart from some increase in productivity due to irrigation.



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REINTERPRETATION OF 1 9 ~ ~ENTURY INDIAN ECONOMIC HISTORY 53R.C. Dutt and other writers gathered and published a mass ofcontemporary evidence in favour of their viewpoint, including theevidence of the low er-most B ritish officials (men-on-the-spot a nd inth e know), higher officials who had spent a life-time in the In diancountryside and towns and who had witnessed first-hand the actual

process of early British impact and economic change, Governorsand Governor-Generals, scholarly officials, contemporary travel-lers, British and Indian merchants, official enquiry commissions,and official records. I need n ot repeat all this evidence- R.C.Dutt, G.V. Joshi, B.D. Basu, D.R. Gadgil, R.P. Dutt, and othershave published masses of it. M ore recent scholars going throughsimilar materials have come to similar conclusions, e.g., R.D.Choksey, Raman Rao, Sarda Raju, N.K. Sinha, and H.R.Gho shal. Early village studies by Ha rold M ann and J.C. Jack boretestimony to a similar phenom enon. Fo r example, J.C. Jack, amember of the ICS, and a very favourable witness for the raj-hedeclared that his work was inspired with the notion of proving thebenefits of th e raj and he concluded that Faridpur peasants werebetter off than Italian peasants-wrote : Weaving, which used tobe a vigorous industry, has been killed partly by the imp ortation offoreign or factory mad e cotton goods and partly by the ravages ofmalaria.38 In any case, it is n ot necessary to stress the point orreproduce the evidence, Th e ruin of artisans is an established thesisand is backed by a great deal of evidence. Now what is to bestressed is tha t i t is ju st no t legitimate to refute it or ridicule itwithout presenting superior evidence, quantitative or qualitative.Once some direct evidence be produccd, we can argue about thesuperiority of on e set of evidence over the other. Certainly, th eold truths must be constantly reinvestigated and also turned outwhen fou nd false. We always search for new data and re-examinethe old.39 An d, of course, a priori analysis can be used to suggestnew lines of inquiry. But n o one may offer a priori, economicarguments, not to speak of hunches, an d suspicions, as refutationsor reinterpretations.

Let me stress again: It is not true that the view Morris iscontesting is based on a canonical tradition or is based on38. J. C. Jack, The Econot i i ic Life of a Betigal District, 1916, p. 92 .39 . For example, a mass of data o n this point could be dredged out of therecent village studies, economic as well as sociological.



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54 . BIPAN CHAND RAnationalist prejudice. It is based on a great mass of evidence-infact the only evidence so far available. Morris has not producedany evid2nce-statistical or qualitative--in his refutation of thisview.OA word may be added here regarding the use of qualitativeevidence in economic history. Certainly whenever reliable quanti-tative evidence is available and can be statistically analysed, we areon surer ground; and it would be wonderful in this respect ifvillage, district, and town records could be used comparativelyto trace the impact of British rule on artisans and handicraftsmen.But so long as such statistics are not available, qualitative evidencehas to be used, though, of course, critically, and with the full aware-ness that it may yield only broad impressionistic results. Moreover,often qualitative evidence is superior to inaccurate and distortedstatistic^.^^ This point is, however, of mere academic interest heresince Morris has given no statistics-not even bad ones-to questionthe evidence of R. C. Dutt and others.We can now proceed to the discussion of his economic theoris-ing on the point, keeping in view all the while that ours is anexercise not i n economic history but in economic logic. For thatreason sometimes there may be no actual debate in process becausehe accepts the nineteenth century theory of international trade and the

40. It is fascinating to watch a technique of research and economic historywhich lets an author accept the evidence of a traveller, Palsaert, for proving that inthe scventeenth century Indians were extremely poor and for characterking an entiremode of production but makes him dismiss the evidence of hundreds of travellers,administrators, and other observers regardiag decline of handicrafts or makes himignore the Dutferin Enquiry of 12388 or the comments of men like W.W. Hunterand Charles Eliot regarding the poverty and starvation of Indians at the end ofthe nineteenth century ; or which enables him to give as proof of his own generalimpression that the traditional lndian society (which century ? B.C.)was support-ed at a lower level of real income per capita than was the case in early modernEurope or even in Tokugawa Japan, the statement of Thomas Kerridge in 1619:.though this co:ntrie be esteemed rich, we find the comnion inhabitants to beverie needie .. (p. 610. fa. 16). How do we compare the per capitu income ofthe veric needie in India, Japan, and Europe ? One stands aghast before themarvels which the srmplsst economic tools can perform I f they can help onecompare, on existing evidence, the leve ls of real income per capita in TokugawaJapan, early modern Europe, and India in 1619 141. Morris had pointed this out very well in another context : The cottontextile industry of India. and especially the Bombay sector of it, is perhaps betterserved by an abundance of statistics than almost. any other major part of theeconomy. Nevertheless, appearances are deceptive. At every point the statistics aresubject to serious question, and this study niut depend, as historical studies unfortu-narely so often mut , on the qualitative rarher than on the quantitative evidence.Emphasis mine) . The Emergence of M Industr ia l Labour Force n India, 1965, p. 9.



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REINTERPRETATION OF 19TH CENTURY NDIAN ECONOMIC HISTORY 55luissezfaire view of com petition an d self-interest producing econ omicgrowth while I accept the early Indian nationalist and Marxianapproach (and perhaps post-war growth approach) which seeseconomic growth as the result of the total interaction of economicmotives of individuals and firms, and of the social and economic andpolitical structure. Th is produces a classic difference : according t othe nineteenth century view all increase in total product (or totalincome) in the short run is economic progress while the latter viewsearches for the quality of the economic process an d its long termimplications. I t then tends to see industrialisation and the capacityto continually generate it and increase it at a minimum rate of acce-leration a s the suprem e test of economic progress.On page 612, Morris writes : While British cloth was competi-tive with In dian hand loom production, mach ine-made yarn seemsto have strengthened the competitive position of the indigenoushandloom sector despite the fall in First let us get someidea of the quantities involved, particularly the r atio of yarn importsto imports of woven goods which was in fact very low :

Import of cottonYears cotton twist and Cotton goodsyarn(1 (11849 909,016 2,222,0891859 1,714,216 8,088,9271869 2,779,934 16,072,55 11889 3,746,797 27,764,508

Secondly, what was it in relation to which the weaver streng-thened his comp etitive position? Imp orted cloth, we would have toassume. But how can tha t be when the same yarn was available toBritish weavers whose productivity was increasing rapidly w hile the. .42. Once again no evidence is offered for this seems to have strengthened.In a theoretical derivation, the apt phrase would be : should have streng thened.The words seems o indicate reality- but without evidence. Of course, the oppositeschool does adduce evidence of the weakening of the competitive position of th eIndian handicraftsmen.43. Based on tables in R . C. Dutt, p. 161 and Statistical Abstract Relating toBritish India, relevent years.,



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56 BIPAN CHANDRATndian weavers productivity was station ary ? For example, wagesper pou nd of yarn paid t o B ritish weavers declined as follows

1819-21 15.5 d.1829-31 9.0 d.1844-46 3.5 d.1859-61 2.9 d.1880-82 2.3 d.

Moreover, the export price of woven goods (cotton) was fallingmuch m ore rapidly than th at of yarn :4 6~~

. Period Average exp ort price per poundYarn Cloth(i n pence) (in pence)1819-2 I1829-311844-461859-6118SO-82

29.015.312.011.712.8

70.340.622.520.519.4

This means tha t the com petitive position of the Indian weaver vis-a-vis the British weaver was weakening throughout most of thenineteenth century. Th at is why the imp ort of cloth goes up from1849 t o 1889 by 25.5 millions sterling (12.5 times) while that ofyarn goes u p by only 1.8 millions sterling (4 times). Morrissposition also run s into logical difficulties. Why is foreign clothstill imported in increasing quantities ? What sort of strengthen-ing is this ? Let us proceed further : n spite of or because of textileimports there was a price differential one way or the other. The nwhat could have led to a rise in t he hand icraft production ?46 Onlythree situations would explain tha t situation :( I ) The price favoured Lancashire, but weavers could sellincreasing quantities because Lancashire was incapable of44. Thomas Ellison, The Cotfon Tradeof Great Brifain,London, 1886. p. 69.45. Ibid., p. 60.46 . Declining production could, o f course, be maintained for a long time byimperfect market, force of tradition,ctc.



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REINTERPRETAT~ONOF 1~ T HENTURY NDI ANECONOMIC ISTORY 57supplying the required quantities at that price or couldnot reach the expanding market which the weaver could.In the latter case, the Indian weavers had a monopoly Orprotected market and did not need strengthening at all !(2) As a result of import of yarn, the price favoured weavers,but Lancashire still increased its sales, because the weaverscould not get enough yarn, or because they had fullemployment. There is another sub-case of this case : hatIndians preferred costlier foreign products to the cheaperweavers products.(3) The weaver maintained his position by cutting into hisnecessary livelihood. But this was a daily losing position.This case resembles the second, but in this his competitiveposition does not improve but deteriorates. He maintains

his craft by cutting into his subsistence and his capital.In fact, the artisans who survived-and a large number of ruralartisans did-did so either as the result of the third case and of sub-case two of the first case, namely, failure of Lancashire to reachthe vast Indian market (in other words, he survived either by gett-ing impoverished or because the British impact on India was alwaysincomplete, he was saved by the backwardness of British rule !British rule was not efficient enough to even produce the idealof laissez fuire economics-the perfect market) ;or, as Dr.. Gadgil

has pointed out, because the peasant remained so poor and thehand-produced cloth was so cheap due to low subsistence cost ofthe producer that the former could not purchase the relativelyfiner Lancashire product nor could this product compete with thehand-produced cloth. In other words, whether the peasants incomeincreased substantially (as Morris believes) or not, he was stillincapable of buying British cloth. Secondly, to be able to continue

47. But fo r that very reason the urban han dicrafts were ruined.48. Th e limitation of the internal market and demand was a major factor infirst limiting foreign imports, and then indigenous factory production. It was amajor factor in Indias economic backwardness i n 1947. One o f the majo r tasksbefore the economic historians is to study how British rule as a whole affected theinter nal deman d. D ada bh ai Naoroji and. o!hers rejected th e notion that law an dorder, railways, foreign trade, commercialisation, or monetisation necessarily orinvariably led to its growth. It is of interest to note that the main spurts in Indianindustrial production before 1947 oFcufred only when existing limited effectivedemand was diverted from impo rts t o Indigenous products by t he two world wars.



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38 BIPAN CHANDRAin this improved competitive position the artisan had to cut intohis subsistence. .Then, again, Morris comes very near to giving us a scientificexplanation. He writes: The demand for cloth in India seemsto have been fairly elastic. The fall in price led to a movementdown the demand curve. In addition, there seems to have beena shift to the right of the demand curve forcotton cloth. Butfrom what evidence are such sophisticated tools of modern econo-mics as demand elasticity and demand curve derived, especially thenotion of the latters shift to the right ? Not from a n y availablestatistics nor from any other type of evidence. There is hardly anymaterial in economic literature to enable one to draw such anadvanced curve and point to its shifting. In fact, thecurveisafiction and words like led and a shift merely give it an illusionof firm existence. And the only basis for this shift in the curveseems to be once again theory :growth of population, and changesin custom (like use of a bodice below a sari). But the impactof growth of population on the income pattern and on thestructure of effective demand is precisely the complex questionthat has to be researched into. It cannot be stated as simply asMorris does, unless one believes in the doctrine that increase ofpopulation leads to automatic industrial development. In theabsence of any research on the subject, the changeoffashioninbodices also belongs to the fairyland times of the nineteenth century,when Lancashire used to dream of putting an inch on the Chinesecoattails and the U.S. Southern senators of making the Chinese taketo tobacco. In those good old days the problems of efective demandused to get handled in such easy and simple terms by the markethungry merchants and manufacturers.The only effective economic argument here would be that grow-ing income increased the effective demand for textiles, But then onewould have to show that such a growth of income occurred that in-creased income was falling into the hands of those who would spendit on hand-made products, and that imports of textiles and laterdomestic machine products did not absorb the increased demand.PD

49 . It is obvious that any real growth in effective demand for textiles wouldbe absorbed by products of Lancashire and/or Indian text ile industries. Th e Indianweaver could hold his own to a limited extent o nly after 1918 as a result of techoo-logical change, i.e., mtchanisation.



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REINTERPRETATION OF 19TH CENTURY INDIAN ECONOMIC HISTORY 59In fact, the existing evidence points to the following picture :

(1 ) Increasing ruin of urban handicrafts which played an im-portant role in the economy. ,(2) A major blow was given to spinning as an economic acti-vity. This had an important effect on the domestic econo-my of the peasant with many-sided consequences, whichwe do not have the spa& to go into-including furtherstrengthening of the merchant-money-lenders hold overtbe peasant and the artisan.(3) The rural artisans were gradually affected; (even a slight fallin real income can have drastic effect on a subsistenceworker). This forced an increasing number to leave theircrafts, especially as more land was being brought undercultivation, and the breakdown of the traditional division oflabour enabled them to bid for land as tenants-at-will andshare-croppers. Many could become agricultural workers.6oIn a period of rising population (about 0.4 per cent per year),this need not result always in a fall in the absolute numberengaged in particular handicraft industries (though all theevidence points to that in most cases) but only in theirproportion in the total population. Of course, a largenumber still stuck to their traditional crafts, more out oflack of any other opportunity than out of economic choice,falling the first victims to a famine, as the regular reportsof the Famine Commissions noted. Many combined theircraft with dwarf holdings or agricultural labour or pettytrade.

Moreover, many of the skilled artisans survived by producinggoods requiring lower degrees o f skill. Many economists have em-phasised that an important factor in Japans rapid industrialisationwas the fact that the traditional handicraft worker possessed a highdegree of skill which enabled him to master modern industrial

50. In the twentieth century, when land co uld n o longer absorbmany of them,they tended to become general labourers, partially employed agricultural labourers,beggars. and men of commerce, i.e., peddlers, etc.. thus improving the ratio ofpopulation engag ed in n oo-agricultural pursuits. Cf. S. Kuzoets, Economic Growrh.1959, p. 61.



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60 BIPAN CHANDRAskills quickly an d efficiently. In India thi s skill-a tangib le factor ineconom ic growth-was largely lost.Morris concludes that the handloom weavers were at least nofewer in number and no worse off economically at the end of theperiod tha n a t the beginning (p. 613). We have already dealt withboth points. But it m ay be noted that he is no longer saying tha tthere was no decrease in the proportion of handicraftsmen in thetota l population. Secondly, there is no proof even for his ame ndedstatement, Th e disappearance of traditiona l textile centres of Indiais there for all to see (e.g., Murshidabad), while hardly anywhered o we get instances of such new centres corning up. Nor has anystudy so far shown that the number of artisans in villages or exis-ting cities went up. The only statistical study of occupations in amajor existing city made so far is by Krish an La1 who showed in apaper a t the Indian History Session of 1961 that in Delhi there wasa virtual decimation of handicrafts.The second part of Morriss statement will also not bear examina-tion. In face of th e rising productivity of B ritish labo urs1 how couldthe Indian handicraftsman have competed without reducing his ownwage cost unless his own productivity went up-of which there isnot a ghost of evidence-or his cost was less, i.e., prices in Ind iawere falling or the cheapness of yarn enabled him t o both increasehis comp etitive capacity vis-a-vis the factory prod uct as well as toincrease his net profit. All these assumptions have only to bespelled o u t to show how naive his suggestion is.And if we have to build up such logical economic history,certain questions arise at the level of logic : f on balance employ-

51. Wages per pound in the British cotton textile industry,~ ~~

Periods Yarn Woven goods

6.4 bence 15.5 Dence819-21 ~~ ~1829-31 4.2 - -,,184446 2.3 ,,18 59-61 2.1 .,I880- 2 1.9 I ,~~9.0 - ,,3.5 9 )2.9 st2.3 ,,

Elison, op . cif.,pp. 68-69.



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REINTERPRJTATION OF 1 9 ~ ~ENTURY INDIAN CONOMICHISTORY 61ment in the industrial sector was going up, if more land was beingbrought u nder cultivation, if monetisation a nd therefore the numberof traders was going up, and if population growth was only at therate of about 0.4 per cent per year, i.e., about 40 to 50 per centbetween 1820 and 1920, then w hy does subdivision of holdings takeplace to such a large exten t? And why are tenants and sh are-croppers willing to pay rackrent ? And from where d o agricultu-ral labourers, including share-croppers, dwarf holders, etc., come(since their n umb er does increase), an d why d o their wages fall asdrastically as Dh arm a Kum ar suggests? And as I have askedearlier, where d o these artisans live? Does the number a nd pro-portion of artisans in rural population go u p ? What happens tothe artisan villages? Does their number go up or down? Fromwhere and why did labour migrate so freely to foreign lands an dto industrial cities like Bombay (as Mo rris has brilliantly shown inhis book on Bombay textile labour) ? (Obviously, the answer isnot over-population in Mughal times since (a ) no such evidenceexists, (6 ) according to Morris, war and famine had kept Indianpopulation within Malthusian limits.)Lastly, and as the coup de grace, M orris uses Alice an d D anielThorners authority and says that the Classical argument is basedon census data which purported to show that between 1872 and1931 a growing proportion of the population became dependent onagriculture. Th is evidence has recently been effectively demolishedby the Thorners (p. 613). This is not the place to deal with theThorners assum ptions and conclusions. But wh at they have proveda t the most is that census d ata are too unreliable to prove o r dis-prove aDy such point. M oreover, they could n ot have demolishedthe Classical argument because the Classical argument was givenby Ranade, R. C. Dutt , G. V. Joshi, etc., before the census ofeven 1901 (of 1931 in the case of Gadgil) was published. Whatis much more important in employment of population statistics forshowing the am oun t of economic development that had takenplace in India is the fact that in In dia in 1892 after 100 years ofgestation only 254,000 persons w ere involved in mo dern indu strialproduction under the Factory Acts. This n um ber increased onlyby 1.1 million by 1931 and by another 1,180,000 by 1951, whilepopulation went u p from 236 millions in 1891 to 275.5 millionsin 1931 an d 357 millions in -1951, an d lab our fo rce from 94



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62 BIPAN CHANDRAmillions to 147, millions between 1891 and 1951.52 In view of thesefigures, one would think the controversy regarding the expansionistforces or census figures would be considered utterly sterile. Andit is with this aspect that writers from Ranade and Dutt to Radha-kamal Mukerjee and R. Palme Dutt have concerned them~elves .~ ~When Morris says Iater that while British rule had the positiveeffects in the nineteenth century that I have already described,its influence was limited (p. 615), we should consider his statementin the context of the figures cited above and contrast them withsimilar statistics for Britain, U.S.A., France, Russia, or Japan.In view of what we know of Indian economic structure and per-formance at the end of the nineteenth century, we have to askwhat was the quality of this limited development? The nationa-lists and the Marxists (and some of the post-war growth economists)would precisely ask whether British rule had or had not generatedan industrial revolution or the process of economic develop-ment. While soms forces of change were introduced, whilemodern technological and organisational innovations were intro-duced in industry, trade, and banking, was not the development ofthese innovations checked and frustrated ? Then there is little mean-ing in the phrase limited influence. One may suggest that whatoccurred in India was at the most aborted modernisation-which istypical of a modern colonial economic structure as Marx had pre-dicted much earlier and which lay at the heart of the complaint by

52. See Coale and Hoover, Population Growth and Economic Development.pp. 30, 231 ; D. W. Buchanan, The Development of Capitalist Enterprise in India,N. Y. , 1934. p. 139; Census of India, 1951. Part I -A, Report, p. 122; A. Myers,Labour Problems i n the Industrialisation of India, Cambridge, Mass., 958, p. 17.This is apart from the calculations of the Indian Planning Commission that thenumber of persons engaged in processing and manufacturing fell from 10.3 millioosin 1901 to 8.8 millions in 1951. Indian Planning Commission, Occupationd Pallernof Indian Union fr om 1901-1951. Table 11. p. 6. cited in Joseph E. Schwartzberg.Occupstional Structure and Levels o f Economic Developm ent-A Regional Analysis.unpublished, microfilm in Chicago University Library. p 127. Having made adetailed regional study. Schwxtzberg says that the Planniog Commission evidentlyfeels that it has arrived at a meaningful picture of the occupational trends of thepxiod 1901 to 1951. The author is in agreement with this view (p. 133). ThePlanning Commissions note has attempted a detailed breakdown to rake accountof old as well as new occupational groups. Schwartrberg also adds that evidencepoints to a much greater decline in the secondary sector (i.e. manufacturing andprocessing) in the 19th century (p. 123).

53. Cf. S. Kuznets: Since old knowledge, in a form ready for extensiveapplication, is limited. a continuous and large rise in product per unit of labouris possible only with major bdditions of new technological and related knowledge,Econ umic Growrh, p. 29.



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REINTERPRETATION OF 19rH CENTURY INDIAN ECONOMIC HISTORY 63writers like Ranade, N aoroji, and R. C. Dutt as also by R. PalmeD utt, an d more recently B. N.Ganguli. And this is the interpreta -tive framework which still seems to be valid for the interpretationof the ninteenth a nd twentieth century econo mic history of India,%

VIn the last section of his article, M orris dea ls with some of th esources of official policy, for he is in the end conscious of the factthat he still must explain Indias economic backwardness. For thereality is that the economy is even now very far from beingindustrialized (p. 614). H e is even aware tha t this may seemrath er bewildering, given my description of the nineteenth centu ryperformrylce (p. 614) an d, he says tha t he has no definite answer to

the question why no leading sector developed (p . 615). H e writes :Thecauses are certainly complex and this is not the place to examinethe intric ate interplay of relationships involved, (p. 615). I for onefelt cheated here. Ca n there be a discussion of nineteenth centuryeconom ic history-not to speak of reinterpretation-which has noplace for this discussion ? Are not the relationships involvedthe very stuff of which British impact is mad e ?But Morris is conscious of the fact that in the interests of theentire validity of his new interpretation he cannot afford to leave ita t this stage. And he does attempt some answers though again inthe context of laissez faire economics and the Stracheyan way ofthinking. Bu t it should be seen tha t he is now discussing causes ofeconomic stagnation, not the fact of progress. W hat he seems to besaying is tha t all his previous positive tendencies would have bo rnefruit but for these contrary factors. Even now he is not analysingeconomic structure , but finding scapegoats. I n the event, it turnsou t th at the scape-goats are not independ ent entities but a part of thestructure of imperialism a nd its impact.54. See his India-a Colonial Econom y (1757 to 1947) in Enquiry, No. 1 ,(old series), 1958.55. That the nature and progress of economic backwardness or advancementcaonot be understood unless we study the distribution of economic activities iswidely accepted today. Even Marshall who ca me at the tail end of l u i ~se z a i reeconomics understood this, for h e wrote : It is to changes in the forms of effortsao d activities that we must turn when in search for the keynotes of the history ofmankind. Principles, p. 85, quoted in H. Myiot, o p . cir.. p. 123.



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64 BIPAN CHANDRAFirst of all he says that the British rujs impact was limitedbecause the Indian government obviously had no self-consciousprogramme of active economic development, because the mj sawitself in the passive role of night watchman (p. 615). On the

surface this answer seems to be correct but it hides the ugly realityof the link between laissez-faire and imperialism. It all seems to bean ideological error! But was the Indian Government a nightwatchman ? Sabyasachi Bhattacharya has effectively refuted thisview.% Without repeating his argument I might point out thatJustice Ranade and others had cleariy pointed out that the Indiangovernment had taken a direct and active part in pioneering andpromoting industrial and commercial enterprises, acd grantingspecial privileges to British capitalists in India. It had, at theheight of luissez fu ire era, pioneered at state expense-and at greatcost-the introduction of cinchona, tea and coffee plantations inIndia and actively promoted the cultivation and transport of cotton.The fact that the Tndian government was the pioneer in state con-struction of railways and even the liberal Dalhousie promotedstate guaranteed railways is a well-known fact of Indian econo-mic history.67 Similarly, India was the only luissez fuire liberalnation state whose government passed penal legislation to forceIndian labour to work on the tea and coffee plantations (that theRadical Lord Ripon passed such a law is even more significant).Where was lack of state interference, or devotion to a passive rolehere ? In fact the very functions of law and order were handed overto the planters. Indians also pointed out that the British wouldnot let the American Standard Oil Company operate in Burma.baMoreover, a government that claimed to be the landlord Over theentire land and interfered so openly in the relations between landlordand tenant and debtor and creditor as did the British Indian Govern-ment in the second half of the ninteenth century, or that introduced agovernment-managed inconvertible currency, can hardly be said tobe a champion of luissez fuire political economy in practice or a

56. Indian Economic andSociaI History Review, Vol. 11, No. 1, 1965. Also see,for example, Daniel Thorners Znvesfrnent i n Empire, 1950, and Arthur Silvers Man-Chester M en and Indian Cotton. 1966.57. Raoadc. op . cit . , pp. 33,86-89,102. 165 ff.58. Hiridusran Review, Fcb. 1903, pp. 193-194; G. S. Iyer, Some EeonomicAspects of British Rule in India, Madras, 1903, p. 123.



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REINTERPRETATION OF 19TH CENTURY INDIAN ECONOMIC HISTORY 65night watchman. While the economic historians and econo-mists point out that Britain followed in the nineteenth century apolicy of Zuissez faire because it suited its interests, Indians longago pointed out that the British Indian Government had neverfollowed a Zaissez fuire policy in practice. The Indian govern-ments inaction in promoting Indian industries and social over-head facilities is no longer explained by its character as a nightwatchman. The question now is : why did the Indian governmentfollow state action in some fields of economic activity and Zuissezfaire in others? How is it that the raw-material based exporteconomy was established with the active help and participation ofthe government but the Zuissez faire doctrine was brought inwhen the question of government support to industrialisation came

Another reason for the Indian governments inaction, accordingto Morris, was the preoccupation with a balanced annual budget.This philosophy directly limited the size and effectiveness of govern-ment expenditure allocated to the construction of social overheadfacilit ie~.~~p. 615). But the real question is again different. Whywas the budget balanced by cutting or avoiding one type of expendi-ture and not another, or by raising one type of taxes and notothers? Some facts, usually referred to by R.C. Dutt and othersmay be noted. In ISOI,45.5 per cent of Indias budgeted expendi-tures was spent on the armed forces, 37.5 per cent on civil adminis-tration (of which 18.7 per cent was spent on education and medicaland scientific departments and 81.3 per cent on non-developmentalaspects of administration).6o Indians pointed out very early thatin the 1880s India spent in absolute terms more on its armythan Britain, or Germany, or Russia, or Japan, or U.S.A., thatIndia spent a larger part of its revenue on the army than Britain orRussia did, that the cost per soldier in India was the highest in thew o r l d 4 was higher than that of the most efficient army i n the

up ?

59. It may be pointed out that even at present a ll government. attem pts tobalance their budgets and all theoretical and political debate on budgeting is devotedto the questions of patterns of expenditure an d revenue. Th e economics of deficitfinancing does not obviate the need for .preoccupation with a balanced budget.60. The se figures are rather roughly worked out from Imperial Gazeffeer,Vol.IV, 1908, an d C. h. Vakil, Financial Developnient in hiodern India, 1860-1924.Bombay. 1924.



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66 BIPkN CHANDRAworld! In 1891, 30 per cent of Indias revenues were spent onEu ropea ns in 1898, Rs. 4.2 crores were spent on railways whileonly Rs. 0.6 crores were spent on irrigation. One could go on citingfacts and figures. W ha t was surely involved was no t balanced budgetsbut a particular pattern of allocation of the budget to suit imperialinterests.This was aslo true of taxation . Go vernm ent officials, profes -sional groups, traders, money-lenders, landlords and zamindars,plante rs, foreign trading companies, etc., pa id very little in taxa -tion. W hen Income Tax was finally imposed in 1888, its rate w asless than 2.7 per cent, and it excluded incomes derived fromland (zamindars and landlords) an d plantations. I t also excludedsalaries, pensions, and leave altowances paid in England, profits ofshipping companies, incorporated in England, interest on securitiespaid in England, and profits of railways u p t o the am ou nt of theguaranteed interest. M oreover the exemption limit for militaryofficers was placed a t Rs. 6000 per year. Consequently, when thecentury ended the gross revenue from income tax was only Rs. 1.9crores, while from la nd revenue it was Rs. 26.2 crores and salt taxRs. 8.8 crores.a8 And the well-off hardly paid any other taxes : herewere hardly any excise taxes or customs duties which could haveaffected them. Tha t is why G. V. Joshi complained in 1888 thatunder the official taxation policy the richer few, w ho profited m ostby British adm inis tratio n, B ritish jus tice and British peace, paid least,while the poo rer millions, who profited least, paid most.4 Onceagain the real question is : why was the budget balanccd in oneway and n ot the other ?Another aspect of the budget to be noted, says Morris, isthat it was a gamble on the monsoon. This is again not in accor-dance with facts, unless even a marginal change in revenue is consi-dered enough to upset a budget. Let me give som e figures aro un dfamine years :0 5

61 . . Se e my The Rise and Growt h of Economic Narionalism in India, Chapter XII.for details.62 . India might have been under-administered but the amount spent on adminis-tration was not any the less for that reason!63. Vakil, o p . c i t . , Appendices.64. o p . C i l . , p. 164.65. Based on Vakil, op. eit.. Appendices.


7/29/2019 Bipan Chandra, 19th C Economy Critique of Colonial

bipan chandra, 19th c economy critique of colonial economy

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