I should clarify that I don’t mean to say everything the British did in India was monstrous. There were some important land reforms during the colonial period aimed at protecting tenant farmers. And the establishment of a unified legal framework is an important step in establishing a modern economy.
However, economic growth during the colonial period was heavily skewed toward the agricultural sector primarily because of unfavorable trade and tax policies on the subcontinent. It is telling that during the colonial period, there was almost a complete lack of development of heavy industry. Had there been trade, tax, and currency parity with England, this shouldn’t have happened. Given lower labor costs in India, relatively higher transportation costs between Indian and England, and a huge potential internal market in India, if there had been true economic parity, then I would expect capital to flow from England to India in order to establish industry there. This didn’t happen, and my contention is that it is because of specific British policies. Much of the Indian economic growth during this period seems to have concentrated in the agricultural sector, and the British capital investments seem to be largely confined to agricultural production of raw materials for English industry.
I haven’t been able to find any cites on the web that go into detail about British economic policy in India, so my cites will have to wait for a few days.
Under no circumstances would I call pre-Indian Mutiny India a colony or dominion, it was a peculiar private enterprize operation. True it had some sort of government backing - but it was more like Haliburton bribing politicians.
The Empire was formally established in 1876, and did not exist in India until the UK government ‘nationalized’ the lot in 1858 and put in effective and accountable administration. From that point on things were run pretty well.
Prior to then, I’ll freely agree, things were run lousily, but in India especially it was private enterprize at work - astonishingly India was run by a private company.
I would not tar the later administration with the antics of a private company that was out of control.
One needs to make a huge distinction between the two periods.
From a UK perspective that is quite easy, 1857 was a major shock, after that things were sorted out and an efficient and effective administration was created.
Ah, your second post came in while I was composing my reply.
I take your point about limited industrialization, although to be fair putting in an infrastructure was more important - well it has to come first.
I doubt that it was a conscious decision, more just the way the trading patterns worked.
The UK was not a ‘command economy’, probably the concept was unknown until WWI, my understanding was that the government restricted its activities to administration.
The Colonial Service was deliberately lightweight and very thinly spread.
I don’t think that there was much restriction on capital movement, possibly people did not see opportunities.
Here are some examples from the colonial period (I’m not keen on quoting from this book again, since I think it’s economic analysis is pretty shallow, but I haven’t been able to make it to the school library):
“… There was a fall in the value of silver due to several causes and from 1885 onwards the silver currency gave a lot of trouble to India. India, a country with silver currency, was called upon to discharge large obligations in England in gold in the form of interest on public debt in sterling, profits on industrial capital invested in India, shipping charges, pensions, India office expenses and so on.” Advanced History of India by Sastri and Srinivasachari, 1975, p. 707.
By giving India a silver currency but requiring balance of payments in gold, the British virtually ensured that gold (and hence wealth) would hemmorage from the subcontinent into Britain. Also, given the relative volatility of silver relative to gold, this would have increased currency risk (that is the risk that an investment would be devalued due to currency fluctuations) for non-British investors. So, basically, the people who had the best incentive to invest in India (the British, because their investments were paid off in gold) were also the people who were draining the country of its wealth (because the investments had to be paid off in gold). Furthermore, the subcontinent was paying off English expenses in gold, not just English expenses in India. This is nothing but economic exploitation designed to bankrupt the subcontinent.
Here’s another example:
“[From 1885 onwards] the five percent import duty on all goods except cotton was reimposed [my comment: so far, so good]. Cotton goods also later came to be included for import duty [my comment: better]. But to satisfy Manchester mill-owners a corresponding excise duty was levied on the products of Indian mills. This 5 percent duty was… [in 1896] reduced to 3.5 percent.” Id. at 708.
Ok, so we have an attempt to put import duties on good from Britain in order to solve a silver currency crisis. But then, this is completely undermined by the English industrialist interest who would have not been able to compete in the Indian market with an import duty. So, the response is to implement an excise tax, which hinders Indian industrial growth.
My feeling here is that the regulatory risk (that is, the risk that future government regulations will devalue an investment) was so high because of British manufacturing interests, that it was not a good investment to put money in manfuacturing in India. If you started to make money, you ran the real risk that the British would slap a tax on you in order to prevent you from competing.
Finally, while there was an income tax (not bad, but could have been more progressive), the British used a salt tax in the subcontinent, which has to be about the most regressive tax I can think of (maybe a tax on air would be more regressive). Such a tax would only have increased income inequality and exacerbated poverty problems.
I’ll try to find more examples of this kind of thing, but I got no problem standing behind my claims that the British exploited the subcontinent during the period of colonial rule. If you have evidence to the contrary, I’ll be willing to wait for cites (since it’ll take me time to find mine).
Yeah, but we have to look at what kind of infrastructure. The infrastructure development was primarily focused on irrigation, railways, and communications (which were all necessary, I’ll admit). But there was very little emphasis placed on development of general infrastructure (such as power and water systems). Once again, gearing the subcontinent for an agricultural economy rather than an industrial one. At this point, I’d go into a diatribe about the way the railroads were financed, but since that was typical of many countries, I’ll leave it out.
I think there were conscious decisions made to protect British manufacturing interests at the expense of Indians. See my previous post.
I shouldn’t have used the word “planned,” since that connotes Soviet-style command economies. But I’ve never thought of the English economy as one with minimal government involvement. Everything I’ve always read about English economic history (and I’ll admit, I’m not as studied on this as US and Indian) is that the English routinely interfered in the economy through favorable tax treatments, grants for monopolies and oligopolies, tarrifs and subsidies–mainly to provide benefits to certain interests. Not much different than any other modern country, but when, say the US government does this, it’s only us fellow Americans who are being exploited.
True, but this is not an indication of economic control or social control (and I’ve confined my discussion to economics here, if I were to actually get into all the other stuff, we’d be here for months).
No, I don’t think there were explicit restrictions on capital movement. I think the economic policies were designed to transfer wealth from India to England.
To answer David Simmons question, there are plenty of countries that have overseas colonies, but nowadays these are mainly small islands. France has various pacific islands (like where they carried out their most recent nuclear tests), various Carribean islands, Renunion, St. Pierre and Miquellon off North America and French Guiana in South America. File:Outre-mer en.png - Wikipedia
Assuming standard colonialism (I’m talking 1776 - pre-Industrialization/Mechanization), we wouldn’t probably be as advanced a society as we are today, though I think we would easily have good roads and a sound infrastructure (not to mention a ton of taxes). I would guess that the education system would be nearly as equivalent as the lower average of Britain (at least for the British colonies), I’m not sure about France. There would be a lot of trading blocs and the EU probably wouldn’t look the way it does now. My answer changes if WWII actually happened. I’m assuming, no, because it’s bad for colonialism, but then again, didn’t the Euro powers go to war just to carve up the last remaining bits of an older empire (Ottoman)?
Anyway, with all the restrictive trade, there wouldn’t be as free a flowing of ideas and people. The US would still be a colony, though I’m unsure what Russia and Asia would look like. I’ll assume that Japan conquered everything in the Pacific in one form or another. Who were the most ethnocentric and least nation building of the empires? Probably the Japanese. I’ll then assume that they would have the worse education standards and the least productivity.
The US would be a huge boom to the English Empire, thus making England probably the most powerful country on the planet.
We wouldn’t be as technologically advanced because we wouldn’t have free markets, just free trading blocs (possibly, it depends on how the other Empires viewed economics). England and France would be on some sort of gold standard, and they would be able to put together some sort of exchange, but there would be taxes between it, thus making it less efficient. The other nations would probably fall in line, but I have a feeling that all empires would continue to use/abuse their current colonial model. Eventually, it will turn into a ruling class of aristocracy, merchants, and then probably indentured servitude (I was going to say slavery, but a lot of Western Europe was already doing away with it by the time of the Industrial Revolution; I wonder if the US independence had anything to do with that…)
I think the reason for the silver currency is that otherwise gold coins would have disappeared from circulation and become jewelery. We also need to note that balance of payment movements would be largely on paper - they would have been accounted for in Sterling (at the time £1 = 1 gold sovereign) which is how Sastri and Srinivasachari have come up with their story. I don’t think those guys are economists.
The import duty stuff was interesting, it implies that India had cotton mills and was shipping manufactures - and rather a lot earlier than I expected. Import duties are just a way of the government getting revenue - but I can see that import duties on raw materials largely destined for export would annoy a lot of people.
I’m going to find out more about the salt tax, that sounds odd, I would not be surprized if it were down to adulteration - or rather prevention thereof.
I don’t buy the bit about people not investing in India because they were afraid import duties would be slapped on it - Britain was not the only export maket, and as you’ve pointed out the domestic (Indian) market was huge.
One also needs to be very careful of comparing Britain of 1570 with Britain of 1870, the old monopolies and daft taxes were tax raising wheezes of monarchs - yet again it is like comparing British administration pre 1860 with post 1860.
Obviously individuals were in it for what they could get out of it, businessmen and investors are not philanthropists, but post 1860 the government was more concerned with regulating private enterprize (preventing abuses) rather than committing abuses.
There is a tendency for people to see the UK’s overseas activity as one long string of the same thing, when in reality it is more like pirates getting replaced with the Royal Navy and unscrupulous adventurers getting replaced with conscientious colonial administrators.
Also the idea that Germany, France, Russia and the UK went to war to carve up the Ottoman Empire is a new one to me.
The Turks were daft going in with the Austrians and Germans, but as far as I’ve heard they were about the last thing anyone was concerned with.
Bear in mind oil was in its infancy, the Middle East was just a dump that nobody much cared about - the only bit that was considered useful was Egypt, mainly because of the Suez Canal - and that was thoroughly under control.
My starting point is the demise of old skool colonialism has not a little to do with the rise in the internationalisation of corporations - later to become ‘globalisation’.
The engine for both phases was/is a standardisation of national laws of commerce, and an international arbitration framework i.e. accountability.
You don’t need gunboats when you have the IMF, the World Bank, and the owners of private capital all on the same side.
Irish history does not blame the English for the blight it blames them and Anglo Irish people for transporting good food out of Ireland to ‘the mainland’ as a cash crop when the country was starving. This was a milestone in Irish nationalism. A lot of people realised that if there was a government in Dublin answerable to the Irish people as apposed to the parliament in London things may have been different. A saying in Ireland is “England didn’t bring the blight but they brought the famine”. It was all about self determination. We wanted our own bastards as at least they were ours.
Please.
No history book or class I ever took painted the Irish out to be saints. The British did act like bastards though. I’m under no illusion that in a different world the Irish would not have done the same to a smaller nation but that isn’t how things worked out. The majority of native Irish had little or no say in anything and the country as a whole was allowed to be controlled by Anglo Irish landlords and politicians, before catholic emancipation they were really fucked.
Lots of people went to the UK for money. Much like a lot of UK’ers are now coming over here. Economic necessity, nothing more.
