The Economic History of India Under Early British Rule FROM THE RISE OF THE BRITISH POWER IN 1757 TO THE ACCESSION OF QUEEN VICTORIA IN 1837 ROMESH DUTT, C.I.E. VOLUME 1 First published in Great Britain by Kegan Paul, Trench, Triibner, 1902 CONTENTS PAGE PREFACE . r . vii CHAP. I. GROWTH OF THE EMPIRE I I e ocI 111. LORD CLlVE AND RIS SUCCESSORS IN BEXGAL, 1765-72 . 35 V. LORD CORNWALLIS AND THE ZEMINDARI SETTLEMENT IN BENGAL, 1785-93 . 81 VI. FARMING OF REVESUES IN MADRAS, 1763-85 . VJI. OLD AND NEW POSSESSIONS IN MADRAS, I 785-1807 VIII. VILLAGE COMMUNITIES OR INDIVIDUAL TENANTS? A DEBATE IN MADRAS, 1807-20. IX. MUNRO AND THE RYOTWARI SETTLEMENT IN MADRAS, 1820-27 . X. LORD WELLESLEY AND CONQUESTS IN NORTHERN INDIA, 1795-1815 . XI. LORD HASTINGS AND THE MAHALWARI SETTLEMENT IN NORTHERN INDIA, 1815-22 . XII. ECONOMIC CONDITIOR OF SOUTHERN INDIA, 1800 . X~II. ECONOMlC CONDITION OF KORTHERN INDIA, 1808-15 Printed in Great Britain XIv. DECLINE OF INDUSTRIES, 1793-1813 . xv. STATE OF INDUSTRIE~, 1813-35 . • ~VI.EXTERNAL TRADE, 1813-35 a . vi CONTENTS PAGE CHAP. XVII. INTERNAL TRADE, CANALS AND RAILROADS, 1813-35 . 303 XVIII. ADMINISTRATIVE FAILURES,I 793-18 15 . 313 XIX. ADMINISTRATIVE REFORMS AND LORD WILLIAM DENTINCK, 1815-35 . 326 PREFACE XX. ELPHINSTONE IN BOMBAT, 1817-27 344 EXCELLENTworks on the military and political transac- XXI. WINGATE AXD THE RYOTIVARI SETTLEMENT IN tions of the British in India have been written by BOMBAY,1827-35 368 . eminent hi~t~orians.No history of the people of India, XXII. BIRD AND THE NEW SETTLEMENT IN NORTHERN of their trades, industries, and agriculture, and of their INDIA, 1822-35 . 384 economic condition under British administration, has XXIII. FINANCE AND THE ECONOMIO DRAIX, 1793-1837 . 398 yet been compiled. Recent famines in India have attracted attention to XXIV. ACCESSION OF QUEEN VICTORIA-FAMINE OF 1837 421 this very important subject, and there is a general and widespread desire to understand the condition of the INDEX . v o 0 o 433 Indian people-the sources of their wealth and the causes of their poverty. A brief Economic History of British India is therefore needed at the present time. Englishmen can look back on their work in India, if not with unalloyed satisfaction, at least with some legitimate pride. They have conferred on the people of India what is the greatest human blessing-Peace. They have introduced Western Education, bringing an ancient and civilised nation in touch with modsrn thought, modern sciences, modern institutions and life. They have built up an Administration which, though it requires reform with the progress of the times, is yet strong and efficacious. They have framed wise laws, and have established Courts of Justice, the purity of which is as absolute as in any country on the face of the earth. These are results which no honest c$tic of British work in India regards without high admiration. On the other hand, no open-minded Englishman contemplates the material condition of the people of ... VII~ PREFACE PREFACE ix Indirt under British rule with equal satisfaction. The was said that in a country where the people depended poverty of the Indian population at the present day almost entirely on their crops, they must starve when is unparalleled in any civilised country ; the famines the crops failed in years of drought; but the crops which have desolated India within the last quarter of in India, as a whole, have never failed, there has the nineteenth century are unexampled in their ex- never been a single year when the food supply of the tent and intensity in the history of ancient or modern country was insufficient for the people, and there must times. By a moderate calculation, the famines of be something wrong, when failure in a single province 1877 and 1878, of 1889 and 1892, of 1897 and 1900, brings on a farnine, and the people are unable to buy have carried off fifteen millions of people. The popu- their supplies from neighbouring provinces rich in lation of a faired-sized European country has been harvests. swept away from India within twenty-five years. A Deep down under all these superficial explanations population equal to half of that of England has we must seek for the true causes of Indian poverty perished in India within a period which men and and Indian famines. The economic laws which women, still in middle age, can remember. operate in India are the same as in other countries What are the causes of this intense poverty and of the world ; the causes which lead to wealth among these repeated famines in India? Superficial ex- other nations lead to prosperity in India; the causes planations have been offered one after another, and which impoverish other nations impoverish the people have been rejected on close examination. It was of India. Therefore, the line of inquiry which the said that the population increased rapidly in India. economist will pursue in respect of India is the same and that such increase must necessarily lead to which he adopts in inquiring into the wealth or famines; it is found on inquiry that the population poverty of other nations. Does agriculture flourish ? has never increased in India at the rate of England, Are industries and manufactures in a prosperous con- and that during the last ten years it has altogether dition ? Are the finances properly administered, so ceased to increase. It was said that the Indian cul- as to bring back to the people an adequate return tivators were careless and improvident, and that those for the taxes paid by them? Are the sources of who did not know how to save when there was plenty, national wealth widened by a Government anxious must perish when there was want; but it is known for the material welfare of the people? These are to men who have lived all their lives among these questions which the average Englishman asks himself cultivators, that there is not a more abstemious, a when inquiring into the economic condition of any more thrifty, a more frugal race of peasantry on earth. country in the world; these are questions which he It was said that the Indian money-lender was the will ask himself in order to ascertain the truth about bane of India, and by his fraud and extortion kept India. the tillers of the soil in a chronic state of indebted- It is, unfortunately, a fact which no well-informed ness; but the inquiries of the latest Famine Com- Indian official will ignore, that, in many ways, the mission have revealed that the cultivators of India sources of national wealth in India have been are forced under the thraldom of money-lenders Ly narrowed under British rule. India in the eighteenth the rigidity of the Government revenue demand. It century was a great manufacturing as well as a great x PREFACE PREFACE xi agricultural country, and the products of the Indian the production of cotton fabrics in India which dis- loom supplied the markets of Asia and of Europe. ables the Indian manufacturer from competing with It is, unfortunately, true that the East Indian Com- the manufacturer of Japan and China, and which pany and the British Parliament, following the selfish stifles the new steam-mills of India. commercial policy of a hundred years ago, discouraged Agriculture is now virtually the only remaining Indian manufacturers in the early years of British source of national wealth in India, and four-fifths of rule in order to encourage the rising manufactures the Indian people ciepend on agriculture. But the of England. Their fixed policy, pursued during the Land Tax levied by the British Government is not last decades of the eighteenth century and the first only excessive, but, what is worse, it is fluctuating and decades of the nineteenth, was to make India sub- uncertain in many provinces. In England, the Land servient to the industries of Great Britain, and to Tax was between one shilling and four shillings in the make the Indian people grow raw produce only, in pound, i.e., between 5 and 20 per cent. of the rental, order to supply material for the looms and manu- during a hundred years before I 798, when it was made factories of Great Britain. This policy was pursued perpetual and redeemable by William Pitt. In Bengal with unwavering resolution and with fatal success; the Land Tax was fixed at over go per cent. of the orders were sent out, to force Indian artisans to work rental, and in Northern India at over 80 per cent. of in the Company's factories; commercial residents were the rental, between I 793 and I 8 2 2. It is true that the legally vested with extensive powers over villages and British Government only followed the precedent of the communities of Indian weavers ; prohibitive tariffs ex- previous Mahomedan rulers, who also claimed an enor- cluded Indian silk and cotton goods from England; mous Land Tax. But the difference was this, that English goods were admitted into India free of duty what the Mahomedan rulers claimed they could never or on payment of a nominal duty. fully realise ; what the British rulers claimed they The British manufacturer, in the words of the realised with rigour. The last Mahomedan ruler of historian, H. H. Wilson, "employed the arm of poli- Bengal, in the last year of his administration (I 764), tical injustice to keep down and ultimately strangle a realised a land revenue of £8 I 7,s 5 3 ; within thirty competitor with whom he could not have contended on years the British rulers realised a land revenue of equal terms; lJ millions of Indian artisans lost their ~2,680,oooin the same Province.