An Economic History of India 1707–1857

Tirthankar Roy

• Éditeur: Routledge
• Année: 2021
• ISBN:
  9781000436075
• Édition: 2
• Sujet: History
• Sous-sujet: Indian & South Asian History

This new edition of An Economic History of Early Modern India extends the timespan of the analysis to incorporate further research. This allows for a more detailed discussion of the rise of the British Empire in South Asia and gives a fuller context for the historiography.

In the years between the death of the emperor Aurangzeb (1707) and the Great Rebellion (1857), the Mughal Empire and the states that rose from its ashes declined in wealth and power, and a British Empire emerged in South Asia. This book asks three key questions about the transition. Why did it happen? What did it mean? How did it shape economic change? The book shows that during these years, a merchant-friendly regime among warlord-ruled states emerged and state structure transformed to allow taxes and military capacity to be held by one central power, the British East India Company. The author demonstrates that the fall of warlord-ruled states and the empowerment of the merchant, in consequence, shaped the course of Indian and world economic history.

Reconstructing South Asia's transition, starting with the Mughal Empire's collapse and ending with the great rebellion of 1857, this book is the first systematic account of the economic history of early modern India. It is an essential reference for students and scholars of Economics and South Asian History.

1 Introduction

In the years between the death of the emperor Aurangzeb (1707) and the annexation of Maratha territories by the British East India Company (1818), the Mughal Empire and the states that rose from its ashes declined in wealth and power, and a British Empire emerged in India. By 1857–1858, when British rule in India faced a crisis and survived it, the empire had grown in scale, reformed institutions to make its power more secure, and sponsored an economic system that looked very different from economies in the past in this region.

The transition raises several questions. Among the contenders for power after the Mughal collapse, the Company was not the most obvious candidate to succeed. It was a business firm, not a military force. Why would it want to take over the government? Why now? Although always close to British politics and commanding arms, it was not militarily stronger than its rivals like Tipu Sultan of Mysore or the Marathas in western India. Why did it prevail in the contest for power that followed the Mughal collapse? What kind of a state did it create? How did political change shape economic change in the region in the long run? This book is an attempt to answer these questions. The answers help to understand the dual transition in politics and economics in India between 1707 and 1857 – a key process in the making of modern India.

While describing what happened, the book will also prove a thesis. The formation of the Company state stood for a strong form of political integration based on the concentration of military and taxation power. Political integration facilitated market integration. Therefore, a new type of state delivered a new economy, which gave stability to the state. Britain’s empire in India did not arise from conquering or exploiting a weak power by a stronger one. It appeared instead by using the weaknesses and building on the strengths of the Indian political economy of the time. Taxation was a weakness of indigenous states; a robust business world was a strength. The Company solved the taxation problem and made the business world its ally.

These movements created a militarily stronger state, encouraged trade, expanded the variety of goods traded, helped the merchants, and harmed the warlords. The shift in wealth and power generated a fierce backlash in 1857, but the shift was also responsible for the rebellion’s failure. Many warlords opposed the regime, and the merchants and bankers supported it. However, the transition did not profoundly transform the lives of ordinary people, especially those in the countryside. The colonial state had neither the will nor the money to make a significant difference to peasants and labourers. The growth of commodity trade may have helped some peasants in some places, but the effect was modest in scale.

The bare facts of the origin of the British Empire in India are well known. A quick recap may still be useful.

The emergence of British rule in India

Shortly after Aurangzeb’s death, the Mughal Empire that had ruled over the Indo-Gangetic Basin since 1526 started breaking up.¹ In Bengal Hyderabad and Awadh former provincial governors established independent rules. In Deccan, eastern Rajasthan, and north-western India, landlords and warlords rebelled. Several new states emerged from this turmoil. Militarily the most powerful was the dominion of the Marathas ruled by several clans. Battles between rivals and alliances became common.

British rule in India began with the trading enterprise of the East India Company. The Company was established as a trading firm in 1600, with a licensed monopoly (charter) to trade in the Indian Ocean. Negotiating rights to trade in India and staving off rivals and private traders pushed the Company into playing a political role from time to time. Towards the end of the 1600s, the Company’s local officers had set up three bases on the coast – Madras, Bombay and Calcutta – mainly to protect themselves from other Europeans.

Until 1740, the three ports were small settlements of traders and soldiers. But in the 1740s, many Indian traders and bankers fled the embattled inland states and moved into the safety of these three towns. In the backdrop of the Mughal Empire’s collapse and conflicts among Indian states that came after the rule, the Company engaged more frequently with politics. Their naval stronghold came in handy sometimes. After 1800, the three cities enjoyed peace. The wealthiest people in these towns around 1820 were Indians, interested in shipbuilding, Indo-China trade, coastal trade, Arabian Sea trade, and overland trade. Their migration had made these spots centres of wealth. They were already centres of power. From these bases, the Company joined the military contest inland.

The origin of the British Empire in India can be described as a sequence of two stages. In the first phase, 1765–1784, the Company officers acquired territories, experimented with systems of rule, and faced charges of a conflict between private or commercial and the public interest. The Company acquired control over eastern and south-eastern India around 1770. The regime expanded towards north, west, and south India via strategic alliances and warfare. With the end of the third Anglo-Maratha war in 1818, the Company’s empire was secure.

In 1784, the British Parliament began to oversee Indian administration. In the second stage that started in 1784, the private mercantile interest behind political decisions receded, and institutional and military reforms set out the plan for imperial rule. In 1813, the charter to trade in India as a monopoly ended. Until the mutiny-cum-rebellion of 1857, the state acquired more territories and spent more time and energy on infrastructure and institutions. Christopher Bayly called the rule between 1780 and 1830 British ‘imperial meridian,’ meaning that an opportunistic form of power transformed into a directly governing one in this time, in turn engaging the home government in foreign rule more deeply than before. A militaristic state started thinking beyond its survival and about public goods and institution-building. The end of conflicts and military threats was necessary to make that transition possible.²

Why did the East India Company succeed in the contest for power? In the late 1700s, the steps that led to a Company state in India did not follow a blueprint designed at the firm’s head office but followed the instincts of those running the branches in India. These people did not leave enough testament for us to guess whether it was their scheming nature or a perception of threat that led them to join Indian politics. In one version of history, deceit and cunning do receive more emphasis.

Saviours or villains?

The emergence of a British Indian state is sometimes explained in terms of some exceptional qualities of India’s early Company rulers. In imperialist history, the Company’s officers were gifted and far-sighted people. They did a favour to the Indians who were suffering from the misrule of the indigenous kings by establishing a state. The scholars and publicists who justified England’s conquest of India argued that colonialism had brought peace to a divided and violent society. James Mill’s History of British India, and 60 years later, John Strachey’s India: Its Administration and Progress are examples of this style of writing. Both writers believed that the early East India Company government was sometimes corrupt and cumbersome, partly because it relied too much on Indian partners and Indian tradition in its government. But both believed Robert Clive when he justified ‘assuming the power that is in us of conducting … the affairs both civil and military of this settlement,’ by saying that the alternative would be ‘anarchy, confusion, and, what is worse, an almost general corruption.’³ ‘In place of constant anarchy, bloodshed, and rapine,’ echoed John Strachey, ‘we have given to [India] peace, order, and justice … it is the strong hand of England alone which maintains peace …’⁴

In recent studies, the emergence of a British Indian state is again explained in terms of the exceptional quality of the British adventurers who created that state. But now, that quality is the opposite of what Mill and Strachey celebrated. In this image, the Company succeeded because it was corrupt, opportunist, and manipulative. For the East India Company, ‘honour was an irrelevant concern,’ writes Shashi Tharoor.⁵ Combining ‘the license to loot everything’ with ‘perfidy, chicanery and cupidity,’ the Company extracted wealth from the native princes, and by these means established a rule that was ‘hardly a … contribution to good governance.’ The ‘conquest of India,’ writes Deepak Lal, built upon ‘perfidious deals.’⁶ The Company, says William Dalrymple, ‘remains today history’s most ominous warning about the potential for the abuse of corporate power.’⁷ The British ‘conquest’ of India, according to him, was the ‘supreme act of corporate violence.’

These two images are identical; the only difference being that the Europeans and the Indians switch roles. Both stories flatten differences within each set. And both are unconvincing for the following reason. The idea that the emergence of a British Empire in India had owed to some unique quality of the British merchant adventurers of the late eighteenth century begs assumptions about their Indian rivals. To believe – as Mill or Strachey did – that the Company officers were peace-loving implies that all their Indian opponents were violent. Mill and Strachey had no evidence to prove this. To believe – as Tharoor and Dalrymple do – that the Company officers were venal implies that their Indian opponents were too honest for their own good. ‘[F]airly decent,’ Tharoor airily calls the Indian forces of the time. That set included the Maratha mercenaries of central India, long-remembered in western Bengal for rape and pillage. Mill and Strachey were not sufficiently well informed to bat for the imperialists. Tharoor and Dalrymple are not sufficiently well informed to bat for the Indian warlords. Claims like theirs peddle sentiments – triumph or righteous outrage – but they are not correctly based on evidence and not reliable as history.

To say that the Company abused corporate power amounts to saying that the Indians were too stupid to see what was going on and adopt the same organizational models. Of course, the Company was a corporate firm, and landlords and warlords ruled the Indian states. That difference could explain their choice of allies and partners. Beyond that, corporate identity mattered little. The larger states, like the Peshwa territory based in Pune in 1760, commanded enormous revenues. Initially, these states could command land armies that were many times larger than the Company’s forces. The London shareholders and directors did not want the branches to join military contests; the branches defied orders from above. The Company’s empire happened not because of but despite the corporate form.

Popular history of this kind assumes that the empire in India was a violent conquest. Europeans, the myth goes, invaded Indians, who did not want to be subjugated and went down fighting. The sentiment of triumph in imperialist history and outrage in nationalistic history follow from this narrative. The only difference between the two is that the Indians appear in one story as villains and in another as a tragic hero. Turning the emergence of the empire in this way into a battle between good and evil creates melodrama; it invites the reader to take sides in a fake holy war. But if good soap opera, it is bad history. The empire was not an invasion. Many Indians, because they did not trust other Indians, wanted the British to secure power. They preferred British rule over indigenous alternatives and helped the Company form a state, as we see next.

The shifting alliance theory

The empire emerged mainly from alliances. It emerged from lands ‘ceded’ to the Company by Indian friends, rather than lands that it ‘conquered.’⁸ What had made the alliances possible, even likely? Since the early 1980s, when Christopher Bayly published path-breaking works on the East India Company rule, historians have known that the Company was nothing without its Indian allies. ‘[A]t every stage,’ writes P.J. Marshall, ‘accommodations between British and Indian interests were … crucial to the rise of British ascendancy.’⁹ This accommodation was based on shared self-interest. To understand its political success, then, requires an understanding of the interests of those who allied with this force. The Company came to rule India because many Indians wanted it to rule India. ‘[T]he story of Britain’s rise to global supremacy,’ to cite Marshall again, ‘needs to be more than an analysis of Britain’s undoubted strengths. Whether these strengths could be used effectively or not ultimately depended on the dispositions of the peoples whom the British encountered …’¹⁰

The idea that the British Empire in India was the product of alliances found its fullest development in C.A. Bayly’s classic Rulers, Townsmen and Bazaars.¹¹ In 1983, when the book was published, ‘this insistence on the indigenous component in European expansion’ was already ‘pervasive, even cliché-ridden.’ But the contact point between European expansion and indigenous society had remained indistinct. In Bayly’s reading, ‘the junction’ formed of ‘a range of intermediate entities [between the state and the peasants] with strong internal organisation from which were recruited, ultimately, the Indian middle class… The incoming colonial power and European traders succeeded when they were able to cajole, entice or manipulate these intermediate groups.’¹²

No single class shared more interest with the British than did the merchants. Collaborations with them were the basis on which European trade functioned. In most places, especially in Bengal, the Company found collaborators because there was already a rich and powerful set of capitalists in these regional economies. The post-Mughal states or successor states depended on the capitalists for their survival. The mutual dependence and shared interests between the ruling classes and the groups like these is indisputable. Merchants, therefore, figure in a large way in Bayly’s narrative.

The book dealt with a part of the Indo-Gangetic Basin over which the Mughals had firm control once but was losing control from the early 1700s. A fertile and commercial zone, the landscape being dominated by the preeminent service-oriented town, Benares, the British Company wanted to control the region, and succeeded from the 1770s in doing so. In turn, the Benares bankers and merchants who feared state collapse more than British rule, declared unqualified support for the new regime on many occasions (see below). Further east in Bengal, the example of Jagatseth, the court banker who secretly helped Robert Clive, again supports the theory that an alliance between two sets of businesspeople could cause a transfer of power. A part of the argument applies to all successor states, the British in Bengal included. In peacetimes, the successor states encouraged commerce and trade. Nearly all region-bound economic histories show that they did.¹³ As Tilottama Mukherjee suggests for Bengal under Nizamat rule, the wish to do so stemmed from the states’ dependence on inland customs duties, which was significantly greater than often imagined.¹⁴ Because they had gained, traders might be readier to make common cause with the Company if they expected instability and extortion by indigenous warlords to grow.

This account of a merchant–merchant alliance, however, is neither wholly persuasive nor generalizable to all of India. It is not totally persuasive for two reasons. First, the mutual dependence between the East India Company and the indigenous merchants was not risk free. Despite the overlap of economic interests, the Company did not trust the Indian merchants. The relationship was an unstable one and filled with mutual suspicion as long as the Indian actors remained close to the successor state courts. Only in the cities directly ruled by the Company, the relationship was more stable. Second, the account overstates the successor states’ ability to sustain commercialization. The costs of internal trade remained high, possibly increased after Mughal disintegration (see below). The larger states had to spend more money than they could afford on wars. Warlords eager to fight with a formidable enemy would not be the best choice as debtors for any banker. During the Maratha raids in weste...

Table des matières

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• List of maps
• Preface
• 1 Introduction
• 2 State formation
• 3 State consolidation
• 4 The agrarian order
• 5 Conditions of business
• 6 Towns
• 7 Levels of living
• 8 The rebellion of 1857–58
• 9 Conclusion
• References
• Index