There is a story that is commonly told in Britain that the colonisation of India – as horrible as it may have been – was not of any major economic benefit to Britain itself. If anything, the administration of India was a cost to Britain. So the fact that the empire was sustained for so long – the story goes – was a gesture of Britain’s benevolence.
New research by the renowned economist Utsa Patnaik – just published by Columbia University Press – deals a crushing blow to this narrative. Drawing on nearly two centuries of detailed data on tax and trade, Patnaik calculated that Britain drained a total of nearly $45 trillion from India during the period 1765 to 1938.
It’s a staggering sum. For perspective, $45 trillion is 17 times more than the total annual gross domestic product of the United Kingdom today.
How did this come about?
It happened through the trade system. Prior to the colonial period, Britain bought goods like textiles and rice from Indian producers and paid for them in the normal way – mostly with silver – as they did with any other country. But something changed in 1765, shortly after the East India Company took control of the subcontinent and established a monopoly over Indian trade.
Here’s how it worked. The East India Company began collecting taxes in India, and then cleverly used a portion of those revenues (about a third) to fund the purchase of Indian goods for British use. In other words, instead of paying for Indian goods out of their own pocket, British traders acquired them for free, “buying” from peasants and weavers using money that had just been taken from them.
It was a scam – theft on a grand scale. Yet most Indians were unaware of what was going on because the agent who collected the taxes was not the same as the one who showed up to buy their goods. Had it been the same person, they surely would have smelled a rat.
Some of the stolen goods were consumed in Britain, and the rest were re-exported elsewhere. The re-export system allowed Britain to finance a flow of imports from Europe, including strategic materials like iron, tar and timber, which were essential to Britain’s industrialisation. Indeed, the Industrial Revolution depended in large part on this systematic theft from India.
On top of this, the British were able to sell the stolen goods to other countries for much more than they “bought” them for in the first place, pocketing not only 100 percent of the original value of the goods but also the markup.
After the British Raj took over in 1847, colonisers added a special new twist to the tax-and-buy system. As the East India Company’s monopoly broke down, Indian producers were allowed to export their goods directly to other countries. But Britain made sure that the payments for those goods nonetheless ended up in London.
How did this work? Basically, anyone who wanted to buy goods from India would do so using special Council Bills – a unique paper currency issued only by the British Crown. And the only way to get those bills was to buy them from London with gold or silver. So traders would pay London in gold to get the bills, and then use the bills to pay Indian producers. When Indians cashed the bills in at the local colonial office, they were “paid” in rupees out of tax revenues – money that had just been collected from them. So, once again, they were not in fact paid at all; they were defrauded.
Meanwhile, London ended up with all of the gold and silver that should have gone directly to the Indians in exchange for their exports.
This corrupt system meant that even while India was running an impressive trade surplus with the rest of the world – a surplus that lasted for three decades in the early 20th century – it showed up as a deficit in the national accounts because the real income from India’s exports was appropriated in its entirety by Britain.
Some point to this fictional “deficit” as evidence that India was a liability to Britain. But exactly the opposite is true. Britain intercepted enormous quantities of income that rightly belonged to Indian producers. India was the goose that laid the golden egg. Meanwhile, the “deficit” meant that India had no option but to borrow from Britain to finance its imports. So the entire Indian population was forced into completely unnecessary debt to their colonial overlords, further cementing British control.
Britain used the windfall from this fraudulent system to fuel the engines of imperial violence – funding the invasion of China in the 1840s and the suppression of the Indian Rebellion in 1857. And this was on top of what the Crown took directly from Indian taxpayers to pay for its wars. As Patnaik points out, “the cost of all Britain’s wars of conquest outside Indian borders were charged always wholly or mainly to Indian revenues.”
And that’s not all. Britain used this flow of tribute from India to finance the expansion of capitalism in Europe and regions of European settlement, like Canada and Australia. So not only the industrialisation of Britain but also the industrialisation of much of the Western world was facilitated by extraction from the colonies.
Patnaik identifies four distinct economic periods in colonial India from 1765 to 1938, calculates the extraction for each, and then compounds at a modest rate of interest (about 5 percent, which is lower than the market rate) from the middle of each period to the present. Adding it all up, she finds that the total drain amounts to $44.6 trillion. This figure is conservative, she says, and does not include the debts that Britain imposed on India during the Raj.
These are eye-watering sums. But the true costs of this drain cannot be calculated. If India had been able to invest its own tax revenues and foreign exchange earnings in development – as Japan did – there’s no telling how history might have turned out differently. India could very well have become an economic powerhouse. Centuries of poverty and suffering could have been prevented.
All of this is a sobering antidote to the rosy narrative promoted by certain powerful voices in Britain. The conservative historian Niall Ferguson has claimed that British rule helped “develop” India. While he was prime minister, David Cameron asserted that British rule was a net help to India.
This narrative has found considerable traction in the popular imagination: according to a 2014 YouGov poll, 50 percent of people in Britain believe that colonialism was beneficial to the colonies.
Yet during the entire 200-year history of British rule in India, there was almost no increase in per capita income. In fact, during the last half of the 19th century – the heyday of British intervention – income in India collapsed by half. The average life expectancy of Indians dropped by a fifth from 1870 to 1920. Tens of millions died needlessly of policy-induced famine.
Britain didn’t develop India. Quite the contrary – as Patnaik’s work makes clear – India developed Britain.
What does this require of Britain today? An apology? Absolutely. Reparations? Perhaps – although there is not enough money in all of Britain to cover the sums that Patnaik identifies. In the meantime, we can start by setting the story straight. We need to recognise that Britain retained control of India not out of benevolence but for the sake of plunder and that Britain’s industrial rise didn’t emerge sui generis from the steam engine and strong institutions, as our schoolbooks would have it, but depended on violent theft from other lands and other peoples.
Originally published on 2018-12-14
About the author: Dr. Jason Hickel is an academic at the University of London and a Fellow of the Royal Society of Arts.
We would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics, and international relations.
A good tradition of the British and the West European colonialismOrigins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Join the debate on our Twitter feed: @OvsishteRead our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.[wpedon id="4696" align="left"]Belgian Congo
Congratulations to Craig Murray for getting there first. The colorful former British ambassador to Uzbekistan, turned anti-establishment dissident after he was sacked from the Foreign Office in 2004, has published on his blog some key texts by authoritative scientists which cast serious doubt on the British government's claims about what happened to the former double agent, Sergei Skripal, and why.Murray – and his sources – have unearthed texts from 2016, 2013 and 1995 by, respectively, a scientist at Porton Down, the secret British military chemical weapons installations which is 20 minutes from Salisbury where Skripal was found last week; a scientist at ...
The British Labour Party no longer represents the working class. Under UK prime minister Tony Blair, the Labour Party became a vassal of the One Percent. The result has been a rebellion in the ranks and the rise of Jeremy Corbyn, a principled Labourite intent on representing the people, a no-no in Western “democracies.”Corbyn is too real for the Labour Party Blairites, who hope to be rewarded with similar nest eggs as Blair for representing the capitalist One Percent. So what is the corrupted Labour Party doing to prevent Corbyn’s election?The answer is that it is denying the vote to ...
The full extent of the damage to international peace and security caused by the US-led Syrian strikes will take some time to become clear. But its impact on the very concept of legality in international affairs is already evident.Simply put, the most powerful county in the world and its chief satellites, the UK and France, have thrown the rule of law into the trash can. The only "law" now is the law of the jungle. There is no going back.Ironically, the attack itself was claimed by its perpetrators as enforcement of legality, not of its obliteration. For example, NATO Secretary-General ...
Quietly, without most people noticing, the European Commission is moving ahead with a strategy that will arguably make the EU into the first fully operational model of a centralised ‘one state’ supranational authority: ‘A New World Order’; the long standing neoconservative ambition which lies at the heart of global secret society agendas and US geopolitical hegemony.The key ingredient of this strategy is the establishment of an ‘EU Treasury’ which, according to Donald Tusk, President of the EU Council, will come into effect in June 2018, under the official title: European Monetary Fund. This will result in the single point control ...
TerminologyA meaning of the term Great Power(s) (GP) in global politics from the beginning of the 16th century onward refers to the most power and therefore top influential states within the system of the international relations (IR). In other words, the GP are those and only those states who are modelling global politics like Portugal, Spain, Sweden, France, the United Kingdom, united Germany, the USA, the USSR, Russia or China. During the time of the Cold War (1949−1989) there were superpowers[1] as the American and the Soviet administrations refered to their own countries and even a hyperpower state – the ...
This weekend 75 years ago, the German city of Dresden was razed to the ground by British and American aerial bombardment. At least 25,000 mainly civilians were destroyed in raid after raid by over 1,200 heavy bombers, indiscriminately dropping high explosives and incendiaries. It took seven years just to clear the rubble.The destruction of Dresden, a world-famous cultural center of Baroque majesty, has been long dogged by controversy. Official British and American military accounts claim it was necessary to hasten the collapse of the Third Reich; with a reasoning that resonates with US claims for dropping the atomic bombs on ...
Here it comes again. As the enemies of peace continue to pressure a new US President into deeper war commitments overseas, and as Washington’s Deep State works relentlessly opposing Russian moves in Syria at every turn, the war drums have started again – beating harder than ever now, clamouring for a new US-led attack on Syria. This morning we saw the familiar theme emerge, and just in time to provide a convenient backdrop to this week’s Brussels’ ‘Peace Talks’ and conference on “Syria’s Future”.The US-led ‘Coalition’ prepares to make its end-run into Syria to ‘Retake Raqqa,’ and impose its Safe Zones in order ...
Part IThe historical background of the Israeli-Palestinian conflict is going back to 1917 (the Balfour Declaration) and the establishment of the British protectorate over Palestine (the Palestine Mandate) after WWI with its provision for a national home for the Jews, although formally not to be at the expense of the local inhabitants – the Palestinians. Nevertheless, it became in practice the focal problem to keep an appropriate balance between these stipulations to be acceptable to both sides – the Jews and the Palestinians.The people and the landSince the time of the Enlightenment followed by the Romanticism, in West Europe emerged ...
Following the death of President Tito in 1980 the Federal Republic of Yugoslavia slid towards chaos. In the 1990s the plunge accelerated into civil war and one of the regions most affected was Kosovo from which Serbia withdrew after a NATO bomb and rocket offensive from 24 March to 11 June 1999. That blitz involved over 1,000 mainly American aircraft conducting some 38,000 airstrikes on Yugoslavia that killed approximately 500 civilians and destroyed much of the economic and social infrastructure of the region.NATO said its air bombardment was essential to halt repression of ethnic Albanians in Kosovo and justified the ...
In 1879 began the disastrous ‘War of the Pacific’, the Chilean army invaded Bolivia’s ‘Litoral’ department, leaving the poorest nation in South America landlocked. It is thought up to 18,000 Bolivians died in the war. Chile’s war on Bolivia was at every step of the way backed and armed by the British Empire as English industrialists took control of the vast natural resources of the Bolivian coastal region. These included guano, sodium, nitrate, copper where British interests established a monopoly on the export of these primary resources. Bolivia has never given up its demand to return to the coast, it ...
It is now clear that on 14 April 2018, the three Governments of U.S., UK, and France, fired over a hundred missiles against Syria, on no more 'justification' than staged videos that had been done by those regimes' own proxy boots-on-the-ground fighters in Syria, who are trying to overthrow Syria's existing, non-sectarian Government and replace it by a Sharia-law regime that would be selected by agents of Saudi Arabia's ruling family. In other words: the fighters whom the U.S., UK, and France, had been arming and training, had themselves created this pretext of a faked 'gas attack' having been perpetrated ...
Caroline Elkins’ accounts of British soldiers ramming broken bottles into the vaginas of female Kenyan prisoners during the Kikuyus’ Mau Mau revolt is not, by any stretch, the worst example of Albion’s imperial violence she recounts. Because this 870 page book is awash with similar instances of systematic war crimes by the British administration in Kenya, in Nigeria, Jamaica, South Africa, Malaya, Palestine, Cyprus, Nyasaland, India and countless other outposts of empire, justifiable comparisons between the British and the Nazis arise time and again.And, although many Nazis were brought to book for their crimes, no British were, even though General ...
Anthony Charles Lynton Blair currently back in Britain, cast a dark shadow over those campaigning to stay in the European Union in the 23rd June referendum. Inflicting himself on the Britain Stronger in Europe group, he spoke at every opportunity – reminding even the most passionate Europhile of the last time he assured: “I know I’m right” – Iraq.If the “Remainers” had an ounce of sense Blair should have been ditched in a nano-second. He is not “Toxic Tony” for nothing.However, since the long awaited Chilcot Inquiry in to the Iraq invasion is to be published just thirteen days after ...
They came as slaves; vast human cargo transported on tall British ships bound for the Americas. They were shipped by the hundreds of thousands and included men, women, and even the youngest of children.Whenever they rebelled or even disobeyed an order, they were punished in the harshest ways. Slave owners would hang their human property by their hands and set their hands or feet on fire as one form of punishment. They were burned alive and had their heads placed on pikes in the marketplace as a warning to other captives.We don’t really need to go through all of the ...
Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics and international relations.[wpedon id="4696" align="left"]Save
What is the European UnionIn Europe, regionalization after WWII is taking the form of a gradual process of integration that was leading to the creation of the European Union (the EU) which is a collaborative association of some of the European states previously known as several different communities. Since agreeing at a summit meeting in December 1991 in the city of Maastricht in the Netherlands to move beyond a custom union and common market towards full economic and monetary union[1] (up to that time the EU was similar to the European Free Trade Association – the EFTA),[2] the association of ...
There are 3 Apartheid Israel-related centenaries this week, namely (1) the victorious 31 October 1917 charge of the Australian Light Horse at Beersheba that led to conquest of Palestine by Britain and massive famine, (2) the nefarious and racist UK Balfour Declaration of 2 November 1917 that gave Palestine to Zionists as a Jewish Homeland as an inducement to help keep Russia in WW1, and (3) commencement of the Palestine Genocide (2 million Palestinian deaths from violence, 0.1 million, or imposed deprivation, 1.9 million, since WW1).History ignored yields history repeated and genocide ignored yields genocide repeated [1]. Anniversaries are useful ...
Uncovering the Western mainstream mass-media lies on Ukraine.Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection, Public Domain & Pinterest.Read our Disclaimer/Legal Statement!Donate to Support UsWe would like to ask you to consider a small donation to help our team keep working. We accept no advertising and rely only on you, our readers, to keep us digging the truth on history, global politics, and international relations.[wpedon id="4696" align="left"]
Islam’s diffusion towards India occurred due to Arab Traders rather than Invaders as imagined by the RSS ideologue, Mohan Baghwat in his latest statement. This is substantially substantiated by the building up of the first mosque by these Arabs in Kodungallur (modern Kerala which had nothing in common with what came to be called India after the British arrival) in the lifetime of Prophet Muhammad (PBUH) and much before Mohammad Bin Qasim’s forays into Sindh, a separate polity which became a part of Indian entity that was essentially conceptualized and built by the British for their own commercial and political ...
