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.
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 ...
Taking the extraordinary USA and EU economic sanctions against Russia and low oil prices since 2014 into account, Russia’s economic outlook looks excellent going forward while that of Trump’s America looks bleak, to put it mildly. Paraphrasing the memorable 1992 Presidential candidates debate between a then-young William Jefferson Clinton and George H.W. Bush, “It’s the debt, stupid.”
In the past few years too many US economists and analysts such as Moody’s Credit Rating have tried to dismiss the economy of the Russian Federation as a near-bankrupt Soviet-era oil and gas-dependent economy, devastated by the 2014 collapse in oil price. This is ...
The chronic want of food and water, the lack of sanitation and medical help, the neglect of means of communication, the poverty of educational provision, the all-pervading spirit of depression that I have myself seen to prevail in our villages after over a hundred years of British rule make me despair of its beneficence. — Rabindranath Tagore
If the history of British rule in India were to be condensed to a single fact, it is this: there was no increase in India’s per-capita income from 1757 to 1947.
Churchill, explaining why he defended the stockpiling of food within Britain, while millions died ...
On 23 April 1999, a NATO missile attack on Radio Television of Serbia (RTS) headquarters killed 16 employees of the state broadcaster. The forgotten war crime occurred during the Kosovo War (March 1998-June 1999), and was part of NATO’s aerial campaign alongside the US-backed Kosovo Liberation army, in opposition to the Federal Republic of Yugoslavia.In the aftermath of the attack there were no great public campaigns launched for the 16 murdered journalists and employees, no outpouring of emotion for those killed, no calls for solidarity and togetherness in the face of aggression. On the contrary the West justified this grievous ...
There is an old adage that pertains to the founding of the European Union «If at first you don’t succeed, try, try, again». And for the Nazis and Nazi collaborators of the Second World War, viewing the post-war European death and destruction brought about by Adolf Hitler and his «Third Reich» alliance of Italian fascists, French Vichy, and others, the immediate decision was to «try again» with a European Union that would establish the same European super-state envisaged by Hitler but with a decidedly «democratic» aura.What eventually became the EU, the European Coal and Steel Community, was formed by six Western European ...
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 ...
Unlike America under Donald Trump, who is proudly psychopathic and went so far as to blurt out that his followers would accept his leadership even if he were to shoot someone on Fifth Avenue, the European Union is so rabidly hypocritical (Trump would probably call it "politically correct") that its leaders routinely moralize about 'human rights and democracy' even while their governments indiscriminately rob and slaughter people in foreign lands (as will be documented here). EU leaders assist U.S.-led atrocities while using prettier language to describe their alleged motivation for these policies. Though the U.S. Government also occasionally employs such ...
State frontiers are established by human beings
and may be changed by human beings.
Adolf Hitler. Mein Kampf
Diplomacy, with all the conventions of its forms,
recognizes only real facts.
Charles de Gaulle
All of Adolf Hitler’s actions, from the time he rose to power in 1933 until 1939, could be described as one triumph after another. He met each challenge he faced: he took over as head of the country, returned Germany’s lost territories without a struggle, and was given permission from England and France to rearm. But one further task lay before him, and failure now would make his previous achievements almost pointless. ...
Never had so many people been put in prison. The size of the Allied captures was unprecedented in all history. The Soviets took prisoner some 3.5 million Europeans, the Americans about 6.1 million, the British about 2.4 million, the Canadians about 300,000, the French around 200,000. Uncounted millions of Japanese entered American captivity in 1945, plus about 640,000 entering Soviet captivity.As soon as Germany surrendered on 8 May 1945, the American Military Governor, General Eisenhower, sent out an “urgent courier” throughout the huge area that he commanded, making it a crime punishable by death for German civilians to feed prisoners. ...
Unification of Europe has brought about radical new divisions within Europe. The most significant split is between the people and their political leaders.The June 23 British majority vote to leave the European Union has made strikingly evident the division between the new ruling class that flourishes in the globalized world without borders and all the others who are on the receiving end of policies that destroy jobs, cut social benefits, lower wages and reject as obsolete national customs, not least the custom of democratic choice, all to make the world safe for international investment capital.Actually, the lines are not quite ...
IntroductionThe fundamental aim of the text below is to deal with the concept and models of global security as one of the crucial topics of global political studies. We have to keep in mind that a term and notion of security usually imply a kind of sense of protection and safety from different possible harms coming from „outside“. Therefore, it can be generally acceptable and understandable that the states want to protect their own territories by expanding great resources in making their territorial safe. Security topics are of very different kind, ranging from the causes of conflict between states to ...
American capitalism is based on plunder. With the continental USA plundered, American capitalism hoped to continue enriching itself by plundering Russia as it did under Yeltsin, carefully including the Russian “Atlanticist Integrationists” in the spoils in order to have support from the liberal, progressive forces in Russia for stripping Russia of its assets. But Putin more or less put a halt to the American/Israeli rape of Russia, although it still continues through the neoliberal economics that Harvard brainwashed into the Russian central bank and economics profession. Brainwashed Russian economists are the main reason Washington is able to punish a powerful ...
An establishment pillar of the European ‘order’ – the Frankfurter Allgemeiner newspaper – explicitly touches the ‘live rail’, which is to say, it ran an op-ed last month titled ‘A Nazi EU?’, speculating on whether or not the present EU, dominated by Germany, should be understood as a lineal extension of German National Socialism. This has not before been an issue at all touched upon in mainstream German discourse. That it appears at all signals something important: a recognition that the dissidence being experienced by the EU has its roots in something other than just populist grievance tantrums. It is the resurfacing of ...
The following timeline describes just a few of the hundreds of atrocities and crimes committed by the CIA. (1)CIA operations follow the same recurring script. First, American business interests abroad are threatened by a popular or democratically elected leader. The people support their leader because he intends to conduct land reform, strengthen unions, redistribute wealth, nationalize foreign-owned industry, and regulate business to protect workers, consumers and the environment. So, on behalf of American business, and often with their help, the CIA mobilizes the opposition. First it identifies right-wing groups within the country (usually the military), and offers them a deal: ...
For a total of sixteen years the US has been occupying Afghanistan after invading immediately after the 9/11 attacks. This act of aggression has already become the longest war in American history, overtaking the “record” that was held by the Vietnam War that lasted from 1964 to 1975. During this period, Washington would spend over 800 billion dollars on the so-called reconstruction of the Afghan nation. As a result of this “reconstruction”, the Taliban has been regaining control over the country, which has resulted in this group controlling over 40% of Afghan territory. Additionally, opium production rates have overtaken the ...
Source: Rich WhitneyAbout the author: Rich Whitney is an attorney, actor, radio commentator and disk jockey, Illinois Green Party activist and former Green Party candidate for governor.Origins of images: Facebook, Twitter, Wikimedia, Wikipedia, Flickr, Google, Imageinjection & 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.
If you want to know the untold history of the U.S.A., then a good place to start is with the history of US imperialism in Asia from the mid-19th century until today. Not only will that reveal the history of the criminality of US foreign policy, but it will also reveal the true nature of U.S. capitalism, imperialism, fascism and U.S. wars of aggression: past, present and future.
For centuries the U.S. has preached that it believes in democracy, freedom and self-determination, but its actions towards other countries speak louder than words. Internationally the U.S. is a predator and a bully. ...
The ‘mainstream’ Western media is, almost by definition, the last place to consult for honest reporting of Western crimes. Consider the appalling case of Yemen which is consumed by war and an ongoing humanitarian catastrophe.
Since March 2015, a ‘coalition’ of Sunni Arab states led by Saudi Arabia, and supported by the US, Britain and France, has been dropping bombs on neighbouring Yemen. The scale of the bombing is indicated in a recent article by Felicity Arbuthnot – in one year, 330,000 homes, 648 mosques, 630 schools and institutes, and 250 health facilities were destroyed or damaged. The stated aim of ...
On December 8, 1991 Russia, Belarus and Ukraine stated that the USSR ceased to exist and signed an agreement on the creation of the CIS. Mikhail Gorbachev, the President of the Soviet Union, resigned on December 25, 1991. The Russian Federation assumed the USSR’s rights and obligations to become the recognized primary legal successor of the Soviet Union.
Each post-Soviet state was free to choose its own destiny but the need to cooperate and maintain mutually beneficial close economic ties was evident.
The creation of the Eurasian Customs Union was guaranteed by 3 different treaties signed in 1995, 1999 and 2007. The first treaty in 1995 guaranteeing ...
On March 29 Latvia, Lithuania and Estonia will celebrate 15 years of becoming NATO member states. The way to the alliance membership was not simple for newly born independent countries. They have reached great success in fulfilling many of NATO demands: they have considerably increased their defence expenditures, renewed armaments and increased the number of military personnel. In turn, they get used to rely on more powerful member states, their advice, help and even decision making. All these 15 years they felt more or less safe because of proclaimed European NATO allies’ capabilities.Unfortunately, now it is high time to doubt. The ...
SHORT LEGAL DISCLAIMER: The website’s owner & editor-in-chief has no official position on any issue published at this website. The views of the authors presented at this website do not necessarily coincide with the opinion of the owner & editor-in-chief of the website. The contents of all material (articles, books, photos, videos…) are of sole responsibility of the authors. The owner & editor-in-chief of this website is not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the contents of all material found on this website. The owner & editor-in-chief of this website is not responsible for the content of external internet sites. No advertising, government or corporate funding for the functioning of this website. The owner & editor-in-chief and authors are not morally, scientifically or legally responsible for any inaccurate or incorrect statement in the text and material found on the website www.global-politics.eu