Let Us All Work For the Greatness Of India

India’s Economy During the British Rule (3)


A. The Destitution of Indian Peasants and the Destruction of Agriculture under the Land Revenue Settlement System of the East India Company

“In 1774, Warren Hastings became Governor-General under the Regulating Act. The settlement of the lands for five years had proved a failure. The rights of the Zemindars, who were hereditary landlords, had been ignored, and the settlement had been made by auction. Bidders at the auction had been led by the eagerness of competition to make high offers, had squeezed the cultivators of the soil, and had yet failed to pay the promised revenue. The land system of Bengal had been misunderstood, the ancient landed families had been ruined, the cultivating population had been grievously oppressed.

In 1774, the European Collectors were recalled, the superintendence of collections was vested in Provincial Councils at Calcutta, Burdwan, Dacca, Murshedabad, Dinajpur, and Patna; and native Amils were appointed in districts to perform an impossible duty. In 1776 the policy of an equitable land settlement was discussed at Calcutta. Warren Hastings and Barwell proposed that estates should be sold by public auction or farmed out on leases, and settlements should be made with purchasers or lessees for lift.”1

“In 1777, the five-year settlement made in 1772 came to an end. The auction system was somewhat modified, and preference was now given to hereditary Zamindars. But the harshness of the system was greatly exaggerated when it was declared that the estates would be let, not for five years, but annually. Lands were thus let annually to Zamindars in 1778, 1779, and 1780. The country groaned under this economic tyranny, the revenues failed once more.

In 1781 great changes were introduced. Thirteen Articles and Regulations were prepared for the guidance of civil courts, which were afterwards incorporated in the Civil Code of ninety-five Articles of Regulations, which were printed with translations in the Persian and Bengali languages. Civil Judges and Collectors were entrusted with the powers of magistrates to grapple with the increase of crime in the province. A Committee of Revenue was formed at Calcutta, and submitted a plan for a new settlement of the land revenue for one year only, preference being given to Zamindars. The settlement was effected, and the land revenue was increased by twenty-six lakhs, or about £260,000.

All the great Zamindars of Bengal, all the ancient landed families, suffered under this system of annual settlements, frequent enhancements, and harsh methods of realization, such as they had never known before. Descendants of old houses found their estates pass into the hands of money-lenders and speculators from Calcutta; widows and minor proprietors saw their peaceful subjects oppressed by rapacious agents appointed from Calcutta. It so happened that the three largest estates in Bengal, each paying a revenue of over a hundred thousand pounds sterling, were then under the administration of three distinguished ladies, who have left their names engraved in the memories of their countrymen. Burdwan, with its revenue of over £350,000, was held by the widow of the celebrated Tilak Chand, and mother of the equally celebrated Tej Chand. Rajshahi, with its revenue of over £60,000, was held by the venerable Rani Bhavani, whose name is cherished in India to this day for her high rank and abilities, as well as for her pious life and munificent charities. And Dinajpur, with its revenue of over £140,000, lost its Raja in 1780, and his widow was the guardian of the heir, then five years old.”2

“Hastings shared with all other Englishmen of his age the ineradicable conviction that India was a great estate for the profit of the East India Company and its servants, and he applied the whole forces of his vigorous mind to make India pay. The good of the people was made subservient to this primary object of the Company’s administration; the rights of princes and people, of Zamindars and Ryots, were sacrificed to this dominant idea of the commercial rulers of India. Land revenue was increased even after the famine of 1770 had swept away one-third of the population of Bengal; landed families who had owned their estates for centuries were made to bid for them as annual farmers against money-lenders and speculators; cultivators flying from their homes and villages or rising in insurrection were driven back by soldiers to their homes with cruel severity; and a great portion of the money so raised was annually sent in the shape of Investments to the gratified shareholders in England. No administrator however gifted, and no administration however perfect, could prevent national poverty and famines when the whole of their fiscal policy was to drain the resources of one country for the traders of another.

This was the main cause of the failure of the administration of Warren Hastings, and his harsh, despotic, and arbitrary measures deepened the evils. There is a verdict on the conduct of great rulers which is more true and more abiding than that of historians, and that verdict is the verdict of the people. The people of India look back with pain and horror on the administration of Hastings which impoverished the country…”3

“Pitt’s India Bill became law on the 13th August 1784. It placed the administration of the Company under the control of the Crown, and thus compelled some reforms. The Directors of the Company felt that they must put their house in order. They selected a nobleman of high character and broad sympathies to succeed Warren Hastings, and in their letter of the 12th April 1786 they gave the new Governor-General, Lord Cornwallis, full instructions for his guidance.

In this memorable letter the Directors expressed their disapprobation of the frequent changes in the revenue system of Bengal and their desire to pursue any one system under watchful superintendence. They condemned the endeavors which had been made to continually increase the land-tax, and to oust Zamindars in favor of farmers, Sazawals, and Amins, who had no permanent interest in the well-being of the cultivators. They expressed their opinion that the most likely means of avoiding defalcations would be to introduce a Permanent Settlement of the land revenue, estimated on reasonable principles, for the due payment of which the hereditary tenure of the possessor would be the best and the only necessary security. They directed that the settlement should be made in all practicable instances with the Zemindars, and they declared that ‘a moderate jumma or assessment, regularly and punctually collected, unites the consideration of our interests with the happiness of the natives and security of the landholders more rationally than any imperfect collection of any exaggerated jumma to be enforced with severity and vexation.’ And while they intended the settlement to be ultimately made permanent, they desired that the first settlement should be concluded for ten years only.”4

B. The Ruthlessness of a Continuous and Ever Increasing Economic Drain Imposed on India by the English

“Lord Cornwallis, when left India in 1793, had so adjusted the finances as to limit the total expenditure to under seven millions, showing a surplus revenue of a million and a half. Within twelve years from this date, the restless and warlike policy of the Marquis of Wellesley had increased the expenditure to fifteen millions, showing a deficit of over two millions. It was this which gave offence to the Court of Directors.

That venerable head of a mercantile body looked with indifference on peace or war in India so long as their surplus was safe; the pecuniary returns from their territories was the main standard by which they judged administration; and when the surplus was changed into a deficit they never forgave. They disapproved of the wars of Wellesley because the wars were expensive; and they recalled the great Proconsul from India in disgrace. All through the fifteen years, from 1795 to 1810, Bengal had showed a surplus, Madras and Bombay had showed deficits.

It is not an exaggeration to state that Bengal, with its Permanent Settlement, yielding a steady and unvarying income from the soil, enabled the British nation to build up their Indian Empire. Bengal paid the expenses of ambitious wars and annexations in Northern and Southern India. Madras and Bombay never paid the total cost of their own administration during these years; Great Britain never contributed anything towards the acquisition of India,

On the departure of Lord Wellesley a balance in the finances was restored once more; and between 1810 and 1814 the peaceful administrators of India reduced the annual expenditure to a little above thirteen millions, showing an annual surplus of two to four millions, which delighted the souls of the Directors. But the surplus disappeared under the warlike administration of the Marquis of Hastings; and there was a deficit again in 1818, when the last Mahratta war was concluded. Lord Hastings avoided the wrath of the Directors by showing a surplus of two millions in 1822. Bombay did not yet pay its expenses. It showed a deficit of a million, five years after the dominions of the Peshwa had been annexed; and Bengal showed a surplus of three millions. It may therefore be said with strict truth, that the conquests of Lord Hastings, like the conquests of Lord Wellesley, were made out of resources furnished by Permanently Settled Bengal.

The Burmese war of Lord Amherst once more upset the finances of India, and there was a continuous deficit from 1824 to 1827. The revenues of India had now increased to twenty-two millions, owing to the extension of the Empire and the severity of the Land-Tax; but the expenditure during these years rose to twenty-three or twenty-four millions.

Then were witnessed the striking results of the policy of peace, retrenchment, and reform introduced by Lord William Bentinck. Even as a financial reformer, Lord William Bentinck stands alone among all British administrators ever sent out to India. For financial reforms in India consist, not in hunting after new sources of taxation which do not exist, but in retrenchment. The excessive Land-Tax was reduced everywhere, and fell within six years (1825 to 1831) from thirteen millions to eleven and a half millions; but the reduction in expenditure more than compensated this loss. When Lord William Bentinck arrived in India in 1828, the total expenditure was twenty-four millions, showing a deficit of over a million. When he left India in 1835, the total expenditure was sixteen millions, showing a surplus of four millions.”5

“In 1792, the Indian Debt, bearing interest, little exceeded seven millions. In 1799, it had risen to ten millions. In consequence of Lord Wellesley’s wars, it had risen in 1805 to nearly twenty-one millions, and by 1807 to twenty-seven millions. It remained almost stationary at this figure for many years, but in 1829 it had risen to thirty millions. Lord William Bentinck’s beneficent administration had the effect of gradually reducing the debt, and on the 30th April 1836 it amounted to twenty-seven millions.

Under an equable arrangement between the two nations, India should have paid for her own administration, and England should have remunerated the Company for building up an empire so beneficial to her trade and her power, and so advantageous to her sons seeking a career in the East. If both nations benefited by the founding of the British Empire in India, both nations should have contributed to the cost, – India paying for the administration of India, and Great Britain paying the home charges. But a different policy was pursued from the commencement of the British rule in India, and the result was a continuous Economic Drain from India, which has increased in volume with the lapse of years, and has impoverished an industrious, peaceful, and once prosperous nation.

‘This annual drain of pound 3,000,000 on British India,’ wrote Montgomery Martin in 1838, ‘amounted in thirty years, at 12 per cent, (the usual Indian rate) compound interest to the enormous sum of £723,997,917 sterling; or, at a low rate, as £ 2,000,000 for fifty years, to £ 8,400,000,000 sterling! So constant and accumulating a drain even on England would soon impoverish her; how severe then must be its effects on India, where the wages of a laborer is from two pence to three pence a day?’

‘For half a century we have gone on draining from two to three and sometimes four million pounds sterling a year from India, which has been remitted to Great Britain to meet the deficiencies of commercial speculations, to pay the interest of debts, to support the home establishment, and to invest on England’s soil the accumulated wealth of those whose lives have been spent in Hindustan. I do not think it possible for human ingenuity to avert entirely the evil effects of a continued drain of three or four million pounds a year from a distant country like India, and which is never returned to it in any shape.’”6

C. Destruction of the Indian Economy to Serve the Commercial Interests of the British

“Throughout the eighteenth century, the competitiveness of Indian textiles had prompted the introduction of extensive protectionist barriers in England to protect domestic producers. It was behind these walls that Britain’s infant textile sector could grow, responding to India’s entrenched labour cost advantage with mechanisation. This early modern strategy of import-substitution proved remarkably successful. Imitation ‘calicoes’ were manufactured in Britain from the early 1770s, and in 1781, mass production of British ‘muslins’ commenced. Only five years later, the first Lancashire cottons were being exported to India, a small fraction of the 500,000 pieces of industrial muslin being churned out annually. Industrial muscle had done the job: by 1793, a Lancashire mill operative had become 400 times more productive than the average Indian weaver.

In the run-up to the 1793 charter renewal, Manchester cotton manufacturers had petitioned the government that their goods should be received duty-free in India, while the wearing of Indian cottons should be banned in Britain. The government sensibly rejected this self-serving nonsense – for the time being. Underneath the surface, however, the Company’s well-established import-export business was being eaten away. Mill-made cottons took increasing slices of the Company’s market share of textiles in both Britain and its key re-export markets in Africa. Simultaneously, Napoleon’s ‘continental system’ had eliminated the important re-export trade with the rest of Europe. From £3 million worth of Indian textiles brought back to England in 1798, the Company imported just £433,000 in 1807. Worse still, the goods it did import could no longer be sold at a profit, resulting in over £7 million of unwanted Bengal cottons piling up in the Company’s London warehouses. This time the government could not ignore the mass of petitions that flooded into Westminster calling for an end to the Company’s exclusive position. In addition, mounting Indian debts forced the Company to request a loan of £2,500,000 from the government in April 1812. This combination of industrial lobbying and financial distress left the Company in no position to resist the push for greater liberalisation. As a result, its commercial monopoly was removed for all except the China trade, which was extended for another 20 years. For many, notably the evangelical William Wilberforce, trade was no longer the main issue where the Company was concerned, but rather the promotion of Christianity.

After years of campaigning, Wilberforce and others managed to include in the 1813 Charter Act provisions for the establishment of a Church of England bishopric in India, as well as the removal of the Company’s long-standing ban on missionary activity. As Smith had predicted, the Company was soon unable to compete against the surge of new entrepreneurs, and it ceased exporting merchandise to India in 1824, largely because there was little it could buy in India for sale back in Britain. For India’s producers, this so called opening of trade brought little relief. In the wake of the Bengal Revolution, the East India Company had used its political position to establish monopoly control over Bengal’s weavers. Its hunger for the weavers’ output was still as strong, if not stronger, than ever before as it looked for new ways of returning the wealth of Bengal to Britain through increased exports of cloth. Exploitation certainly followed in the most cruel form, and for the weavers the result was dislocation and impoverishment. Paradoxically, however, it was the end of the Company’s trading monopoly in 1813 that would turn this terrible situation into one of complete destitution. A 20 per cent increase in import duties on Indian goods was added in 1813 to ensure that open competition did not challenge the British producer.”7

“Still more emphatic is the impartial verdict of H. H. Wilson, historian of India, ‘It is also a melancholy instance of the wrong done to India by the country on which she has become dependent. It was stated in evidence [in 1813]that the cotton and silk goods of India up to the period could be sold for a profit in the British market at a price from 50 to 60 per cent, lower than those fabricated in England. It consequently became necessary to protect the latter by duties of 70 and 80 per cent, on their value, or by positive prohibition. Had this not been the case, had not such prohibitory duties and decrees existed, the mills of Paisley and Manchester would have been stopped in their outset, and could scarcely have been again set in motion, even by the power of steam. They were created by the sacrifice of the Indian manufacture. Had India been independent, she would have retaliated, would have imposed prohibitive duties upon British goods, and would thus have preserved her own productive industry from annihilation. This act of self-defence was not permitted her; she was at the mercy of the stranger. British goods were forced upon her without paying any duty, and the foreign manufacturer employed the arm of political injustice to keep down and ultimately strangle a competitor with whom he could not have contended on equal terms.’

While such was the policy pursued in England to discourage Indian manufactures, the system pursued in India did not tend to improve them. The revenues of the country were spent on the Company’s Investments, i.e. on the purchase of Indian goods for exportation and sale in Europe without any commercial return.

The method pursued in supplying these Investments was this. On being informed of the amount required by the Directors, the Board of Trade in India forwarded a copy of the order to the several factories where the goods were produced. The Commercial Residents at the factories divided the order among the several subordinate factories, and required the weavers to attend on a specified day to receive advances. Each weaver was debited for the advance made to him, and credited for the deliveries he made. If the weavers objected to the rate, the Board of Trade decided the matter according to its own judgment.

How this system was frequently abused appears from the evidence of many witnesses examined by the Commons Committee in 1813. Thomas Munro deposed that in the Baramahal the Company’s servants assembled the principal weavers and placed a guard over them until they entered into engagements to supply the Company only. When once a weaver accepted an advance he seldom got out of his liability. A peon was placed over him to quicken his deliveries if he delayed, and he was liable to be prosecuted in the courts of justice. The sending of a peon meant a fine of one anna (about 1.5 d.) a day on the weaver, and the peon was armed with a rattan, which was not unoften used to good purpose. Fine was sometimes imposed on the weavers, and their brass utensils were seized for its recovery. The whole weaving population of villages were thus held in subjection to the Company’s factories; and Mr. Cox deposed that 1500 weavers, not including their families and connections, were under his authority in the factory over which he presided.

The control under which the weaver population was held was not merely a matter of practice, but was legalised by Regulations. It was provided that a weaver who had received advances from the Company ‘shall on no account give to any other persons whatever, European or Native, either the labour or the produce engaged to the Company’; that on his failing to deliver the stipulated cloths, the Commercial Resident shall be at liberty to place peons upon him in order to quicken his deliveries; that on his selling his cloths to others the weaver shall be liable to be prosecuted in the Dewani Adalat;  that weavers possessed of more than one loom, and entertaining one or more workmen, shall be subject to a penalty of 35 per cent, on the stipulated price of every piece of cloth that they may fail to deliver according to the written agreement; that landlords and tenants are enjoined not to hinder the Commercial Residents or their officers from access to weavers; and that they are strictly prohibited from behaving with disrespect to the Commercial Residents of the Company.

Manufactures do not flourish when manufacturers are held under any sort of thralldom. But the worst result of this system was that, while the Company’s servants assumed such power and authority over the manufacturers of India, other Europeans often assumed larger powers and used them with less restraint.

‘The Englishman,’ said Warren Hastings, ‘is quite a different character in India; the name of an Englishman is both his protection and a sanction for offences which he would not dare to commit at home.’

‘There is one general consequence,’ said Lord Teignmouth, ‘which I should think likely to result from a general influx of Europeans into the interior of the country and their intercourse with the natives, that, without elevating the character of the natives it would have a tendency to depreciate their estimate of the general European character.’

‘I find no difference in traders,’ said Thomas Munro, ‘whether their habits are quiet or not when they quit this country ; they are very seldom quiet when they find themselves among an unresisting people over whom they can exercise their authority, for every trader going into India is considered as some person connected with the Government. I have heard that within these two or three years, I think in Bengal in 1810, private traders, indigo merchants, have put inhabitants of the country in the stocks, have assembled their followers and given battle to each other, and that many have been wounded.’

‘I have always observed,’ said Thomas Sydenham, ‘that Englishmen are more apt than those of any other nation to commit violences in foreign countries, and this I believe to be the case in India.’

So frequent were the acts of violence committed by European traders and indigo planters in the interior of the country in the early years of the nineteenth century, that the Government was compelled to issue circulars to magistrates on the subject. In a circular dated 13th July 18 10 it was stated:

‘The offences to which the following remarks refer, and which have been established, beyond all doubt or dispute, against individual indigo planters, may be reduced to the following heads:’

‘First, Acts of violence which, although they amount not in the legal sense of the word to murder, have occasioned the death of natives.’

‘Second, The illegal detention of the natives in confinement, especially in stocks, with a view to the recovery of balances alleged to be due from them, or for other causes.’

‘Third, Assembling in a tumultuary manner the people attached to their respective factories, and others, and engaging in violent affrays with other indigo planters.’

‘Fourth, Illicit infliction of punishment, by means of rattan or otherwise, on the cultivators or other natives.’

And the circular directed magistrates to cause the destruction of the stocks, to report cases of flogging and inflicting corporal punishment on the cultivators, and to prevent European planters residing in the interior unless they conformed with the spirit of the Government orders. A further circular, issued on the 20th July 1810, directed magistrates to report cases in which indigo planters compelled the cultivators to receive advances, and adopted illicit means to compel them to cultivate indigo.  The oppression of indigo planters in Bengal continued, however, for half a century, until the people of Bengal rose and resisted, and the cultivation of indigo by European planters terminated in most parts of Bengal after the Indigo disturbance of 1859.”8

“The parliamentary inquiries of 1813 brought no relief to Indian manufacturers. The prohibitive duties were not reduced. The Company’s Investments were not stopped. On the contrary, it was distinctly sanctioned by the Committee of the whole House. ‘The whole or part of any surplus that may remain of the above described rents, revenues, and profits, after providing for the several appropriations, and defraying the several charges before mentioned, shall be applied to the provision of the Company’s Investments in India, in remittances to China for the provision of Investments there, or towards the liquidation of debts in India, or such other purposes as the Court of Directors, with the approbation of the Board of Commissioners, shall from time to time direct.’

In the Parliamentary debates of 1813, says the historian, H. H. Wilson, ‘professions of a concern for the interests of India were, it is true, not unsparingly uttered, but it would be difficult to show that the majority of the party who engaged in the discussion were solely instigated by a disinterested regard for the welfare of the Indian subjects of the Crown… The merchants and manufacturers of the United Kingdom avowedly looked only to their own profits.’

The real object of the Parliamentary inquiry of 1813 was to promote the interests of the manufacturers of England. Napoleon Bonaparte had excluded British manufactures from the Continental ports; the merchants and manufacturers of England were laboring under difficulties; the country was menaced with distress unless some new vent for the sale of its industrial products could be discovered. Under these circumstances the national demand against the monopoly of the East India Company increased in force, and the monopoly of the Company’s trade with India was abolished when their Charter was renewed in 1813. British traders thus obtained, for the first time, a free outlet into the great field of India; it was not in human nature that they should concern themselves much with the welfare of Indian manufacturers.”9

“The earthquake that struck Dhaka in 1812 – demolishing the Company’s agency building in Tejgaon – was only a portent of a far more savage economic disaster that was about to strike. In 1753, just before Plassey, Dhaka exported Rs 2,850,000 in textiles to Britain; by the end of the century, this had already fallen to Rs 1,362,000. But it took only four years following the removal of the Company’s monopoly for exports to cease altogether, and in 1818, the Company’s cloth ‘factory’ at Dhaka was wound up. The city imploded upon itself, and by 1840, its population had fallen from 150,000 to just 20,000, with jungle and malaria ‘fast encroaching upon the town’. Once again, horrific acts of mutilation are said to have accompanied this upheaval. In a grisly repeat of earlier cruelties, when machine-made yarns were first introduced into Dhaka in 1821, the ‘thumb and index finger of some of the renowned artisans began to be chopped off in order to disable them from twisting finer yarns’, according to Syed Muhammed Taifoor. Taifoor adds that some reputed artisans also ‘chopped off their own finger-ends in order to avoid the tyranny of the middlemen’.

Until 1813, India had a strongly positive balance of trade, operating as it had done for centuries as ‘the great workshop of cotton manufacture for the world’. But in the next 20 years, exports to India of British cotton rose more than fifty-fold, while textile imports from India fell by three-quarters. The deliberate manipulation of trade and industrial policy resulted in the elimination of India’s handloom weavers; English weavers were also being driven to extinction by the same remorseless forces. In India, the Company’s role was simply passive – to observe, but to do nothing. By 1834, the Governor-General, William Bentinck, was reporting that ‘the misery hardly finds parallel in the history of commerce’, adding that ‘the bones of the cotton-weavers are bleaching the plains of India’. This was not the free trade that Adam Smith had called for – even though his name was invoked repeatedly by the mill-owners in their quest to dominate India’s markets. Observing what Britain did rather than what its philosophers wrote, the German economist Friedrich List cited the cotton trade as a case study of the successful use of protectionism to build up national industrial strength.”10

“When Queen Victoria ascended the throne in 1837, the evil had been done. But nevertheless there was no relaxation in the policy pursued before. Indian silk handkerchiefs still had a sale in Europe; and a high duty on manufactured Indian silk was maintained. Parliament inquired how cotton could be grown in India for British looms, not how Indian looms could be improved, Select Committees tried to find out how British manufactures could find a sale in India, not how Indian manufactures could be revived. Long before 1858, when the East India Company’s rule ended, India had ceased to be a great manufacturing country. Agriculture had virtually become the one remaining source of the nation’s subsistence.

British merchants still watched and controlled the Indian tariff after 1858. The import of British goods into India was facilitated by the reduction of import duties. The growth of looms and factories in Bombay aroused jealousy. In I 879, a year of famine, war, and deficit in India, a further sacrifice of import duties was demanded by Parliament. And in 1882 all import duties were abolished, except on salt and liquor.

But the sacrifices told on the Indian revenues. In spite of new taxes on the peasantry, and new burdens on agriculture, India could not pay her way. In 1894 the old import duties were revived with slight modifications. A 5 percent duty was imposed on cotton goods and yarns imported into India, and a countervailing duty of 5 percent were imposed on such Indian cotton fabrics as competed with the imported goods. In 1896 cotton yarns were freed from duty; but a duty of 3.5 per cent was imposed on cotton goods imported into India, and an excise duty of 3.5 percent was imposed on all goods manufactured at Indian mills. Coarse Indian goods, which did not in any way compete with Lancashire goods, were taxed, as well as finer fabrics. The miserable clothing of the miserable Indian laborer, earning less than 2.5 d.* a day, was taxed by a jealous Government. The infant mill industry of Bombay, instead of receiving help and encouragement, was repressed by an excise duty unknown in any other part of the civilized world.

During a century and a half the commercial policy of the British rulers of India has been determined, not by the interests of Indian manufacturers, but by those of British manufacturers. The vast quantities of manufactured goods which were exported from India by the Portuguese and the Dutch, by Arab and British merchants, in the seventeenth and eighteenth centuries, have disappeared. India’s exports now are mostly raw produce-largely the food of the people. Manufacturing industry as a source of national income has been narrowed. There remains Agriculture. Cultivation has largely extended under the peace and security assured by the British Rule, but no man familiar with the inner life of the cultivators will say that the extension of cultivation has made the nation more prosperous, more resourceful, and more secure against famines.

The history of the Land Revenue administration in India is of the deepest interest, because it is intimately connected with the material well-being of an agricultural nation. In the earlier years of the British Rule, the East India Company regarded India as a vast estate or plantation, and considered themselves entitled to all that the land could produce, leaving barely enough to the tillers and the landed classes to keep them alive in ordinary years. This policy proved disastrous to the revenues of the Company, and a reform became necessary. The Company then recognized the wisdom of assuring to the landed classes the future profits of agriculture. Accordingly, Lord Cornwallis permanently settled the Land Revenue in Bengal in 1793, demanding from landlords 90 percent of the rental, but assuring them against any increase of the demand in the future. The proportion taken by the Government was excessive beyond measure; but cultivation and rental have largely increased since 1793; and the peasantry and the landed classes have reaped the profits. The agriculturists of Bengal are more resourceful today, and more secure against the worst effects of famine than the agriculturists of any other Province in India.

A change then came over the policy of the East India Company. They were unwilling to extend the Permanent Settlement to other Provinces. They tried to fix a proper share of the rental as their due so that their revenue might increase with the rental. In Northern India they fixed their demand first at 83 percent of the rental, then at 75 per cent., then at 66 per cent. But even this was found to be impracticable, and at last, in 1855, they limited the State-demand to 50 percent of the rental. And this rule of limiting the Land Revenue to one-half the rental was extended to Southern India in 1864. An income-tax of 50 percent on the profits of cultivation is a heavier assessment than is known in any other country under a civilized Government. But it would be a gain to India if even this high limit were never exceeded.

The rule of the East India Company terminated in 1858. The first Viceroys under the Crown were animated by a sincere desire to promote agricultural prosperity, and to widen the sources of agricultural wealth in India. Statesmen like Sir Charles Wood and Sir Stafford Northcote, and rulers like Lord Canning and Lord Lawrence, laboured with this object. They desired to fix the State-demand from the soil, to make the nation prosperous, to create a strong and loyal middle class, and to connect them by their own interest with British Rule in India. If their sound policy had been adopted, one source of national wealth would have been widened. The nation would have been more resourceful and self-relying today; famines would have been rarer. But the endeavors to make the nation prosperous weakened after the first generation of the servants of the Crown had passed away. Increase of revenue and increase of expenditure became engrossing objects with the rise of Imperialism. The proposal of Canning and of Lawrence was dropped in 1883.”11


  1. Romesh Chandra Dutt, The Economic History of India – I, Director, Publications Division, New Delhi, 2006, pp.38-39
  2. Ibid., p.40
  3. Ibid., p.52
  4. Ibid., p.54
  5. Ibid., pp.269-70
  6. Ibid., pp.271-72
  7. Nick Robins, The Corporation that Changed the World, Orient Longman Private Limited, Hyderabad, 2006, pp.146-48
  8. R.C. Dutt, Op-Cit. pp.172-76
  9. Ibid., pp.176-77
  10. Nick Robins, Op-Cit. pp.148-49
  11. Romesh Chandra Dutt, The Economic History of India – II, Director, Publications Division, New Delhi, 2006, pp.ii-iv



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