Chidambaram Says … “End 5000 years Of Poverty”

Posted in History, Uncategorized by Anuraag Sanghi on November 12, 2007

Who Is The EnemyThis was Chidamabaram’s statement in the parliament and at least a couple of magazines – including India Today.

Nations Wealth

A nation’s wealth can be a number of things – intellectual wealth, economic wealth, social and political institutions and structures leading to wealth. But primarily, most look at wealth as a measure of economic wealth. And that is what Chidambaram was referring to and most of us accept. Therefore in this write up we will limit ourselves to the economic debate.

A few things.

Obviously, paper money cannot be a measure of wealth. Probably, the de la Rue family would have been the world’s richest family, if paper money was of value. The Bretton Woods mechanism under which the US dollar was the world’s reserve currency lasted as long as it was the only currency on the gold standard. The US Government broke the Bretton Woods mechanism by printing too many dollars. De Gaulle’s French Government started trading in US dollars for gold. In 1971 President Nixon abandoned the Gold standard. Thereafter the world got the first Oil shock and 10 years of stagflation. This French ‘perfidy’ strained US-French relations for the next 30 years. President Sarkozy is today trying to change that – and he can. The casus belli – the US dollar is no longer an issue. Today the US is the world’s largest debtor nation.

Measure Of A Nation’s Wealth?

How does one measure a nation’s wealth? A reliable method is, of course, gold reserves.

India’s private and governmental reserves of gold are by far the largest in the world. Estimates of total Indian gold reserves vary between 25,000 to 30,000 tons. The next highest is the United States with 14,000 tons of gold – with the US Govt accounting for 8000 tons. For at least the last 50 years, India has been world’s largest consumer of gold. (Pliny lamented 1800 years ago as to how imports from India were draining Rome of gold. In 1960’s, James Bond was sent after an arch villian, Auric Goldfinger, to close down illegal gold export from Britain to India in Goldfinger – the book.)

Secret of Japan’s rise

Year 1542. The Sado gold mines were discovered. In 16th-17th century, Japan became the second largest producer of gold in the world. Rapid rise of Japan after that and the rest of story is known to the world. Korea claims that Japan plundered Korea of hundreds of tons of gold from 1937-1944. Philipines, Indonesia have all raised claims against Japan for war time gold loot. Regardless, one American writer had definitely hit a jackpot – Gold Warriors: America’s Secret Recovery of Yamashita’s Gold (By Sterling Seagrave, Peggy Seagrave). Ian Fleming is supposed to have based his story on the Yamashita chapter of WW2.

Sounds like a 5000 years of poverty?

The intellectual father of India’s freedom movement was a British MP of Indian origin – Dadabhai Naoroji. His seminal work on the British colonial loot of India cut away the legs of the Raj – and thereafter, the Raj could not stand. Statistical analyses by Angus Maddisson, Groningen University showed India with a world trade share of 25% for much of the 500 years during 1400-1900.

India loss of wealth is a recent phenomenon. This trend of increasing poverty was halted only with Indian independence and subsequent growth of the Indian economy.
India’s rapid economic decline in the first half of the 20th century is what Chidambaram refers to as the 5000 years of poverty.

Lees Mody Pact

October 28th 1933. Much of India’s Hindu rate of growth can be traced back to this date. On that day, the Bombay Mill Owners Association signed the Lees-Mody Pact. This earned all Indian industrialists Nehru’s distrust. The British had succeeded once again in divide-and-rule.

Japan had become the largest buyer of Indian cotton – in spite of imperial preferences. Lancashire was hurting. Duty on Japanese textiles was raised from 31.5% to 75%. Japan stopped buying Indian cotton in retaliation. Cotton prices crashed. Montagu Norman was already wreaking havoc with his economic policies. demand had collapsed. Britain agreed to “help”. Customs duty was lowered for British goods only to 20%. Britain agreed to buy Indian stock piled cotton at lower prices. Indian mills and the Indian farmer paid the price. GD Birla said “They have lost their nerve …”. Churchill made life difficult in Britain as this pact did not deliver.

While the whole country was following a boycott of foreign goods (specially Lancashire goods), 21 businessmen led by Homi Mody (father of Russi Mody, Piloo Mody) agreed to the system of ‘imperial preference’ – which was behind India’s impoverishment. Earlier, Homi Mody had warned Gandhiji against the renewing the swaraj movement. The “money famine” had collapsed demand in India.

Mody had his own political ambitions. After Independence, Nehru did try and make up with Homi Mody later. Homi Mody was included in to India’s Constituent Assembly – even though he had served the British well.

Chidambaram Should Look At …

What Chidambaram should focus on is a monetary mechanism to leverage India’s 25,000 tons of gold to make India a capital rich country. From there India can start on its way to becoming the richest economy of the world – again.

Significantly, Chidambaram needs to answer if the Indian defence system is adequately funded for its task of protecting the world’s largest gold reserves!

12 Responses

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  1. […] (and also Indians), only the Core North India, is Indian history, society and culture. This is the history which British propagated and showed India as a defeated civilisation. Invaded, pillaged and dominated. Inferior and poor. […]

  2. Dsylexicus Indicus said, on July 28, 2008 at 1:26 pm

    Will a move to gold standard based monetary system unleash this private gold?.

    I believe ,you suspect, the US will not allow this until they have more of the gold.

    How do you account for the technological prowess of countries like Japan with no gold reserves practically. they cant be declared poor suddenly. can they?


  3. Anuraag Sanghi said, on July 28, 2008 at 2:13 pm

    Hi Pravin – Thanks for your comments and compliments.

    The situation is complex. I have linked posts which answer your questions. Trust that these will be adequate.

    RBI, set up by the British to implement colonial policies, continues to do the same. Our April Fool Jokers (The RBI) do not understand India’s relative economic strength and the rest of us do not understand our relative defense unpreparedness. While we think, we are poor, we are actually, quite well to do – and we need to create a financial system which uses our resources.

    Our misplaced belief in the benign West and the rule of law in international affairs allows us to continue with our underfunded defense establishment.

    The rise of Japan is dealt in other posts – and having built up dollar reserves of more than US$ 1 trillion, they are not going to be poor – suddenly. Yes, in a tighter monetary system, a lot of their produce may not get buyers. That may change their economic status negatively.

  4. […] damage to the post colonial India. The infamous population theory, Chidambaram’s ill-informed 5000 years of poverty, poor natural resources, the supine Hindu, non-aggressive behavior by Indians amongst many others […]

  5. […] Top Clicks indianbollywoodmovies.wor…quicktake.files.wordpress…2ndlook.wordpress.com/200…2ndlook.wordpress.com/200…2ndlook.wordpress.com/200…ngm.nationalgeographic.co…business-standard.com/ind…akashgupta88.wordpress.co… […]

  6. […] back Chiddu came back saying that he wanted to end 5000 years of poverty! Supposedly India’s star finance minister, and a Government headed by an ex-RBI governor, says […]

  7. […] the elephants in the Western rooms have become all but invisible. Don’t believe me – look at Chidambaram saying that he wants to end 5000 years of Indian […]

  8. […] Singh’s speech at Oxford, praising the Raj,  while receiving his honorary doctrate, or Chidambaram’s decision to end “abject poverty” in India that he seems to “have known for 5,000 […]

  9. […] Manmohan Singh’s speech at Oxford, praising the Raj,  while receiving his honorary doctrate, or Chidambaram’s decision to end “abject poverty” in India that he seems to “have known for 5,000 […]

  10. […] speech at Oxford, praising the Raj,  while receiving his honorary doctrate. Continue with Chidambaram’s decision to end “abject poverty” in India that he seems to “have known for 5,000 years.” And now add […]

  11. Sirish said, on November 5, 2009 at 3:25 am

    Hi, you have a wonderful blog here and i immediately became a fan of your blog, is there any way i can contact the blog writers? please do let me know by mailing me at my mail. Also i am a big time history buff and also been researching on the world financial history.

    Thanks and all the best and hope you continue this good work.



  12. Anuraag Sanghi said, on November 5, 2009 at 5:58 am

    Sirish – hi!

    1. Thanks for taking the time to go through the 2ndlok blog.

    2. The blog is the way to keep in touch with the authors.

    3. Hope that you will share your research with 2ndlook readers also.

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