2ndlook

British Raj: Expansion In India was Swift and Easy says British-American Historian

Posted in British Raj, History, India, Propaganda by Anuraag Sanghi on July 2, 2012

65 years after the loss of India, Britain tries recycling old propaganda – and selling it as cutting edge history.

James Gillray, (1756-1815), leading printmaker, lampoons Cornwallis after battlefield reverses in India in a work Title: The coming on of the monsoons, or, The retreat from Seringapatam Related Title: Retreat from Seringapatam  |  Published: London; on December, 6th 1791 by H. Humphrey  |  Click for image.

James Gillray, (1756-1815), leading printmaker, lampoons Cornwallis after battlefield reverses in India in a work Title: The coming on of the monsoons, or, The retreat from Seringapatam Related Title: Retreat from Seringapatam | Published: London; on December, 6th 1791 by H. Humphrey | Click for image.

Regret and rankle?

Why does it bother a British historian, that Indian-writers write good things about India, who are largely read in India? After 30 years in the employ of an American University!

Yet it does.

Writing smoothly, in the London Book Review (LRB) Perry Anderson uses more than 15,000 words to refresh British propaganda about the British Raj in India.

Full of gaps like

When the British arrived, it was the sprawling heterogeneity of the area that allowed them, after a slow start, to gain such relatively swift and easy control of it, using one local power or population against the next, in a series of alliances and annexations that ended, more than a century after the Battle of Plassey, with the construction of an empire extending further east and south, if not north-west, than any predecessor. (via Perry Anderson · Gandhi Centre Stage · LRB 5 July 2012)

Was the British imperial expansion in India, ‘swift and easy’ over ‘more than a century after the Battle of Plassey.’

Really?

Eh … Oh … Aah

Let us look at some history.

First: If the expansion was swift and easy, the decline and departure was faster. Between Plassey (1757) and the 1857 War was a hundred years. Between the 1857 War and Indian Independence (1947) was only ninety.

Indian independence, which had a large dose of non-violent protest, was preceded by British loss of initiative and control.

Remember dates.

English are nowhere

1600 – East India Company formed.

1683 – British Crown approves new charter for EEIC; which can now wage war.

1739 – Nadir Shah’s raid on India sees British missing in action.

1746 – Chauth for Bengal & Bihar ceded to Marathas by Mughals. British are still nowhere.

1757 – Battle of Plassey – an artificial landmark in Indian history; but important to British.

1761 – Ahmad Shah Abdali defeat Marathas at Panipat. Maratha powers starts to decline.

1764 – British take advantage of Maratha /Mughal weakness; and win the minor Battle of Buxar, 22 October; which lands them the Diwani of Bengal. British loot of India begins. Regular famines become feature of the British Raj.

English Appear Somewhere

1765-1785 – British win battles against European powers (French, Dutch, Danes) but lose wars against Indian kings.

1781 – Surrender of Lord Cornwallis, October 19, at Yorktown, America.

1786 – 23 February, Cornwallis appointed for India position. Departing in May, arrived at Madras – 22 August.

1799 – Tipu Sultan’s death. British power consolidates in India.

English Are Here in India

1818 – The Third Anglo-Maratha /Pindari War ends. English power arrives in India.

1839 – Death of Ranjit Singh.

1845-1849 – The Sikh Wars in which English gained supremacy over the last outpost of Indian power.

British power in India

1857 – Combined Indian forces, led by the Mughal-Maratha alliance declare war. Major battles continue for 18 months. English win.

British Loss of Power

1916 – April 16. BG Tilak declares Swaraj is my birthright; forms Home Rule League at the Bombay Provincial Conference held at Belgaum.

1927 – Indian polity refuses to negotiate with Simon Commission.

1930 – Bhagat Singh displays disinterest in the legal outcome of his trial.

1944 – India’s leading industrialists come together (Bombay Club) and make an economic-plan document for an India which is yet to be born; for a government that was yet to be formed.

1946 – Naval Ratings raise the Indian Flag of independence.

1947 – Britain out of India

Two: A recent British ranking included Rani Lakshmi Bai as sole woman entry in the list of Top-20 foes of the British Empire. More than 200 wars, battles, mutinies, bombings, armed uprisings, spread over the 190 years, in which more than 10 million people died, was not easy.

Three: The loss of India was recurring theme in the less than 200 years of British misrule in India. The British knew their hold on India was one-step away from losing it.

Voices From The Past

Lord Curzon, probably got the tone for the Raj, till its end 50 years later. In a letter, on 31 March 1901, (some suggest March 3), to the Conservative minister AJ Balfour; Curzon predicted in 1901,

governing of India was far and away the biggest thing that the British were doing anywhere. As long as we rule India, we are the greatest power in the world. If we lose it we shall straightway drop to a third rate power. (from – Curzon in India: Achievement; books.google.co.in; David Dilks – 1970.).

In 1857, soon after the outbreak of war, reporting on Europe’s reactions, were brothers Eliakim Littell and Robert S. Littell, for their American publication, The Living Age (Volume 55 – Page 113).

In a familiar manner they said,

India is not only an English, it is a European subject; and the face of the Continental press moves that it is so. “Will England lose India or not?” is a question mooted by friends and foes, with hopes and fears according to their feelings; and from what they say of our prospects, we may judge of their future ‘conduct in the event of any serious loss to our power. On the Continent, more than in this country, it seems to be felt, and is indeed here and there loudly proclaimed, that Great Britain will lose her European supremacy if she lose India.

In fact, the loss of India would be a deathblow to her commerce and industry. (From: The living age …, Volume 55; By Eliakim Littell, Robert S. Littell, Making of America Project.).

Further back, in 1829, writing in Gentleman’s magazine, (Volume 149), John Nichols summed up the mood in England.

It has been said that we might lose India, if, with the gospel of peace in one hand, and the code of English justice in the other, we thus legislate in a country whose superstitions are inveterate! Lose India !’ what is a man profited if he shall gain the whole world, and lose his own soul!

Many Britishers said the opposite too. Churchill, the most famous of these Indian-doom predictors, thundered in the British Parliament,

In handing over the Government of India to these so-called political classes we are handing over to men of straw, of whom, in a few years, no trace will remain.

We now know whose predictions were right.

It can be safely said, that India was far from subdued, either easily or quickly, in the entire British Raj. A long enough search will produce one such analysis for each year where the British fear of losing India was exposed.

But the British lost power pretty fast.


1857 – A Failed ‘Mutiny’?

Posted in British Raj, History, India, politics by Anuraag Sanghi on April 19, 2012

Getting into the details of the 1857 War reveals some interesting sidelights.

An elephant gun-battery in 1857, a wood engraving from the 1860's. These elephant guns were crucial to both sides.

An elephant gun-battery in 1857, a wood engraving from the 1860's. These elephant guns were crucial to both sides.

Guns vs bow & arrows?

When it comes to the 1857 War, popular impression is that Indian ‘mutineers’ fought with swords, bows and arrows, and the British had guns and cannons.

For at least 400 years before 1857, India was the largest producer of gunpowder elements – specially crucial nitrates. India was the largest producer of nitrates (main component in gunpowder) – and availability of explosive material was not the problem in the 1857 War.

Not for Indians. Not for the British, too.

The Indian Court at the Great Exhibition, Hyde Park, London 1851.  |  Painting by Joseph Nash  |  Click for image.

The Indian Court at the Great Exhibition, Hyde Park, London 1851. | Painting by Joseph Nash | Click for image.

Explosive power

Since nitrate-production was concentrated in the greater Bengal area (Bihar, West Bengal, East Bengal), the purbiyas (the Easterners) were also the explosive experts. Malwa’s rulers recruited  Purbias from Bengal and Bihar for their expertise in gunpowder. The British initially valued and later (after 1857) feared the Purbias for the same reason.

The purbiyas (the Easterners) were the main body in in Malwa and Mughal armies, in Sher Shah Suri and Ranjit Singh’s armies – and in the army of East India Company also. In fact, the main component of anti-British Indian soldiers in the 1857 War were the Bengal soldiers, the purbiyas (the Easterners).

Indian nitrate production was in the hands of the private sector – and the whole world bought its gunpowder from India. Indian rulers too, had to buy nitrates at near global prices.

But buying nitrates, hiring soldiers, buying guns was an expensive affair.

Note the damage to the structure. Soldiers of the 1st Madras Fusiliers seated amongst the remains of the British entrenchment de fences to barracks at Cawnpore which General Sir Hugh Massy Wheeler surrendered in June 1857.  |  Image by Felice Beato; source & courtesy - iwm.org.uk  |  Click for image.

Note the damage to the structure. Soldiers of the 1st Madras Fusiliers seated amongst the remains of the British entrenchment de fences to barracks at Cawnpore which General Sir Hugh Massy Wheeler surrendered in June 1857. | Image by Felice Beato; source & courtesy - iwm.org.uk | Click for image.

Slavery, narcotics & piracy

Indian rulers ‘hampered’ by Indian dharma systems had limited access to funds. Taxation across India was set at 16.67%. Only in dire emergencies could the king impose the chauth rate (25%) of taxation – used by Shivaji.

The British East India Company could easily buy nitrates – funded by the riches of slave-trade, sugar production (using slave-labour), piracy, narcotics trade (opium to China).

Capital formation in Britain also pushed the Industrial Revolution – fully underway in Britain.

A cargo of seventy elephants from Burma during the 1857 Mutiny; |  Image date: 1858–61; Albumen silver print; from Gilman Collection, at The Metropolitan Museum of Art  |  Click for image.

A cargo of seventy elephants from Burma during the 1857 Mutiny; |m Iage date: 1858–61; Albumen silver print; from Gilman Collection, at The Metropolitan Museum of Art | Click for image.

By 1857, production of armaments in Britain was the highest in the world. The Grand Expo of 1851 announced Britain’s industrial might and leadership to the world.

By 1857, steam engines were driving production in England. Indian armament industry was powered by manual power – instead of steam power in Britain.

But was industrial might the deciding factor?

Siege guns, 18-pounders were much used by the British to bombard Indian soldiers.

These guns drawn by elephants made a difference. But more than guns were elephants themselves.

Contemporary British accounts record capture of elephants from Indian armies.  At least at one time, the British resorted to ship elephants from Burma to supplement their armies in India.

But what was the main achievement of the 1857 War? Western views is

Kashmiri Gate after the pounding by cannons during the 1857 War  |  Albumen print by Felice Beato; source & courtesy - bbc.co.uk  |  Click for image.

Kashmiri Gate after the pounding by cannons during the 1857 War | Albumen print by Felice Beato; source & courtesy - bbc.co.uk | Click for image.

Indian Mutiny was a revolution which failed.

Except that it destroyed the East India Company as a quasi-government once and for all: when executive administration and military authority were restored in the Raj, both were firmly in the hands of the British Crown. And except that never again, in the 90 years which remained before Indian independence, would Britons stand so confidently astride the subcontinent. Its balance had been fatally shaken at Meerut and from that day onwards it was a matter of when, not if, the Raj would fall.

The story which began in 1857 has never quite been resolved. Not all of its million sub-plots found so neat an ending as the tale of Margaret Wheeler. More representative by far is the legend of Wheeler’s nemesis, Nana Sahib, the enigmatic rebel leader who oversaw the massacres at Cawnpore. Despite being the most wanted man in the British Empire, Nana Sahib was never captured. Long after his probable death, sightings continued to be reported. The last came in Gujarat in 1895 when a young British officer detained an elderly sadhu and excitedly cabled Calcutta: “Have arrested the Nana Sahib. Wire instructions.”

Calcutta’s reply, subtly redolent of exasperation at the power of myth and mirage under the Indian sun, read: “Release at once”. (via Bounty from a mutiny – Books – Scotsman.com).

If … But … Why …

If the 1857 War was such a failure, why was the East India disbanded? Why did Christian missionary program start taking a back seat? Added to this, after the 1857 War in India, Christian proselytism too had to take a back seat.

Victoria Regina’s Colonial India Government printed leaflets in tens and thousands to proclaim that the British Crown had no intentions to dictate faith to its Indian ‘subjects’. The 1857 War also forced the British to change the war. Instead of military means, the British mounted an intellectual war on India. Euro-centric historians to change the entire drift of world history.

Less than ninety years after the 1857 War, in February 1946 Indian sepoys raised the Indian flag of independence – again.

This time around the British decided to walk.

Away.


Death of Indian Shipbuilding

Posted in British Raj, European History, Gold Reserves, History, India by Anuraag Sanghi on April 14, 2012

Bengal, which Mughal rulers described as paradise on earth, became a hell on earth during the British Raj. Right from the Famine of 1765 to the 1943 Great Bengal Famine which killed at least 3-4 million..

Note: Read 'f' as 's', where needed.  |  From: The ... report from the Select Committee of the House of Commons on the Affairs of the East India Company (Google eBook) | Published in Great Britain | Author: Select Committee on the Affairs of the East India Company, East India Company (London) | Publisher: Cambray | Year: 1810

Note: Read 'f' as 's', where needed. | From: The ... report from the Select Committee of the House of Commons on the Affairs of the East India Company (Google eBook) | Published in Great Britain | Author: Select Committee on the Affairs of the East India Company, East India Company (London) | Publisher: Cambray | Year: 1810

Gunpowder capital of the world

After the Battle of Plassey (1757), the British gained control of Bengal – which was India’s major industrial centre. For the British, the most valuable product from Bengal was saltpetre – nitrate, the essential ingredient in gunpowder.

In 1757, right up to WWI, India manufactured more nitrate (essential for gunpowder manufacture) than the rest of the world put together. An intricate technology, no other country in the world manufactured gunpowder products, as much as India, of such good quality. For the British, Bengal’s gunpowder production was the passport to a world empire.

Gunpowder apart, Bengal was a major textile centre, famous for shipbuilding and a significant agricultural centre.

Lockstep in Bengal

Between 1757 and the Battle of Buxar (1765), the British moved step at a time, to tighten their grip on Bengal.

One of the first steps was to create a famine. After Buxar for the next two hundred years, the Bengal region started witnessing famines that continued upto 1943, when some 30-40 lakhs Indians died in Bengal (3-4 million).

Bengal which was intricately connected by thousands of kilometres of waterways and canals, had lakhs of boats plying up and down the region. In 1788 came the order that killed shipbuilding in Bengal. Today it may seem fantastic, but more than 20 different types of boats, were used. Each of them built for different use.

Chronicles of India

In the eighteenth and nineteenth century, wonder-stuck Europeans spent years making etching and woodcuts, that are today the main surviving record of that age gone by.

The Mughals built the world’s largest treasury of the world – and even after that, India was a major economic power. After the end of Mughal power in 1857, in the next 100 years of the British Raj, we see India become a starving, naked and homeless population.

And in the last 65 years, India has again become the fourth largest economy in the world.


Rise of the British Empire – A 2ndlook

Posted in Business, European History, Gold Reserves, History, India, Media, politics by Anuraag Sanghi on July 6, 2010
Leo Tolstoy in Yasnaya Polyana, May 23, 1908. An early colour photography example in Russia Photo - By Yevgeny Kassin. Courtesy - www.guardian.co.uk

Leo Tolstoy in Yasnaya Polyana, May 23, 1908. An early colour photography example in Russia Photo - By Yevgeny Kassin. Courtesy - http://www.guardian.co.uk

Indian history fails

Indian history’s biggest failing is in understanding and explaining the rise of English imperial power in the Indian subcontinent.

Facing foreign conquest for the first time in 12th century AD, Indians have difficulties in understanding invasion, conquests, territorial expansion and the motive power behind such imperial actions.

Equally for the British, the ‘gain’ and ‘loss’ of India happened so quickly, that they cannot accept the loss and they still cannot believe their luck.

The central question of how India could ever have fallen under British rule continues to engage almost obsessive attention. How so few Britons, as servants of a private business enterprise, could have conquered so huge an area and so many people, so far away, has never ceased to amaze or embarrass. Neither British nor national historiography has proven satisfactory. (From The Oxford history of the British Empire: Historiography By Robin W. Winks, Alaine M. Low).

Modern Indian historians have not been of much help.

The perplexed Indian

The question of Indian subjugation by Islamic and English invasions has rarely been answered with any balance.

For instance, with reluctant admiration, some Indians ‘acknowledge’ that the British must have had something special. After all, how could Robert Clive with 400 English soldiers, defeat Siraj-ud-Dowla’s armies of 60,000? This left the ordinary, disbelieving Indian with the second assumption. Indians must have been fighting with bows and arrows, while the English had guns and cannons.

Now both these answers are wrong – because in 1857, Indian had equally good ship-building docks (if not better) and gun smiths. The best steel in the world came from India – as did the raw material for gun-powder, saltpetre.

A hundred years ago, a perplexed Indian, Taraknath Das, sought to understand the cause of Indian subjugation. He wrote to Tolstoy, the 19th Russian writer. Tolstoy’s very ‘insightful’ answer on Indian independence was

What does it mean that 30,000 people, not athletes, but rather weak and ill-looking, have enslaved 200 millions of vigourous, clever, strong, freedom loving people? Do not the figures alone make it clear that not the English, but the Hindus themselves are the cause of their slavery?’ For the Hindus to complain that the English had enslaved them was like villagers addicted to drink complaining that that the winesellers who had settled in their midst were the cause of their drinking habit. ‘Is that not the case with all the people, the millions of people, who submit to thousands or even hundreds of individuals of their own nation or those of foreign nations?’ If the Hindus had been enslaved by violence, it was ‘because they themselves have lived, and continue to live by violence, and fail to recognize the eternal law of love inherent in humanity.

Gandhiji, made 20,000 copies of this waffling and rambling narrative – and distributed it among the Indian population in South Africa. Tolstoy’s ‘explanation’ is today repeated in Indian schools as a defeatist question, ‘How could a few thousand people conquer a nation of crores?’

Tinged with ‘admiration’ for the English ‘character’!

Modern parallels

What was behind the rise of English power – especially, in the Indian sub-continent? After 60 years and a few hundred-crores (or a few billions) of tax-payer funds, Indian academia and historians have failed to answer this question – satisfactorily.

The usual answers trotted out are:-

  • Military superiority (better trained and motivated English soldiers)
  • Technological superiority (Indians had bows and arrows versus English guns and cannons)
  • Political unity (united English vs a divided India)

Historical evidence completely contradicts these three constructs during the 1600-1850 period, the phase of English ascent. For real answers we will need to look somewhere else.

Later in the post, we will use two widely syndicated posts, that appeared on the same day, originating in the USA. These two reports are an excellent parallel of what happened some 300 years ago.

But before that let us look at the key events and developments.

The coup at Plassey - became a 'military' victory for the British!

The coup at Plassey - became a 'military' victory for the English!

Cut to India in 1757

Robert Clive’s ‘genius’ lay in cobbling exactly one such cabal. This cabal consisted of Armenian, Indian and English merchants.

The Armenians were represented by Khojah Petrus Nicholas, and Indians were represented by the Jagat Seths, Seth Mahtab Chand,and Seth Swarup Chand, and other seths like Raja Janki Ram, Rai Durlabh, Raja Ramnarain and Raja Manik Chand. The Armenians, and the ill-fated Omichund, a “notorious Calcutta merchant who was later to engineer the Plassey Revolution” played an important part in the Bengal/Bihar saltpetre trade. They were all significant players in the export of saltpetre (potassium nitrate). Also known as niter, saltpetre was a necessary ingredient for gunpowder.

Increasing demand for Indian saltpetre from Europe increased prices in India. Indian traders benefited. Was this Plassey-nexus between Armenian, English and Indian traders, a result of restrictions on saltpetre trade itself by the Nawab of Oudh.

As a battle, observes Panikkar, “Plassey was ridiculous. Mir Jafar, who vacillated during the engagement, came timidly round with congratulations and he was told he was now Nawab.” Plassey thus, was “a transaction, not a battle.

The ‘importance’ of Plassey is a colonial invention. It is the Battle of Buxar which started off the East India Company. It is conveniently ignored that the East India Company recruited some 18000 sepoys in the next 6 years (1757-1763). It is these 18000 sepoys which clinched the Battle of Buxar for the East India Company.

The coup of Plassey was not a military success, but industrial and economic. Industrially, the English gained global control over saltpetre, an essential component in gunpowder. With Bihar and Bengal being production centres of saltpetre, control over the global gunpowder production system, passed into English hands. Rest of India and the world were cut-off from saltpetre supplies.

Economically, till the grant of Bengal diwani to the East India Company in 1765, after the battle of Buxar (1764) England used to export bullion to make investments in purchase of Indians goods. After the 1765, diwani, the excess revenue was used to make the purchases – and the English bullion was used to fund expansion, grow armies, et al. It was the battle of Buxar (1764) which created the roots of the English Empire in India via the East India Company.

Such exclusive companies, therefore, are nuisances in every respect ; always more or less inconvenient to the countries in which they are established, and. destructive to those which have the misfortune to fall under their government. (An inquiry into the nature and causes of the wealth of nations By Adam Smith).

Such was Clive’s legacy. A troubled Robert Clive committed suicide in 1774.

The colonial Indian army was used against the civilian population - e.g. Jallianwala bagh.

The colonial Indian army was used against the civilian population - e.g. Jallianwala bagh.

The oppressive army of the colonial Raj

The growth in the Colonial Raj’s army to maintain its authority is the simple reason why the Raj was able to maintain its rule for nearly 200 years.

The 18000 sepoys enrolled in 1763 grew in the early years of the nineteenth century to 150,000 and to nearly 350,000 by about 1820. (from Neighbors & strangers: the fundamentals of foreign affairs By William Roe Polk).

In 1820, Britain ruled less than half of modern India. The population of India at that time has been estimated at 25 crore- and the possible population under the Colonial Raj was less than 12 crore.

To sustain an army of 350,000 on a population of 12 crores is an oppressive burden beyond imagination. In a population of 12 crores, the number of able-bodied men would be around Rs.3.0 crore – and army of 350,000 would have meant 1 in every hundred was a soldier. Another writer on the British Empire confirms

the East India Company’s own army, especially its sepoy regiments, grew rapidly. This created a new demand for officers. By 1772 the Company’s officer corps in India was about 1560 strong, more than half the number of regular British army officers at that time. Regular officers were encouraged to transfer to the Company, but most of the increase was accounted for by the recruitment of very young men straight into the Company’s army as cadets. (from The making and unmaking of empires – Britain, India, and America c.1750-1783 By Peter James Marshall).

A proportionate army in India today would be close to 35 lakhs – twice the size the 16 lakhs that India, defence forces (army, air-force and navy) have today. Not only did the East India Company pay better, they also made timely payments.

The East India Company had a justified reputation for not only paying better but for being a more reliable paymaster for its Indian sepoys than any Indian ruler was likely to be.

Many Indians soldiering communities joined the armies of the British Raj as the

Company sepoys’ pay was high; infantry received about Rs.80 per annum, several times the pay of a specialist field worker. The regularity of pay … distinguished British from indigenous Indian armies.

The other reason why the British Raj military size was greater was that instead of police,

many civil duties, which in this country (England) are performed by the police, are in India discharged by the military force.

The small size of Indian police force was a historical trend, predating the English and continues till date. The small police force was derived from the economic habits of the Indian population which did not depend on crime for a livelihood (unlike say, piracy or slave trade in Europe). The constant warfare against Indian polity in India was essential for imperial English objectives. It was the large size of the Colonial Indian Army, consisting of Indian sepoys that was behind the might of the British Empire.

But during WW2, the situation changed. As Indian armies were sent to various theatres of war, and the Quit India movement exploded – as did various other movements across India, the British hold on India seemed to be hanging by a thread. The British response was interesting.

In 1932 there were 215,004 policemen in India (for a population in excess of 300 million) of whom 32,596 (15.16 per cent) were armed. By the end of 1938, the figure had fallen slightly to 193,118 with 28,703 men (14.86 per cent) under arms. But in December 1943, as political and administrative responsibilities of the police grew, the total reached 300,656 (an increase of over 60 per cent since the outbreak of the war) with 137, 222 (45.64 per cent of the total) under arms. (from Policing and decolonisation: politics, nationalism, and the police, 1917-65 By David Anderson, David Killingray.).

The Royal Indian Navy decided to raise to flag of Independence in Bombay in 1946, after which the Indian Army saw a mutiny in Jabalpur. (Photo courtesy - www.outloook.com).

The Royal Indian Navy decided to raise to flag of Independence in Bombay in 1946, after which the Indian Army saw a mutiny in Jabalpur. (Photo courtesy - http://www.outloook.com).

The day the worm turned, the British Raj ended. On February 18th 1946, the Indian Naval force, then the Royal Indian Navy raised the flag of independence. Colonial history calls it the Naval Ratings Mutiny – on February 18th 1946. Within 1 week, Britain decided to evacuate from India.

On February 18th, the ‘lowly’ Naval Ratings from the Royal Indian Navy rained on the British parade – by raising the flag of Indian Independence. Britain did not have the stomach to take on the Indian Colonial Army, battle hardened and exposed to warfare in all the global theatres of WW2. Penderel Moon, a much quoted British Civil servant, felt that the Raj was on “the edge of a volcano.” As did Nehru and Pethick Lawrence. The INA trials had created serious ruptures in British control over India.

On February 19th, 1946, PM Clement Attlee announced that a British Cabinet delegation of three ministers would visit India. He followed this up, on 20th February, 1946, with a statement in the British House of Commons,

His Majesty’s Government desires to hand over their responsibility to authorities established by a constitution approved by all parties in India … His Majesty’s Government wish to make it clear that it is their definite intention to take necessary steps to effect the transference of power to responsible Indian hands by a date not later than June 1948 … His Majesty’s Government will have to consider to whom the powers of the Central Government in British India should be handed over on the due date

On 15th March, 1946, Attlee announced in the British House of Commons that Britain was leaving India. 23rd March, 1946, Lord Pethick-Lawrence, Secretary of State for India, A. V. Alexander, First Lord of the Admiralty, and Sir Stafford Cripps, President of the Board of Trade came to India for consultations on modalities for power transfer. The British acquiesced and 18 months later the British were out.

It took nearly 200 years for the The Indian sepoy to decide that he was no longer willing to be a loyal soldier of the Company Bahadur. And the British Raj crumbled.

Noiselessly.

The seed capital of the British Raj

In all this, the important thing was funding!

The recruitment and expansion of the standing army, the purchase and stockpiling of gunpowder, needed exceptional financial resources that only the English seemed to have. Where did this ‘liquidity’ come from?And that is where the English secret lies.

Apart from the Indian loot, it was the loot from the rest of the world that enabled the English to fund the acquisition of these power sources. The surge in English financial capital can be explained by a succession of English ‘adventures’ which created the seed capital for Indian subjugation.

Of which, the most celebrated is the piracy.

A captive bows before Welsh pirate Sir Henry Morgan as Morgan and his men sack the city of Panama in the 1670s. (Hulton Archive/Getty Images)  Read more: http://www.cbc.ca/world/story/2008/11/21/f-pirates-whoswho.html#ixzz0stPqRYn3

A captive bows before Welsh pirate Sir Henry Morgan as Morgan and his men sack the city of Panama in the 1670s. (Hulton Archive/Getty Images) Read more: http://www.cbc.ca/world/story/2008/11/21/f-pirates-whoswho.html#ixzz0stPqRYn3

Britain – a pirate power

The explicit use of pirates in the Caribbean brought great riches to the Britain. Keynes famously linked all British foreign investment to the single act of looting of the Spanish Armada.

For a good part of 300 years (1550-1850), the English crown gave permits for pirates to operate on high seas – through, what were known as, letters of marque. With the sanction of the English State, high seas piracy became a national pastime in Britain.

Pirates like Sir John Hawkins made money on slave trade and piracy – targeting Spanish ships. Queen Elizabeth, apart from knighting him, also participated in these criminal enterprises. In a modern context, imagine the Italian government giving legal sanction to the Mafia, or Colombians to the Cali cartel.

The Spanish Armada was assembled by Spain to end British piracy. Further on, British propaganda made these pirates and privateers into heroes – and the Spanish Armada into an instrument of Catholic repression.

John Maynard Keynes, famously and honestly, tracked the source of British capital – and computed the compounded value of this loot. Keynes wrote: –

I trace the beginnings of British foreign investment to the treasure which Drake stole from Spain in 1580. In that year he returned to England bringing with him the prodigious spoils of the Golden Hind. Queen Elizabeth was a considerable shareholder in the syndicate which had financed the expedition. Out of her share she paid off the whole of England’s foreign debt, balanced her Budget, and found herself with about £40,000 in hand. This she invested in the Levant Company –which prospered. Out of the profits of the Levant Company, the East India Company was founded; and the profits of this great enterprise were the foundation of England’s subsequent foreign investment. Now it happens that £40,ooo accumulating at 3f per cent compound interest approximately corresponds to the actual volume of England’s foreign investments at various dates, and would actually amount to-day to the total of £4,000,000,000 which I have already quoted as being what our foreign investments now are. Thus, every £1 which Drake brought home in 1580 has now become £100,000. Such is the power of compound interest!

Now we all know where the Spaniards got their gold from!

English Chartered Companies – monopoly public-sector trading houses

The next major source for English capital were English corporations, in which the British ruling classes were the prime promoters and beneficiaries. English use of corporations was ‘pioneering’. It allowed the State to hide behind the veil of an artificial person. The EEIC could be blamed as the tyrant – and Queen Victoria could be displayed as a saviour.

The earliest English experiences with corporations started with the Muscovy Company (formed during 1550-155), the Spanish Company (1577), giving rise, in turn to the Levant Company (1581). Precursors to the East India Company, the Levant Company for instance was a mostly successful English monopoly of trade with the Turkey, Venice, Genoa and Middle East. English royalty became shareholders in these English corporations like the Muscovy Company or the Russia Merchants Companies in the 1550s, Levant Company, The Royal African Company – and later also the East India Company.

James Lancaster, John Eldred (Treasurer of the Levant Company) and Alderman Thomas Smythe and his assistant Richard Wright were common to both the Levant company and the East India Company. The English Queen contributed to the slave trading enterprise of Jack Hawkins the pirate, with her own ships, the Jesus of Lubeck and the Minion.

These trading houses, set up with royal patronage, controlled wealth, power and trade. Controlled by a few people, these corporations were extensions of the State.

British Slave Trade (Data source - Table from 'The Oxford history of the British Empire: The eighteenth century By P. J. Marshall, Alaine M. Low'; page 446)

English Slave Trade (Data source - Table from 'The Oxford history of the British Empire: The eighteenth century By P. J. Marshall, Alaine M. Low'; page 446)

Britain – prime slave trader

Britain and US were the largest users of African slaves – which gave these economies a 20% labour cost advantage. It also ‘freed’ its unemployed youth to go to the colonies and join the military.

The Royal African Company, a slaving trading ‘enterprise’, branded slaves with the letters ‘DY’, after its benefactor and promoter, the Duke of York, (better known as King James-II) and later the company’s initials, RAC. The Royal African Company, formed as the Company of Royal Adventurers Trading to Africa, was created to exploit the ‘opportunity’ for slavery in general – and the trans-Atlantic slave trade specifically.

Between 1699-1807 alone, there were more than 12100 slave voyages from the English ports of London, Bristol, Liverpool, Newport and others. Britain was the prime slave-trading European power. More than 20 million slaves were captured from West Africa and sold into slavery. The overall number of slaves from Africa to Europe and Americas are much higher than 20 million. Wealthy slave traders built grand edifices across Britain, donated to universities, museums, charities.

Britain – sugar and spice

Based on slavery, was Britain’s chain of sugar production colonies across the Caribbean. With the collapse of slavery in Haiti, sugar prices zoomed. Places in the West Indies, like Barbados, Jamaica competed to become the ‘richest spote of ground in the worlde.’ Between 1793-1798, sugar prices trebled. For a few years, English territories imported more slaves than Cuba.

As slavery became impossible due to revolts and mutinies, Britain turned to India again. This time for indentured labour. Slavery diluted and called by another name, India became a source to fall back on for indentured labour. How could the British afford to buy indentured labour? Bought with new gold discoveries in Canada and Australia. Nearly 1 crore (10 million) indentured labourers were shipped out from India alone to various parts of the world – and continued till about 1917. As is to be expected, the UK Government grossly underestimates these figures.

By the time the indentured labour scheme was finally brought to an end in 1917, it is estimated that 2.5 million East Indians had been shipped to British colonies around the world. (From Empire’ Children – Channel 4).

After the finally abolishing slavery in 1833, indentured labour replaced slavery with indentured labour. Upfront, indentured labour was only slightly more expensive, but was cheaper in the long run. Indentured labour also came fewer issues related to capture, transport, trade and maintenance of slaves – with a veneer of respectability that was needed for propaganda purposes.

Indentured labour – Slavery by another name

In the late and middle 19th century, capture of Indians by British agents indentured labour, (slave traders and slavery by another name) was also the reason, that possibly, the myth of ‘kaal-paani’ became prevalent and Indian traders preferred buyers to come to them. Intrepid Indians, suddenly discovered kaala paani - a defensive response to indentured labour, which was a close parallel to slavery.

The West re-invented slavery (in the 20th century again) and renamed it as apartheid which made native populations into slaves. They could, of course, truthfully claim that great Anglo-Saxon frontiersmen discovered gold and settled empty continents – in ‘hostile conditions.’

As sugar prices climbed, Cuban plantation owners expanded plantations – and increased slave labour. From 1840, rumblings among Cubans slaves increased – which would continue for many decades.

Cuban sugar industry was itself kick-started, with English import of 5000 slaves in 1762, during their brief occupation of Cuba. In 1844 Cuban slaves revolted unsuccessfully. 10th, October 1868, Carlos Manuel de Céspesdes released his slaves and El Grito de Yara War, (a 10 year campaign) against Spain started. General Valeriano Weyler, “The Butcher,” was sent to stamp out the independence movement. He created modern history’s first concentration camps. Hundreds of thousands of men women and children were put into concentration camps.

And English sugar colonies gained another second wind.

But what do the Portuguese call their ocean-going ships? Nau. Yes, nau as in Hindi, for boat. Vasco da Gama’s ship, was illustrated in the Libro das Armadas in 1497. (ACADEMIA DAS CIENCIAS DE LISBOA / GIRAUDON / BRIDGEMAN ART LIBRARY). Picture saudiaramcoworld.com

But what do the Portuguese call their ocean-going ships? Nau. Yes, nau as in Hindi, for boat. Vasco da Gama’s ship, was illustrated in the Libro das Armadas in 1497. (ACADEMIA DAS CIENCIAS DE LISBOA / GIRAUDON / BRIDGEMAN ART LIBRARY). Picture saudiaramcoworld.com

Indian shipping

50 years before Independence, a 100 years ago, India was one of the largest ship building countries in the world. The “modern era” began with the building of a dry dock at Bombay about 1750; a second was erected in Calcutta about 1780.

During Shivaji’s reign, as per estimates, more than 300 ships of 300 tons capacity were launched. The Wadias alone built more than 350 ships – during 1735-1863 170 war vessels for the East India Company, 34 man-of-war defence vessels for the British Navy, 87 merchant vessels for private firms, and three vessels for the Queen of Muscat at Bombay docks.

In 1872, Jamshedji Wadia, from a Parsi ship-building family, constructed the “Cornwallis”, a frigate with 50 guns, bought by the East India Company. This led to several orders from the English Navy.

Bengal was the other major port where ship building was for global markets. Chittagong was the center for shipbuilding (now in Bangladesh). The Turkish Navy (a major world power till WWI) was a major customer.

Ma Huan, the famous chronicler and interpreter of Zheng He (also called Cheng Ho) voyages, during the Ming dynasty, studied boat building in Bengal during the early 15th century (1400-1410).

The third major center for ship building was Narsapurpeta (near Masulipatnam) port – which was a major center of exports of steel, diamonds, saltpetre (potassium nitrate, for gunpowder, to kill Indians, Negroes, Aborigines and Red Indians with) from the Deccan plateau.

Sixteenth century painting of the Calicut port - showing shipbuilding yards. (Courtesy - www.saudiaramcoworld.com; BRAUN AND HOGENBERG, CIVITATES ORBIS TERRARUM, 1572 (2)) Click for larger image.

Sixteenth century painting of the Calicut port - showing shipbuilding yards. (Courtesy - http://www.saudiaramcoworld.com; BRAUN AND HOGENBERG, CIVITATES ORBIS TERRARUM, 1572 (2)) Click for larger image.

These buyers preferred Indian ships, because of better jointing technology and elimination of metal sheeting. Indian shipbuilders had a special system where wood was seasoned in partial vacuum, with oils for timber improvement. British shipbuilders, colonialists ensured through tariff and other barriers, that Indian shipbuilding “was prevented from continuing to develop, even though it had a proven ability to adapt to changing technological needs” – and thus finally killing it. English naval superiority rested on Indian ships – and paid for by exploitation of Indian resources.

In 1498, Vasco da Gama’s ocean-going ship, the Sao Gabriel came to India. The Portuguese caravel are well-known. But what do the Portuguese call their ocean-going ships? Nau. Yes, nau as in Hindi, for boat. Few of these Indian built ships have been recovered in various parts of the world. Indian shipbuilding expertise ruled the world – till colonialism killed it.

History repeats itself

On June 6th, two posts appeared in the Indian newspapers. These two posts were remarkable, as these mirrored events and behaviour some 200-400 years ago.

One report dealt with the American War in Afghanistan. To smoothen logistics in Afghanistan, the US ‘recruited’ an Afghan warlord, Matiullah Khan. Much like the English recruited many Indian kings, chieftains to fight their wars.

His main effort — and his biggest money maker — is securing the chaotic highway linking Kandahar to Tirin Kot for NATO convoys. One day each week, Matiullah declares the 100-mile highway open and deploys his gunmen up and down it. The highway cuts through an area thick with Taliban insurgents.

Matiullah keep the highway safe, and he is paid well to do it. His company charges each NATO cargo truck $1,200 for safe passage, or $800 for smaller ones, his aides say. His income, according to one of his aides, is $2.5 million a month, an astronomical sum in a country as impoverished as this one. (via With U.S. Aid, Warlord Builds Afghan Empire).

Matiullah Khan, yet another report reveals, is one of the

… eight trucking contractors who share the US military’s $2.16bn (€1.68bn, £1.45bn) two-year host nation trucking contract. The companies include NCL Holdings, run by Hamed Wardak, the US-educated son of Afghanistan’s defence minister, and others founded by investors in the US and the Gulf.

The system relies on an opaque network of sub-contractors who pay Afghan security companies to escort their trucks. Investigators suspect these companies in turn pay tolls to militia leaders with groups of hundreds of gunmen.

Prominent militia commanders in southern Afghanistan include Matiullah Khan and Ruhullah. Although some hold ranks in the Afghan security forces, such commanders exercise considerable autonomy and often field better forces than the army or police. Industry insiders say militias run what amount to protection rackets on convoys passing through their territory.

Two aspects of this stand out. One is the figure US$2.16 billion over two years – i.e. US$1.08  billion per annum. Now that is a lot of money for the 1500 Matiullah Khan’s militia – and the other 10,000-15,000 members of the other militias.

Are these private militias a problem for the local Afghans? Yes, say the local people. But, like this reports says, “But as long as the Americans are behind him, there is nothing I can do. They are the ones with the money.”

And that pretty much was what happened in India from 1757 to 1947.

The day we decided to invest in 'Desert Bloc' is the day that evil started becoming so awesome!

The day we decided to invest in 'Desert Bloc' is the day that evil started becoming so awesome!

Indian history according to Dilbert

All this still does not explain how the English could become ascendant in Indian – without Indian collaboration. For understanding this collaboration, let us turn to another column by Scott Adams – the creator of Dilbert.

When I heard that BP was destroying a big portion of Earth, with no serious discussion of cutting their dividend, I had two thoughts: 1) I hate them, and 2) This would be an excellent time to buy their stock. And so I did. Although I should have waited a week.

People ask me how it feels to take the side of moral bankruptcy. Answer: Pretty good! Thanks for asking. How’s it feel to be a disgruntled victim?

I have a theory that you should invest in the companies that you hate the most.

If there’s oil on the moon, BP will be the first to send a hose into space and suck on the moon until it’s the size of a grapefruit. As an investor, that’s the side I want to be on, with BP, not the loser moon.

Perhaps you think it’s absurd to invest in companies just because you hate them. But let’s compare my method to all of the other ways you could decide where to invest.

Perhaps you can safely invest in companies that have a long track record of being profitable. That sounds safe and reasonable, right? The problem is that every investment expert knows two truths about investing: 1) Past performance is no indication of future performance. 2) You need to consider a company’s track record.

Right, yes, those are opposites. An investment professional can argue for any sort of investment decision by selectively ignoring either point 1 or 2. And for that you will pay the investment professional 1% to 2% of your portfolio value annually, no matter the performance.

I’m not saying that the companies you love are automatically bad investments. I’m saying that investing in companies you love is riskier than investing in companies you hate.

If you buy stock in a despicable company, it means some of the previous owners of that company sold it to you. If the stock then rises more than the market average, you successfully screwed the previous owners of the hated company. That’s exactly like justice, only better because you made a profit. Then you can sell your stocks for a gain and donate all of your earnings to good causes, such as education for your own kids.

My point is that I hate Apple. I hate that I irrationally crave their products, I hate their emotional control over my entire family, I hate the time I waste trying to make iTunes work, I hate how they manipulate my desires, I hate their closed systems, I hate Steve Jobs’s black turtlenecks, and I hate that they call their store employees Geniuses which, as far as I can tell, is actually true. My point is that I wish I had bought stock in Apple five years ago when I first started hating them. But I hate them more every day, which is a positive sign for investing, so I’ll probably buy some shares.

Looking back at how the Rajputs, like General Mansingh et al, collaborated with the Mughals (Mughals were better than the Khiljis, right?) Indians also justified alliances with the colonial Raj. It took some time for the reality of English rule to sink into Indian minds.

Reluctant admirers

Thus, at historical crossroads, in the 18th century, Indian industrial technology (shipping and gunpowder), wealth (Indian gold reserves) and Indian manpower (Indian sepoys and indentured labour) powered the rise of Britain.

The Indian military market was completely dominated by the private sector. Elements of the Indian military mix – soldiers, elephants, horse traders and trainers, saltpetre production, shipping, wootz steel production, was supplied to the various kingdoms. Operating on a commercial basis, across borders, these production and recruitment systems were technology leaders with high production capacity. In such a military system, standing armies were rare. Production capacities catered to the entire Indic area – and limited export markets.

As the linkage between Indian intellectual and industrial centres (Takshashila against Alexander; Nalanda and saltpetre) broke, after Indian polity fell under the spell of ‘Desert Bloc’ ideology, from 1200 (Qutubuddin Aibak onwards) till date, Indian military production also  lost discretion and propriety. From being market-oriented, and end-use sensitive, India’s military production became mercenary.

Using their ill-gotten gains, from slavery, piracy, crime, loot, et al Islamic rulers and the English outbid Indian rulers. For military elements like saltpetre, elephants, sepoys, horses, armies et al. The first time in Indian history, defence production became public sector monopoly, under Nehru’s ‘commanding heights’ and ‘temples of modern India’ socialistic policy.

To marginally ethical people, without recourse to loot, piracy and slavery under the Indic values system of shubh labh, ‘Desert Bloc’ ethics were an ‘attractive’ alternative. Economically affected by shrinkage in Indian exports due to slave raids and piracy, land grab by the colonial Indian State, some took the easy way of embracing English practices and values – giving the British Empire a leg up in India.

Pirates and slave traders as vectors of the insidious Desert Bloc ethic are usually not factored, analysed or discussed. Indian ship manufacturing centres were world leaders. Hence, ‘traders’ (especially slave traders) from the world over came to India shipyards – centred around Kerala, Gujarat and Chittagong. But slavery and loot are the two elephants in the Desert Bloc room which needs to be recognized, examined – and understood.

Sandwiched between buying Indian collaborators (like Americans are today buying Matiullah Khan) or obtaining cooperation (like Scott Adams is suggesting) from ‘reluctant’ Indian admirers lies the story of the rise of Britain and the British Raj in India.

Not a great mystery this. If you can cut out all the ‘White’ noise.

India’s Money Lenders – The Colonial Stereotypes

Posted in Business, Current Affairs, European History, Feminist Issues, Gold Reserves, History, Media by Anuraag Sanghi on April 1, 2008

“Families have lost land, farmers have been asked to prostitute their wives to pay off debts …” writes Krittivas Mukherjee / Reuters.

Market Share Of Indian Money Lenders

Outdated Bollywood Style

I wonder what is the source of Krittivas’s article. I wonder how many prostitutes these money lenders have – from their 2,00,00,000 farmer-borrowers. Which era are you in, Bro. Krittivas? Apparently, the ghost of East India Company is alive, well and kicking. Is this the kind of grovelling that has to be done to be a part of Reuters, Krittivas? Friend Krittivas is reading a lot of colonial era propaganda – and seeing old Bollywood movies.

Even Bollywood has stopped this kind of portrayal of money lenders now. TV serials these days have business families as stars of the show.

A financial newspaper, The Mint, dutifully carries this Reuters article. Published jointly by The Hindustan Times and The Wall Street Journal, The Mint, regularly carries such bloopers. In yet another article that the Mint carried, for instance, writes how Indian “cities began suffering chronic milk shortages soon after independence in 1947″ – implying that colonial India was the land of milk and honey. This kind of editorial blindness nearly makes me believe that the Indian Government got it right with the previous policy of excluding foreign media.

Some Stats About Money Lenders

There are 34,000 money lenders – and they have lent money to more than 2,00,00,000 farmers. They account for nearly 30% of the rural credit flows – and more credit than all the nationalized banks put together. They charge between 18% to 36% p.a. interest generally. Lesser than what most ‘educated’ credit card users pay – and what ‘modern’ banks charge their English-speaking customers.

So much about ‘usury’ by money lenders.

The Seths Who Funded The East India Companies

The vilification of the money lender by the British Colonial Raj at various times for political and economic gains has unfortunately been carried forward in post-colonial India. The English East India Company (EEIC) was initially funded and grew on Indian capital. The House Of Jagat Seth was most famous – and one of the largest banking families in the world. Virji Vora, Shantidas were other merchant bankers who funded the various European Indian Charter Companies in their trade. EEIC officials could not forget their supplicant status with these ‘seths’ – when they were desperate borrowers.

After 1757, and the occupation of the Bengal, Bihar and Orissa, transactions with the East India Company caused the ruin of many Indian lenders.

The other reason why money lenders were portrayed as villains by the the Colonial administrations was merchandise. Instead of bonded producers of Europe, Indian producers were free to sell their product to the highest bidder. The EEIC found that their contracts could be annulled by repaying the advance amounts. And the weavers and other producers could repay the advances by borrowing from the local money lender.

20th Century Vilification

Later during the Great Depression and the so-called ‘Indian currency crises’, Britain was extracting gold from Indian peasants, to overcome its own problems. For British loot to happen and to make their policies effective, they needed to leave the peasant without options. The only way to do that was to curb the money lender. To achieve this aim, between 1925-1940, enquiry commissions were created – and propaganda ‘reports’ flooded the system.

The colonial India Government passed many of the laws restricting money lending activities. These reports - Central Banking Enquiry Committee (CBEC) report (1929) and its associated Provincial Banking Enquiry Committee reports (of Assam, Bombay, Burma, Ceylon, Central Provinces, Bengal, Punjab, et al) of which the Madras Provincial Banking Enquiry Committee (MPBEC) report is cited by lazy academics and out-moded bureaucrats as authoritative – even in post-colonial era.

April Fool Jokers?

April Fool Jokers?

April Fool Joke – The RBI

On April 1st, 1934, while the ‘Squeeze India’ campaign was under execution India’s banking authority was set up – choreographed by Montagu Norman, Neville Chamberlain, Winston Churchill (some sickness … some racism) Lord Willingdon. From that April Fool’s day till now, RBI’s character has not changed. It remains isolated, out of touch with the India – and looks at India through colonial viewing glasses.

The tragedy is that RBI is not alone. The IAS (a successor to the ICS) and the Planning Commission are the other two. Compare that with the brilliant track record of modern Indian regulators and organizations like the SEBI, TRAI.

Legalized Harassment & Extortion

Debt Conciliation Acts were passed between 1933 and 1936 by the governments of Assam, Bengal, Central Provinces and Berar, Madras and Punjab; the Punjab Regulation of Accounts Act (1930) and the Debtors Protection Acts of 1935 and other such burdensome laws buried the money lender in mountains of paperwork and licences. These laws required money lenders to comply with extensive and prolonged compulsory licensing and registration – and extensive recording of transactions and accounts.

What these laws achieved was what was desired – a license for police and other ‘inspectors’ to start an extortion racket from money lenders (these days called corruption). A bureaucrat from colonial Punjab, Malcolm Darling (1925) shedding crocodile tears stated “the Indian peasant is born in debt, lives in debt and dies in debt” became a by line for tarring the money lender – while the cause was extractive, colonial revenue practices.

Options Foreclosed

These restrictions on money lending foreclosed the liquidity option for the Indian peasant, which would have averted the gold outflow from India and the impoverishment of the Indian peasant. With this legalized persecution, money lenders’ activities were curtailed all over India. RBI joined in this hounding of the money lenders – which continues to this day. The Bengal Burma link of the ages was broken. Chettiar money lenders were thrown out of Burma. From being a granary of Asia, Burma started declining – and there was no rice for exports. Result – The Bengal Famine of 1943. Tally – 40-50 lakh deaths. Similarly, the role of Chettiars in Singapore was wiped clean.

After the fall of Singapore, and the rapid Japanese advance, with Subhash Chandra Bose in the vicinity, a revolt by Bengal would have had catastrophic effect on the colonial administration. Howard Fast, in his novel ‘The Pledge’ believes that the Bengal Famine was deliberate creation- possibly to weaken the local population.

Subhash Chandra Bose occupied a large mindshare within and outside India. (Image source and courtesy - editstreet.com). Click for a larger image.

Subhash Chandra Bose occupied a large mindshare within and outside India. (Image source and courtesy - editstreet.com). Click for a larger image.

The RBI, a colonial era body, continues with these colonial anti-Indian policies. They keep ever-greening and recycle colonial policies. Old laws with new labels and different wordings are made – with the same intent. Kill the money lender. In all this, it is Indian agriculture and the peasant who suffers.

Even the rare modern supporter of the money lender does not see the colonial baggage that India and Indians governance carries, sees only half the picture – and little opportunity.

The Pre-WW2 Currency Crisis

After (colonial) India’s accession to the world gold standard in 1898, India rapidly built up a export surplus - and British reserves of gold started drying up – in spite of gold export restrictions to India by the USA, Britain and much of the Western world. There was hysteria in popular press and politicians on the subject of India and its appetite for gold. To overcome this payment crisis, it was decided to pay India in silver released by the Pittman Act. Subsequently, even payments in silver became difficult. India then started getting paid by Bank Of England credit notes.

By WW1 end, it was evident that sooner rather than later, India would obtain independence. Between 1920-40, in a series of measures, it was decided to reverse this policy. Central bankers from the USA, Britain, France and Germany had many meetings to “coordinate monetary policy.” The agenda – gold flow management between themselves and an obvious understanding - don’t let the browns get the gold. They (Hjalmar Schacht, Governor, Reichsbank, Charles Rist, Deputy Governor, Banque de France, Benjamin Strong, USA Federal Reserve, Montagu Norman, Bank Of England) agreed that Indian demand for gold had a “deflationary effect on global liquidity,” therefore “Indian demand for gold had to be regulated.” So, while the West consumed Indian production and goods, they regulated Indian demand for gold!! The result – Bengal Famine of 1943 which killed 40-50 lakh Indians. As Gideon Polya has pointed out, Australian sheep have lower mortality rates.

Like much of Western history, the British (Lord Willingdon, Neville Chamberlain, Montagu Norman, Winston Churchill – as the Chancellor of the Exchequer) executed a scorched earth policy in India. (After all what is brown life worth?) They implemented a series of economic and administrative measures that killed millions in the Bengal Famine would impoverish India – and sustain the empire.

Montagu Norman, Winston Churchill (then the Chancellor of the Exchequer) returned to the gold standard – with the famous prediction by Keynes that this action would result in a world wide recession – of which much came to pass. Churchill confessed “I’m lost and reduced to groping,” but went along with Montagu Norman, united by their racism.

The National GovernmentOn October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September (misnamed as the Indian Currency Crisis), ensuing Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that depressed silver prices, inflated gold prices and raised interest rates in India.

Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council , the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically say ‘… Indians are disgorging gold … (page 156). Indians have a different reason to revile Neville Chamberlain who with great satisfaction said “…The astonishing gold mine that we have discovered in India’s hordes has put us in clover …”after impoverishment of the Indian serf.

What Can be Done

The largest rural credit agency system, which knows Indian agriculture like the back of its hand, is available to the Indian economy. Trash the colonial propaganda – and use these money lenders.

Step 1 – Stop calling them money lenders. This term was used and has acquired pejorative connotations.

Step 2 – Bring them under SEBI – an effective organization, not reputed for corruption.

Step 3 – Increase credit supply – and interest rates will automatically fall. Allow re-finance to these ‘banias’ – based on their loan books.

Step 4 – Create credit enhancement tools – by use of traditional adhatiyas, other money lenders, property collateral of the end user, etc.

Step 5 – Induce competition by simplifying registration and inducing initial success for existing and new comers.

These credit experts can become low cost credit delivery mechanisms – which will revolutionize Indian agriculture. Will Indian planners grow out of their colonial moulds? Will Indian legislation go native? Sooner the better.

What Can The Money Lenders Do?

Under generations of persecution, extortion and discrimination has blunted the organizational capability of the ‘native money lender.’ He needs to look at himself afresh – and exploit business opportunities and use his knowledge of the Indian financial ‘consumer.’

A simple outline of an action plan for the money lenders to reclaim their position can be as follows: -

1. Incorporate a holding company.

2. Contribute one lakh rupees capital per member – with 34,000 members.

3. Create a paid up promoter capital of Rs.340 crores – and an IPO for 660 crores.

4. Obtain RBI licence for a rural bank with this paid up capital of 1000 crores.

5. Enrol all money lender members as DSAs.

6. Refinance money lender portfolio – and create further liquidity.

7. Use the money lender network to raise deposits, sell insurance, obtain refinance mortgage for housing, etc.

Even a conservative estimate of Rs.1.00 crore lending, guaranteed by these money lenders can inject Rs.34,000 crores of investment in the agricultural economy in India. SEBI can be co-opted to create appropriate supervisory and oversight measures.

Post Script – The source of Krittivas’s article

It is 6 months and Krittivas has not seen it fit to give sources or details of his dubious charges. So, let me give the details. This entire story of prostitution of wives to money lenders was a colonial idea that the British plagiarised from a very successful French Emile Zola novel, Germinal (1885).

Of course, most of Zola’s work was propaganda for the Socialist causes that were dear to him. The Vatican banned Germinal – and proscribed its reading by Catholics. India’s vernacular press fighting for survival had no sources to overcome this propaganda. Indian English press was, of course, under colonial domination. When Emile Zola died in 1902, he was given a State funeral and the crowd chanted ‘Germinal, Germinal’.

Does this give you some idea, Bro.Krittivas, on how much propaganda we are targetted with, before you start hitting the keyboard.

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