Britain – The Rise of a Pirate Empire

Extract on Piracy – Cultures of Exchange: Atlantic Africa in the Era of the Slave Trade By David Richardson; from Transactions of the Royal Historical … – Ian W. Archer – Google Books 2011-10-09 19-27-47.

Let there be piracy …

During the centuries of Britain’s rise (1600-1800), a significant source of wealth was piracy – loot of merchant shipping, on high seas.

A particular target of English pirates were Spanish ships, crossing the Atlantic, carrying gold from the Americas to Spain. English pirates attacked and looted these ships. Any ship was a target – and many a time, the ship itself, and not the cargo, was the target of the pirates.

British access to financial liquidity, initially, was a result, of organized piracy – targeting Spanish merchant shipping. Modern British history glosses over this ‘contribution’ made by piracy.

Looting … uh?

Pirate nation to super-power

Till 1856, sea piracy was legal. And not just legal, but also promoted by European Governments.

The British Crown gave permits to pirates for looting on high seas – through, what were known as, letters of marque. With two conditions – English ships would not be attacked and the State would get a part of the loot.

One of the earliest ‘success stories’ was Pirate John Hawkins. So successful was Pirate Hawkins, that he became Admiral ‘Sir’ John Hawkins. Pirates like Admiral ‘Sir’ John Hawkins made money on slave trade and piracy. This model of ‘voyages’, became the norm for the next 200 years. With the encouragement and sanction of the English State, high seas piracy and African slavery combination became the national industry in Britain. Trafficking African slaves one way, piracy the rest of the time.

Descendants of Admiral ‘Sir’ John Hawkins, recently ‘apologized’ to Africans for the crimes of their ancestor – Admiral ‘Sir’ John Hawkins.

Francis Drake calling for pirate hands. ©Copyright 2009 The Way Network. Click for larger image

El Draque

Admiral Hawkin’s more famous nephew, was ‘Sir’ Francis Drake. El Draque, The Dragon, to the Spanish.

Drake’s voyage in the ship Golden Hind is an event in British economic history. His attack on the Spanish ship, Nuestra Senora de la Concepcion, nicknamed ‘Cacafuego’ (meaning Shitfire!) captured off Ecuador on March 1, 1579 yielded much loot. It took six days to transfer the loot from the Spanish ship to the British. In this capture, Drake seized 80 pounds of gold and 26 tons of silver. Queen Elizabeth, apart from knighting him, was also a financial partner in these criminal enterprises.

And the Others

Anne Bonney, Henry Morgan (later appointed a Governor in the Caribbean) were other celebrated pirates. Edward Teach (also Edward Thatch, c. 1680 – 22 November 1718), better known as Blackbeard remains famous to this day.

Dutch pirates like Maarten Tromp, Piet Hein (also Heyn), were made admirals. Thin lines divided pirates from official naval forces. Michael de Ruyter , another Dutch pirate became notorious for his raids across the Canadian coastline. Recently, Netherlands named an underground tunnel after Piet Hein – and ditties were written and set to music for Piet Hein. Piet Hein’s became famous when he captured booty worth 1 million sterling or 12 million guilders in gold, silver, and expensive goods like indigo and cochineal from Spanish ships.

Looting from Looters

The main target for pirates – Spanish ships in the Atlantic.

Why only Spanish ships?

Spain, which had a monopoly over most of America by the Papal Bulls, had a steady stream of ships, carrying looted gold from the Americas, after the massacres and genocide of Native Americans.

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

Papal Bulls

How did Spain end with a ‘monopoly’ over the New World?

The Vatican in the 15th century, partitioned the world between Spain and Portugal. Each of these nations were given exclusive rights for expanding ‘trade’, and ‘planting the banner of Christ’. These awards to Spain and Portugal, known as Papal Bulls, excluded Britain, France, Danes, Netherlands and German region.

Was that the reason for the support to Protestantism in most of these countries. Why did Henry VIII change – from a Defender Of The Faith, to revolt against the Church?

The politics of of piracy

After the break with Vatican, during the reign of Henry VIII, no longer tied by Papal injunctions and diktat, the English decided to challenge Spain. After the grant of duopoly to Spain and Portugal, vide the Papal Bulls, by the Church Of Rome, England, France and Netherlands declared open season against Spanish ships.

Jamaica, captured by the British (1655), from the Spanish, was an ideal hideout from which English pirates, attacked Spanish ships. Further, it was it was a safe-haven for escaping Native American Tainos and African Slaves. Called Maroons, they were recruited by these pirate ships, to bolster manpower.

The Spanish Armada was assembled by Spain to end British piracy.

And Britain decided to form a company to challenge Portugal in India. In 1600, the English East India Company (EEIC) was formed to spearhead English trade with India. By 1650, EEIC obtained the firmaan from Shah Jehan to operate in India – and compete with the Iberians.

At the heart of Britain’s wealth – piracy

The explicit use of pirates in the Caribbean brought great riches to the Britain. For a good part of 300 years (1550-1850), the English crown gave permits for pirates to operate on high seas. The rise of European powers coincided closely to piracy. In a modern context, imagine the Italian government giving legal sanction to the Mafia, or Colombians to the Cali cartel.

Keynes famously linked all British foreign investment to the single act of looting of the Spanish Armada. 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!

Piracy across the Desert Bloc

Were Europeans the only pirates.

Among Islamic pirates, the more famous were the Barbarossa Brothers – Muslim pirates operating in the Turkey-Mediterranean region. No less capable, or less effective, the Barbarossa Brothers were the most notorious pirates – raiding towns and villages, for slaves. Their raids were feared across the Mediterranean. Against the Barbarossa Brothers were the Knights of St.James.

Indian shipping was also significantly affected by piracy.

Piracy affects India

British historiography claims that Maratha Navy under Kanhoji Angre – which levied taxes on British ships, were privateers and /or a pirate. Before that, Mughal armies removed the Portuguese from Daman, for attacking a royal ship, Rahimi, carrying the Mughal Queen, Maryam uz Zamani,  to the Haj in 1613.

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. In India’s military market, the highest bidder usually also won the subsequent wars.

Increased stranglehold of Indian economic output, after the 1857 war in India, gave British a fresh impetus to de-legitimizing piracy. In 1858, Rep. HL Underwood, on June 10th 1858, on the subject of ‘Increase of the navy’, in the US Congress stated that

United States would be the first to resist the unauthorized use of her flag by vessels of other nations fraudulently to carry on said trade, as Great Britain asserts is being done.

Smuggling, piracy and slave trade as an ‘adventure’ | Poster for 1939 film, Jamaica Inn, a story about piracy and smuggling, based on a book by Daphne du Maurier; Starring – Charles Laughton, Maureen O’Hara, Director: Alfred Hitchcock.

Romancing Piracy

British propaganda and the Government made these pirates and privateers into governors, officials and heroes – and the Spanish Armada into an instrument of Catholic repression. In the best Anglo Saxon propaganda tradition, books soon started a ‘white wash’ of slavery and piracy.

One such was the skilled Lord Byron – whose pirate-poem Corsair, sold out its entire print run of 10,000 copies on the first day itself. Another book that chiselled the pirate-image was Robert Louis Stevenson’s Treasure Island. Like Mr.Midshipman Easy, by Captain Frederick Marryat (Retd. Royal Navy), in 1836.

British ‘celebration’ of Drake’s fugitive flight from Spanish ships has been credited by no less than Keynes himself as the turning point in British fortunes. 400 years after the Drake’s ‘exploits’, British historians at the Royal Historical Society (image 1) gloss over the role of the British Government as fountainhead of piracy and slave trading in the first place.

Britain’s official historians, the Royal Historical Society, ignores these facts – and instead takes credit for ‘reducing’ piracy.

Vectors of religion and slavery

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.

Kanhoji Angre – Statue at Alibaug

When the State commissions crimes!

Behind every great fortune there is a crime – Honoré de Balzac.

For many centuries, piracy, slavery, were encouraged, licenced by European States. Balzac’s statement only be understood with that background.

A 1936 novel by Daphne Du Maurier’s was set in the Bodmin Moor, Cornwall, based on and named after the real Jamaica Inn, a Bolventor pub, that evolved from a coaching inn in 1750, and went on to become famous as a smugglers’ base. Her other book, was the The Frenchman’s Creek (1942), was based on the life of a pirate.

Coppola’s Apocalypse Now was inspired by Joseph Conrad’s The Heart of Darkness. A book examines this phenomenon tangentially – when a ‘licenced’ fighter goes ‘private’! In Asia. Like Britons did in India.

Remember O’Dyer and O’Dwyer!

End of piracy

Piracy was outlawed by The Declaration of Paris, in 1856, ratified by various powers. Initially by Austria, France, Great Britain, Prussia, Russia, Sardinia and Turkey – but not by Spain, Portugal and the USA.

Beginning of the end for Britain …

Wonder why the Great British culture is taking them nowhere! After they lost their slaves (in 1830), after the end of piracy (1860) and the end of colonies (1960).

Even with a hybrid, mongrel polity, India has emerged as a significant economic force within 60 years of British departure.

Wonder what India missed by a doing this hybrid shindig – instead of a full Indic.

 

Debt situation – A representative sample

INDIA'S FINANCIAL SITUATION 1600 AD (FROM A free nation deep in debt: the financial roots of democracy By James MacDonald. PAGE 131). Click to read more at Google Books.

Spain, which became a significant power in the world between 1500-1800 AD was deep in debt. On the other hand, Moghul India, which controlled about three-fourths of modern India, most of Pakistan and Afghanistan was seriously in surplus – and had deep reserves.

To become a super-power, money ain’t everything. A deep desire to loot, pillage, slaughter, kill possibly is more important. Has the desert Bloc changed? Vietnam, Korea, Iraq, Afghanistan seem to suggest that the Desert Bloc remains just as willing to loot, pillage, slaughter, kill as they were in the past.

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Rise of the British Empire – A 2ndlook

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 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 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 - 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

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.

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

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 - 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!

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.

Indian Gunpowder – the Force Behind Empires

A vizcacha, relative of the chinchilla, in Chile's Atacama Desert. These herbivores are among few who thrive in the Atacama. (Photo shot on assignment for "The Driest Place on Earth," August 2003, National Geographic magazine) Photograph by Joel Sartore

Arid, Desolate Atacama

On Chile’s northern border is the remote, arid Atacama desert. Desolate and dry, rain in Atacama happens once in 2-3 years. Some people living in the Atacama have never seen rainfall in all their lives. Yet, there is some sparse wildlife – a tribute to hardiness of living beings.

Strangely, the Atacama is home to a few ghost-towns – once boom towns. For five years, from 1879-1884, Bolivia and Peru fought with Chile over this rainless, arid and desolate terrain.

Behind this curious importance of the Atacama desert was nitrates. It was Atacama’s nitrates interestingly that broke an important British monopoly – based on India’s saltpetre production.

Untold secrets

In 1809-1810, the British had to mount a serious campaign in the Indian Ocean. The French, from their Indian Ocean naval bases at Île de France (Mauritius), Bourbon (Réunion) and Rodrigues, attacked East India Company ships carrying valuable saltpetre (also saltpeter, nitre, niter) – so essential for the Spanish War (1808-1809).

Indian saltpetre for could not reach Confederate armies due to Union naval blockade!

The British army, retreating across Spain, in harsh winter conditions, needed saltpetre. Under the onslaught of the French forces, ruthlessly pursued, the final escape of the British army, from Corunna was a miracle. The British General, John Moore’s death, at Corunna, Spain, was turned into a heroic ‘victory’. Charles Wolfe’s poem, The Burial of Sir John Moore after Corunna became essential reading for every English schoolboy.

In 1800, a son from a rich family of refugees from the French Revolution in America, after a survey of business opportunities in America, wrote

There already exist in the United States two or three mills which make very bad powder and which do however a very good business. They use saltpeter from India which is infinitely better than that which is produced in France but they refine it badly.

The son was Eleuthère Irénée du Pont, the family was the Du Pont family – and their firm is now known as EI du Pont de Nemours and Co. EU du Pont’s expertise in manufacturing saltpeter came from his training with the French Agency for Powder and Saltpeter (Regie royale des poudres et Salpetres) – and under the tutelage of Antoine Lavoisier, the French chemist, he boasted.

Behind the Dupont fortune was Indian saltpetre. Behind Lincoln’s success in the American Civil War was saltpetre. Behind Anglo-French confidence against Germany in WW1 was the control of the saltpetre deposits from India. Germans were able to sink many of these British saltpetre shipments. In turn, Germans with the Haber-Bosch process, in BASF factories, continued the war – without Indian saltpetre or Chilean nitrate supplies.

Saltpetre – what’s that?

What was saltpetre? Why was saltpetre important. Why did India play such an important role in saltpetre?

Unusually important, the chemical name of saltpetre is potassium nitrate – an essential ingredient in gunpowder. Indians had perfected the method of preparing potassium nitrate (KNO3). The other two ingredients in gunpowder being charcoal and sulphur – easily and freely available and cheap.

India’s military technology is history’s greatest ‘hidden’ secret. Official (and Western) portrayal of Indian military systems in the face of Islamic invaders, Mughal sultanate  and the rise of British imperialism makes out India as a sitting duck with ill-trained and terrified soldiers, armed with bows and arrows, who were hopelessly outclassed by the enemy.

Facts being otherwise, it raises questions about motives for this deliberate wrong portrayal.

The story from Mongolia

In the last 1000 years, there are sketchy records of gunpowder in India, with Rai Hamir Deva of  Ranathambore of the Malwa region, who supposedly used some Mongol deserters (1300 AD) to fight Khilji armies with gun powder. This may be misleading for two reasons.

Modern history credits China with the invention of gunpowder. Firstly, this is largely based on the work of a self-confessed Sinophile – Needham. With a dismissive one sentence, Needham opines, “On Gunpowder history in India, Oppert (1) was duly exploded by Hopkins(2).” And Indian history as the world’s largest producer of gunpowder was swept under the carpet. Needham conveniently ignores evidence like how

Jean Baptiste Tavernier recorded a local tradition in the 1660s that gunpowder and artillery were first invented in Assam from whence they spread to China and he mentioned that the Mughal general who conquered Assam brought back numerous old iron guns captured during the campaign.

Secondly, Mongol territories extended from Mongolia to the gates of Vienna and Russia – but not India. How is it that a few deserters-soldiers could establish the world’s largest gunpowder production system, so rapidly in non-Mongolian India. But, could not do so in conquered territories of China, Central Asia, Middle East, West Asia, and Europe.

A 100 years before Needham, India’s pioneering status in saltpetre was common knowledge. English publications, for instance in 1852 and another in 1860 gave weightage to the opinion of

those who believe that gunpowder was invented in India and brought by the Saracens from Africa to the Europeans; who improved its manufacture and made it available for warlike purposes.

Unlike China, with an odd textual reference or a drawing or a singular artefact, was the entire industry in India – which remained unrivalled in the history of the world. Compared to China’s paltry production of gunpowder, India’s widespread and organized gunpowder production system points towards indigenous development. There are reports, that in “664 an Indian visitor to China reportedly demonstrated the peculiar flamability of saltpeter and provided instructions on how to locate it (Pacey 1990, 16).”

Tall tales … thin stories

The deserter Mongol soldier source seems rather far-fetched considering that Mongol armies studiously avoided attacking India.  India, the richest economy of the world at that time, known and famous for its wealth, was spared by Genghis Khan! Just why would history’s foremost looter, invader, pillager spare India?

When Genghis Khan’s Mongol armies were running rampant, Islamic refugees found shelter in India, during the reign of Iltutmish. In 1221, Khwarezm-Shah and other Persian refugees, sought refuge in India, across the Indus into the Punjab, India, from Genghis Khan’s Mongol armies.

Encyclopedia Britannica says ‘Fortunately, the Mongols were content to send raiding parties no further than the Salt Range (in the northern Punjab region), which Iltutmish wisely ignored …” (emphasis mine). As Indian military reputation waned under foreign Islamic rule, the Mongols mounted a military expedition. The Mongols could succeed in India only under the foreign rule of the much-derided Islamic Tughlaks.

Was Nalanda behind the gunpowder expertise in Bihar and Bengal region. A section of the Nalanda Mahavihara. The qualities of Buddhahood were personified in the vibrant style of art that was created in the university's intellectual atmosphere. (Picture by BENOY K. BEHL, courtesy: The Frontline). Click for larger image

India – the largest gunpowder source in the world

Now, combine saltpetre production with the fact that the heart of the Indian saltpetre production was in Bihar, which was also the home of the Nalanda seminary /university.

By the 16th-17th century,

In parts of India that never were frequented either by Mohammedans or Europeans, we have met with rockets, a weapon which the natives almost universally employ in war. The rocket consists of a tube of iron, about eight or ten inches long, and above an inch in diameter. It is filled in the same manner as an ordinary sky-rocket, and fastened towards the end of a piece of bamboo, scarcely as thick as an ordinary walking cane, and about five feet long, which is pointed with iron.

What about Europe

Saltpetre based gunpowder was in constant short-supply in Europe. Gold from the Americas, flowing into European trade channels, fuelled demand for gunpowder. Gunpowder became an essential ingredient for subjugation of natives, extraction of gold, capture of territories and slaves, piracy on the high seas – all the real reasons for ascent for European power.

The European gunpowder situation was grim. This can be gauged from “a letter of 1605 from the King of Spain to the Viceroy of Goa (the Portuguese trading settlement on the south-west coast of India) for example ordering the annual dispatch of 10 or 12 caskets of saltpetre.” Remember in 1605, Spain was the prime power European power. Compare that to the Indian situation.

When Raja Pratapaditya of Jessore capitulated to Islam Khan in 1609, he agreed to surrender twenty thousand infantry, five hundred war boats, and a thousand “maunds” (41 tons) of gunpowder.

Saltpetre from India kept the British 6-pounders busy at Waterloo!

The outcome of Waterloo can be gauged from a forgotten statistic – “In the year before the battle of Waterloo (1815) the East India Company exported 146000 cwt. of saltpetre to England.” 146,000 cwt is  7300 tons of saltpetre. British Ordnance Board powder mills in 1809,

produced 36,623¾ ninety pound barrels of powder and private contractors using government supplied saltpetre a further 24,433 ninety pound barrels. Some of British munitions output was supplied to allied governments: Portugal received in the years 1796-1801 … 10,000 barrels of powder, 500 tons of saltpetre; the British Government put into execution the gigantic plan of being a depot, the manufactory, the place of arms, and the centre of the European war

Spain and Sweden also received munitions for fighting on the British side against Napoleon. British victory at Waterloo, was in no small measure “thanks to the use of Indian saltpetre, British gunpowder was widely recognised to be far superior to the charcoal-like French product.” British creditworthiness received a boost just before Waterloo. British debt, trading at 25% discount in 1813, was boosted by Indian gold, in 1813, procured by Britain.

Western historians now reluctantly admit, that without the “accumulated credits from Indian transfers since 1757, Britain’s financing of land warfare during the French wars could have been compromised.” Napoleon and France could not “march their combined armies to India, and strangle the supplies of British gold that had been financing successive coalitions against France.”

Without the advantage of Indian saltpetre, with a threatening Britain

in 1792 France was able to face danger on all sides, it was because Lavoisier, Fourcroy, Guyton de Morveau, Chaptal, Berthollet, etc., discovered new means of extracting saltpetre and manufacturing gunpowder.

Some 6000 factories manned by ‘salpetriers‘ worked in France to overcome the naval blockade.

Meanwhile in India

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 other reason was an established saltpetre production in the Malwa region till the 19th century. In Punjab, the main centres were Lahore, Hissar, Multan and Amritsar.

India’s gunpowder production system

India was the largest gunpowder production system – in the history of the world, till the 20th century. Specifically Bengal and Bihar regions. Operated by a caste of peoples called the nuniah, saltpetre beds supplied the most vital element in gunpowder – saltpetre. And India produced virtually all of it.

Especially, Bihar, Bengal, Agra and Tamil Nadu, Andhra and Karanataka regions (Anantapur, Coimbatore, Guntur, Kurnool). The Guntur Sircar also manufactured saltpetre on a commercial scale. A mid 17th century Royal Society paper documented how saltpetre was made in India. Most of the miniscule amounts of saltpetre produced in the rest of the world was calcium nitrate, a hygroscopic salt, which spoilt easily by absorbing moisture from air.

The Armenians, 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.

Gunpowder becomes a British monopoly

After the annexation of Bengal,

“By seizing Bengal, the British exerted mastery over 70 percent of the world’s saltpeter production during the latter part of the eighteenth century. Since powder stocks could not be prepared quickly or easily, demand was no less during peaceful interims than during times of war, for, in addition to normal sales for peaceful purposes, gunpowder was steadily purchased or produced to build up military powder reserves for emergency use.

One reason why China developed fireworks, rockets, and other incendiaries rather than shot-firing artillery was China’s reliance on artificial saltpeter for making gunpowder. The Chinese also often used a higher proportion of charcoal and sulfur, which resulted in more fire and less ballistic strength. (16) India, on the other hand, produced saltpeter of very high quality, enabling the development of gunpowder weapons, in particular heavy siege guns, in addition to rockets. In many ways, Indian gunpowder making was more advanced than that of China, particularly regarding the strength of the final product, in its commercial organization, and in its application to military purposes.

As early as the 1460s, nearly forty years before the commencement of the East India trade, these Persian sources make it clear that the rulers of Jaunpur and Bengal already had organized saltpeter production as state monopolies managed by their chief merchants.

India was roughly a century ahead of Western Europe in terms of developing the infrastructure for gunpowder technology. It is significant, though, that gunpowder was not shipped to India from Europe in any significant quantities. By 1617, the Portuguese king had joined the general European clamor for more saltpeter. The capitalization of the saltpeter trade at Rajapur was in the hands of Saraswat Brahmins, with investors participating from as far away as Goa and Diu. Shivaji (r. 1664-1680) and his successors made nitrate procurement into a state monopoly, thus forcing the Portuguese, their Indian agents, and Banjara peddlers to deal with the Maratha state.

The Mughal Empire has been styled a “gunpowder empire,” which is a debatable characterization. (34) It is clear from Mughal records that guns were important, if only as symbols and occasional instruments of imperial power. The victory of Babur (r. 1526-1530) over Ibrahim Lodi (r. 1517-1526) often is attributed to his use of artillery, however, Babur himself valued his own judgment at least as much as his Turkish guns. (35) After the Battle of Panipat (1526), the first Mughal ruler ordered executions by firing squad, which are some of the first such killings recorded. Contemporary descriptions of Babur’s battles, however, emphasize the continuing dominance of cavalry, with guns present but not decisive. Nevertheless, warfare was changing in South Asia. Babur’s eldest son and successor, Humayun (r. 1530-1539/1555-1556), was keen to bring Rumi Khan, the Turkish artillery expert employed by the Sultan of Gujarat, over to his side. (36) The widespread use of firearms by Sher Shah (r. 1540-1545) during the brief Sur interregnum is significant, as is the fact that Sher Shah himself was killed by a gunpowder explosion. (37) The early sixteenth century, for India, was a time of significant military change, a watershed between the age of the blade and the age of the gun.

Sher Shah realized that a large army of peasant matchlockmen, recruited and paid by the state, could only exist in the context of a bureaucratic regime with enhanced revenue-collection capabilities and in a kingdom with strong commercial institutions. This lesson was not lost upon Akbar (r. 1556-1605), whose advisor, Abu al-Fazal, adopted many of Sher Shah’s innovations. The rising importance of the saltpeter trade, as well as its lowly origins, may be gauged by the meteoric rise of the warlord Hemu, who had opposed Akbar’s accession to the throne. Akbar’s biographer-courtier, Abu al-Fazl, uncharitably informs us that Hemu was a member of “the Dhusar tribe, which is the lowest class of hucksters in India. At the back lanes he sold saltpetre (nimak-i-shor) with a thousand mortifications … till at last he became a government huckster….” As Akbar’s army set out to challenge Hemu, their spirits were roused by a giant image of the saltpeter merchant-turned-general, filled with gunpowder and set on fire. (38) Ironically, Hemu was killed by the Mughals not with a musket shot, but in the old-fashioned style, with an arrow in the eye, followed by a sword blow to the neck.

Significantly, Sher Shah’s infantry, carrying firearms, were recruited from the eastern Ganges Plain, the same region in which saltpeter production had already become an important component of the regional economy. Later, this area provided infantry for the Mughals and eventually for the British, too. (from The Indian saltpeter trade, the military revolution and the rise of Britain as a global superpower. from: The Historian, Article date: September 22, 2009, Author: Frey, James W.)

After obtaining this vital monopoly, Britain protected this. Saltpetre exports were banned. Thus an ancient Indian technology was harnessed by the English to subjugate the Indian.

From gold came saltpetre, which made getting gold easier

Greater access of saltpetre to the British and with the shutting out of other European powers, saltpetre became essential for other European powers, because English had it. It became rare, as the English monopolised the trade.

In 1775, the French scientific publication, Observations sur la physique a proposal by Academie Royale des Sciences for increased saltpetre production within France.  Finally, a prize was announced in 1783. Nicolas Leblanc set up a factory at St.Denis, during 1791-194, near Paris for manufacture of saltpetre in France. The whole of France was mobilized for this saltpetre collection and gunpowder production.

Directions for gathering of saltpeter were printed and sent all over France. The prescribed recipe for saltpeter, charcoal, and sulphur was dispatched to the flour mills and the powder was ground according to simple specifications. Each district was directed to send two citizens to Paris for a month’s course in the casting of bronze and iron and in new methods for the manufacture of powder. (from From crossbow to H-bomb By Bernard Brodie, Fawn McKay Brodie.).

At the start of the American Civil War, against the Southern  Confederates, The North started with the benefit of a stockpile of some 3 million pounds of niter – i.e. saltpetre. The Confederates  sent James Mason and John Slidell to obtain saltpetre from Britain – and not empty diplomatic recognition from European powers. Mason and Slidell were captured by Unionist forces. Britain demanded release of Mason Slidell. Lincoln refused.

Queen Victoria issued a proclamation forbidding the export from all ports of the United Kingdom, of gunpowder, nitre, nitrate of soda, brimstone, lead, and fire-arms.—London Gazette, Dec. 4.

Britain imposed a ban on exports of saltpetre. Known in history as the Trent Affair, as Union saltpetre stocks went down, Lincoln backed down and agreed to release Mason and Slidell. Prices of saltpetre skyrocketed from some US$0.20  to US$3.0 within one year after the war began. The  Confederates established a Niter Corps to manage this shortage. British godowns overflowing with Indian and Egyptian cotton, did not really depend on Southern cotton, declared neutrality – and supplied both sides with Indian saltpetre.

Well understood by the US Government, C.H.Davis, of the Bureau Of Ordnance, Navy Department, on November 22, 1862 reported to the US Congress,

I feel it, therefore, to be my first duty to urge that suitable provision of ordnance material be made for probable future necessities of the Navy. Most important among them is nitre, which enters so largely into the composition of gunpowder that it may be said to be gunpowder itself, with some slight additions of sulphur and charcoal under proper combination.

It is not produced naturally in this country, nor by any other but India, except in insignificant quantities.

Hindostan alone supplies the whole world, which being a British dependency, places us entirely at the mercy or caprice of that power for our stock of this essential article.

India's widespread manufacture of saltpetre was private enterprise! Without state subsidy or support! (Picture by BENOY K. BEHL, courtesy: The Frontline). Click for larger image.

End of the saltpetre era

With the arrival of Chile’s nitrate (sodium nitrate – NaNO3) deposits in Atacama desert, the world was weaned away from Indian saltpetre. Chilean nitrates were used to derive nitric acid, a key intermediate for explosives manufacture.

Chilean nitrate was sodium nitrate, (NaNO3), which could be used to derive nitric acid. Nitric acid was used for manufacture of explosives. HAPAG, the Hamburg based shipping line,  became the biggest in the world, carrying Chilean nitrates to Germany. The end of Boer War (1899-1902) saw the emergence of Germany as a major producer of munitions – especially the smokeless gunpowder. Even Britain started buying from Germany.

For a brief while, guano, a natural fertiliser composed of bird droppings, was also a source of nitrates for explosives. But, with the Haber-Bosch process, Germany could manufacture explosives – without the Chilean nitrate.

With the discovery of nitroglycerine and TNT and its widespread commercialization by Alfred Nobel (of Nobel Prize fame) from the 1860s onwards, this British saltpetre monopoly end. As the British monopoly over gunpowder started weakening, the British policy changed.

Pirate nation to super-power

Till 1856, sea piracy was legal.

The British 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. 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.

Piracy was outlawed by The Declaration of Paris, in 1856, ratified by various powers. Initially by Austria, France, Great Britain, Prussia, Russia, Sardinia and Turkey – but not by Spain, Portugal and the USA. Soon after, Britain became a buyer of explosives, munitions. Challenges to British power started soon after this.

In less than than a 100 years after invention of alternates to Indian saltpetre, Britain was a shadow of its former imperial self.

The end of Indian saltpetre

To cover the cost of the Anglo-Indian War of 1857, the British Raj increased taxes on saltpetre. British traders from India started clamoring for a reduction in export duty from 1860 onwards. From more 20,000 tons of saltpetre exports in 62-62, it fell to around 11000 tons by 1865, and continued declining there after.

By which time, Britain was already the preeminent power in the world. On the back of Indian gunpowder factories.

Behind the Dupont chemical empire and  fortune was Indian saltpetre.

Gold and currencies outlook

Gold /Silver /Oil and the BSE-Sensex Co-relation - How will this pan out?

Gold scenario for this year

With gold prices at a historic high, the future trend of gold price is the question on everybody’s mind. There are a few wrinkles which make the future of gold price a complex subject. Gold prices in the coming 1-3 years, may not be a open-and-shut case. Lending stability to gold prices are the following six factors.

1. IMF gold sales – IMF has some 3000 tons of gold – of which,  some 400 tons have been earmarked for sale. 200 tons has been bought by RBI and another 20 tons by sundry central banks of Sri Lanka, Mauritius, etc. Leaving less than 200 tons on the table. RBI claims that they have put in a bid for the rest also – and the decision on that will be taken soon. Thus, any downward pressure on gold prices due to IMF sale is unlikely.
2. Central Bank gold sales – Various European banks have been selling gold from their ‘reserves’ on the open market, over the last ten years. Not much is left from that quota. No downward pressure from this quarter also.
3. Chinese Yuan appreciation – The whisper on the street is that the Chinese yuan may see 10%-15% appreciation in the next 4-8 months. This may trigger a re-balancing of the global currency equations, making the dollar weaker in narrow range. This may lead to a welcome lowering of the US trade deficit – which will strengthen the dollar, against non-yuan currency. And re-create some confidence in the US dollar.
4. Indian business outlook – Yuan appreciation will end up making the Indian export sector, specifically and corporate sector generally, more profitable. An increase in merchandise export seems unlikely. Improvement in profitability will attract dollar inflows into India for investment in Indian stock markets; increasing liquidity in India, decreasing interest rates and mildly strengthening the rupee.
5. Double whammy – A strengthening rupee and a stronger dollar is likely to further put downward pressure on gold prices. For the first time in many years, India has slipped to number two position (by a minor ten tons) as the largest gold ‘consumer.’ Accompanied by the drumbeat of official media, Chinese consumers have been encouraged to buy gold – and comparisons to India are being freely made.

“Even if it’s sold at a market price, we should still buy,” counters Xia Bin, head of a key Beijing think tank advising the State Council cabinet (and also making plain that this is his personal view).

“India’s okay with it, why shouldn’t we be? What’s the use for so many dollars, whose purchasing power is weakening anyway? With so many foreign reserves in hand, I think China should buy, without doubt.”

6. Gold value is 10% of Indian capital stock – Keep in mind that India is a US$1 trillion economy and India’s 25,000 tons of private gold reserves @Rs.18,000 per tola and Rs./USS$ rate @Rs.45 to dollar converts to US$ 1 trillion also. Adopting a return on capital employed @ 10%, implies total capitalization of the Indian population at US$10 trillion. And gold forms 10% of that capital. Is this an equilibrium in India. From here on, Indian gold demand may well be damped.

What about the Eagle’s loot?

One tremor is all

What can trigger a fresh upward burst in gold prices, can be any of the following events.

One tremor, in the market, on any of these triggers, will set off another stampede towards gold.

Depending on the event, the next breather gold may then take will possibly be at US$1800 (ounce)/ INR25,000 (tola).

As the last one year unfolded, the Citi, GM, rescue plans, have strained the US Treasury. The next upheaval may be sovereign debt.

How can Greece, Spain or the UK unravel the EU

Greece, Iceland, Ireland, Spain, UK et al are tethering at the brink. If they regain their balance, world economic outlook may give reasons for optimism – and for gold prices to take a breather. To avoid a default by Greece, Spain or UK, the ECB may need to extend some really big sums of money.

What makes these five cases specially worrisome, is the near-absence of manufacturing and industrial output in these countries. Unlike France, Germany or Italy. This may make EU-member countries balk at extending lines of credit, sovereign guarantees, underwriting of new loans, interest /capital waivers, rescheduling of debts, rollovers – the works.

Defaults by any or all names. Without credit lines, loans, underwriting, guarantees to these on-the-edge countries, may set off an exodus or a break-up of the EU.

Can Russia and China become a problem?

Russia has seen a major drop in export income, due to crash in oil and raw material prices. Yuan appreciation in the China could the other trigger. But these two scenarios may take 2-5 years to play out. These may not be the reasons for the immediate run-up on gold prices.

But to get a real perspective on how changes in gold prices can happen, the Soviet Gold saga is worth looking at.

“Even if it’s sold at a market price, we should still buy,” counters Xia Bin, head of a key Beijing think tank advising the State Council cabinet (and also making plain that this is his personal view).

“India’s okay with it, why shouldn’t we be? What’s the use for so many dollars, whose purchasing power is weakening anyway? With so many foreign reserves in hand, I think China should buy, without doubt.”