Economics of British India

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ECONOMICS OF BRITISH
INDIA.
BY
JADUNATH SARKAR
Indian Educational Service
FOURTH
m.a..
(Bihar).
EDITION.
Longmans, Green
London.
&
Co.,
ECONOMICS bp
BRITISH INDIA
BY
JADUNATh SARKAR.
Professor,
Patna
M.A.,
College.
Fourth Edition,
Enlarged, re'Written, and brought up
to date.
1917.
M.
90/2,
C.
SARKAR & SONS,
Harrison Road, Calcutta.
*'***
*Firsf edition \{\iYP?^,
Second edition ($04
Third
pp.),
edition (336 pp.),
Fourth
edition (384 pp.),
^^^y
March, igog.
March, igii.
^^'
'^-^-<3'
March, igij.
April, igiy.
In this edition the book has been thoroughly revised, the
brought up
statistics
date,
to
and a chapter on the economic
So rapid
war on India added.
effects of the
mic transformation
on various aspects of
fast is the literature
is
the
econo-
India going on before our eyes and so
of
growing up, that a
it
general account of the "subject requires to be mostly re-written
every six years,
and not only have new
but even the old conclusions have

the light of the
new
facts
be noted
to
be greatly modified in
Such a restudy has been attempted
facts.
Throughout the book
in the present edition.

1
to
have taken
913-14, the last year of peace, as the standard of comparison
and the basis of study.

war have been duly noted
in the
last
statistics
the
Prices,
the
which
chapter (X),
of
Among
But the changes effected by the

in various places
191 7
as
is
as available
far
more important
and studied together
altogether
have
new; and the

been
supplied.
additions are the inquiry into
Report of the Royal
Commission
on
High
Indian
Currency (19 14), recent developments of co-operation and

our war finance and
Printed at
tariff
changes.
the^KUNTALINE PRESS,
Calcutta by
P.
C.
SARKAR & SONS

Calcutta.
Dass and
by
S. C.
61,
Bowbazar Street,
Published from
M.
C.
Sarkar, 90-2, Harrison Road,
CONTENTS.
Preface to the fourth edition
Chapter
The land
I.
Indian empire,
nomic
aspects,
economic
16
iv
...
1-54
aspects
Himalayas, eco-
of
rivers^
economic
crops
economic
13
4
of
Deccan, physical aspects,
Monsoons,
land and climate, 10
of
tion of rainfall,
...
...
and population,
area
northern plains,
influences
...
distribu-
aspects of different provinces,
crops, provincial
out-turn and export, 26 26 wheat, 27
30 irrigation systems, 32
and return on
29
development
recent
the Punjab,
35
economic importance, 37
produce,
l^^'orests,
40
38
43
39
46
46 India
economic
43
and England contrasted, 48 national character, 51 our eco17
distribution of our chief crops, 20
areas, 23
staple
cot-
rice,
ton,
capital
tea,
irrigation
irrigation,
in
their
their
their
ininerals,
transport,
railways,
nomic advantages,
Chapter
distribution,
their
Population, urban and
Indian
cities,
55
effects,
53.
The People
II.
statistics,
mmmsm^^'^^
'^^vir
rural,
village life, 56
55 origin and
economic
55-107
growth of
effects of village
and
peasant proprietors, 62
69 Indian laws of
inheritance, jo influence of
and custom, 73 customary
organisation of
75 customary wages, 76
culture, 78 of handicrafts, 79
guilds, 82
83 indigenous trade and transport systems, 85 banking and
system,
58
6^joint
caste
family system and
its
effects,
effects,
its
status
rents,
agri-
village
city guilds,
caste
rural
credit,
89
CREDIT SOCIETIES,
97
legislation
money lenders
92
their
on them, 98
principles,
484
classified,
their
'/
v>
90
co-operative
96 their
growth,
loi
advantages,
their
good
VI
effect,
present-day problems
02,
INDIA.
105
in co-operation,
Mac-
lagan Committee's report, 106.

...
Chapter III. The State ^=---f::*^"^
108-142
\Pax Brita7i7iica, its good effects, 108-îts disadvantages, no
foreign
i-^^êetomic modernisation
113 example
economijc changes
116
Land Tenure; zamindari, 119
mahalwari, 120
123 laws on
123 Permanent
126 and 133 disadvantages
of India,
exploitation
of India,
1 1
of
in Calcutta,
{ii)
(f)
{ill)
ryotwari,
Settlement,
teiiant
its
i36^political
capital,
England, 137
economic
of short-
recent reforms
term settlement, 130
foreign
I'ight,
effects,
in
revenue policy,
India's foreign debt and balance of

Home Charges,
Consumption
effects of
Chapter IV.
Consumption:
trade, 141
141.
classification
its
'
...
143-161
...
and growth, 143
simple
of Indians, 145
of Indian consumption
our standard of
of
how
149
standard,
152 consumption
155 sugar,
159 other things, 160.
life
articles
147
living
131
India and
of
relations
classified,
higher
effects
rising,
156
statistics,
cloth,
Chapter V. Production
Economics
of
...
agricultural
...
and manufacturing
162-215
countries
agriculture should be associated with manuIndian labourers,

character, 169 lack of
business-assistants and managers, 173 of
175
contrasted, 162
167
facture,
suitable
their
capital,
general
efficiency
in sugar
prospects
of
how
manufacture, 183
189
its
far India
\\2<^
national
good work, 186
classification
of cotton mills, 193

of
Indian production, 176
labour, in textiles 181
Indian
FOREIGN capital:
India,
of
wealth
in
184
in
of capitalists according to race, 190
of jute mills, 195
tea plantations, 198
India,
of
number oi factories
192
progressed in manufacture,
co7nparative
mining, 182
of paper
technical education
progress
mills,
its
196
aim, 199
CONTENTS.
apprenticeship system of India,

technical
improved
institutes,
why, 201
schools,
its
Vll
defects,
lack
200
early
failure of
of genuine students, 202
lines of technical education suggested,
205
technical
Atkinson's report on technical education, 209
207
Indian Factories Acts, 213.
Chapter VI.
Distribution
...
216-263
...
how custom broken,

221 nature of
224 rent
zamindaris,
Indian land revenue, 223
225 rent as affected by land laws, 227 as affected by pressure
of population, 228 actual incidence of land revenue and
nature, 231 K. L. Datta's inquiry,
230 Indian wages,
wages, classes benefited, 235 com233 recent
parative movements of wages, 238 wages
movements
239 condition of wage-earners, 240 prices,
246 comsince i860, 244 what governs our grain
parative areas of food and non-food crops, 249 price
250 price index numbers, 251 causes of the recent
prices (Datta's Report), 253 my own views, 256
of
Rent
219
by custom, 216
as influenced
State
landlordism,
effect
its
its
is
on
rent,
in
rate,
rent,
their
rise
real
in
in
textile
factories,
their
prices,
statistics,
rise
in
effects
high prices, 260.
Chapter VII.
2^4
Profits...
on manufacture,
Profit
India's
foreign
teenth century,
trade,
272
how
parts
profits,
264-270
divided,
interest,
profits, 268.
Exchange
Chapter VIII.
component
middlemen's
partly
267 wholesale exporters'
entrepreneurs, 265
partly business profits,
...
...
its
...
in ancient times,
during
...
271
th^ nineteenth
271-337
iivthe seven-
century,
272
India's imports by sea (1913),

274 India's exports (1913), 276 India's trade relations with
other countries, 278 Indian balance of
278 Home
282 how India makes
economic
Charges, 279
payments to England, 283 Indian Public Debt, 285 history
statistics
of
foreign trade, 273
trade,
their
effects,
VIll
Indian
of
INDIA.
Currency Commissions and Legis
currency, 287
Gold
Exchange standard explained, 292 how

exchange between India and the world's money-market is now
lation,
290
Gold Standard Reserve, origin growth and

Indian Paper Currency, 298
of
currency advance
300 recommendations of Royal
Commission on Indian Currency (1913), 302 arguments
against a Gold Currency
of the
304
arguments, 306 objections
the closing of the mints
coinage, 310 history of our
312
of our
before war, 315 war changes
317 arguments
Protection, 318 arguments
322 should India
adopt Protection
322 no; why not? 324 Swadeshi, 327
Reform proposed
333 not suited
maintained, 294
its
investment, 295
line
^best
in future,
for
India,
criticism
to
to
silver
state
tariff,
in
tariff
for
tariff,
against,
Tariff
for
India,
to India,
334.
Chapter IX.
Public Finance
Indian revenue,
Sources of
explained,
of opiu77i
339
stamp
346 "fees"
344
duties,
for
penditure in
Chapter X.
General
policy,
excise,
commercial
i7icidence
358
situation in 19 17,
343
346
347
353
effects of
immediate
361 how raw
tax,
cesses,
of net
details
finance, 349
history
salt
finance,
of taxation, 351
in India,
Economic
effects,
services,
provincial
land revenue
net figures
net revenue in 19 13, 341
of
341 recent opium

345
345 war
1913, 347
1901-1916, 350
nature of
nomic
details
revenue,
gross and
338
338-357
...
...
ex-
statistics for
local taxation, 351
its
the
real hardships, 356.
War
358-374
effects of war,
359 eco-
producers have been
jute and cotton, 363 India's
as a
have benefited, 365 war and cotton
consumer, 364 classes
industry, 366 prices and wages, 367 exchange, freight &c.,
370 public finance, 370 import and export
372-3.
injured, 362
total loss in
loss
that
variations,
Bibliography
...
...
...
375-376.
;;
CHAPTER
INDIA.
I.
THE LAND.
Physical features of the country and their
economic influence.
The Indian Empire including Burma contains over

if million square miles of
Russia),
(exceeding by
territory,
12,000 square miles the whole
of
Europe
minus
numbered
the human race and
and a population which
in
igii
315 millions, being one-fifth of

than double the population of the
more
Roman
Of these 244^ millions live in British

territory.
The British Isles in 19 ri had a population
of 46 millions, and Japan 47 millions.
Of the entire British Indian population
Empire.
1 9.5
per cent, live in the United Provinces
18.6 p.
c.
in the
Bengal Presidency
16.9 p.
c.
in the
Madras Presidency
14. 1 p. c. in
9 p.
c.
Bihar and Orissa
in the
Punjab and the N.
W.
Frontier
Province taken together
E-C^NOMieS OF BRITISH INDIA.
8 p.
in the
c.
Bombay
The average density of

India
on a
fertile
soil.
districts are the
Howrah,
Some
937
875
Saran,
853
The average
-together
is
most
the
of
following
Darbhanga,
densely
,,
North Bihar taken
for the districts of
646 per square mile, (Census of 191 ij,
this area is
essentially
rural
England and Wales with
towns.
is
coast-
1850 persons per square mile.
Muzaffarpur,
though
The population
Southern India, which enjoy abundant rain-
of
crowded
British
in
and the two
thickest in the Gangetic plain

strips
I.
in the other divisions.
population
224 to the square mile.
is
[CH.
Presidency
and a much smaller proportion
fall
their
with very few
enormous town-
population have only 618 inhabitants per square mile.

India
may
be physically divided into three well-
defined regions
A.
THE HIMALAYAS.
The Himalayas have a length of 1,500 miles and

an average breadth of 200 miles. Their southern
ofE-shoots
frontiers
at
run
the
and
north-western
down
to
the sea
north-eastern
and completely shut
India out from the rest of Asia by land.
Their economic aspects

(a)
Their double walls
clouds driven north
catch
the
vapour-laden
from the Ocean by the monsoon
CH.
HIMALAYAN REGION.
I.]
The moisture either falls as rain or is frozen

snow and then descends in glaciers, feeding the
winds.
into
These
the year.
throi;ghoiit
rivers
therefore,
hills,
supply rain-water to the Indian plains. At Cherapunji
Assam
in
Kashmir
annual rainfall
the
is
The
Himalayas
network
plains.
forests covering the southern slopes of the
retain
much
their roots
of
of the
and
among
rain-water
their floor of
by preventing too rapid a surface
flow.
the
dead leaves,
Throughout
down and
The
dry season this water slowly trickles
the
water
all the
Punjab
of the five rivers that fertilise the

(b)
about 460 inches.
one vast reservoir supplying
is
thus saves our rivers from absolutely drying up.

hills, therefore, store
and regulate
the
supply
of
water
to the plains in an equable flow all the year round.

(c)
The
Railway
forests
the northern plains.

thrive
fruits
on the
sleepers, fuel,
hill-side
and beams
yield
timber for
for buildings to
all
Tea, potato, and certain English
greatly on the Himalayas.
The
indige-
nous products are barley, oats, millets, borax, honey,

and,
in
a f^w places, lice
but their total value
is
not much.
{d)
The
water- potmr of the hill torrents and water-
falls is
now
used mostly in turning a few old-fashioned
But
mills.
can
it is
generate
of great potential
importance, as
an enormous quantity of
it
electricity.
Several such schemes have been already set on foot,

chiefly
may
in
connection with the
hill stations,
and
we
look forward to the rapid development of hydro-
INDIA.
[CH.
next generation.
electrical installations in the
I,
vast
power from the Jhelam falls

in the Uri gorge of Kashmir, was completed in igo8.
Outside the Himalayas we have the Cavery hydroelectrical works in Mysore and the Tata works at
Lonvala in the Western Ghats.
(e) Their chief disadvantage is the cost and difficulty of transport, which, added to the fact that the
hill region can grow food for only a small population,
project for generating
has always caused a scarcity
of labour in
them.
THE NORTHERN RIVER-PLAINS.
B.
They
between the Himalayas and the

and include three great river-systems,
the Indus, the Ganges, and the Brahmaputra, with
their tributaries.
This is the most fertile and densely
populated region of India and is inhabited by nearly
60 per cent, of the entire Indian population. The
stretch
Vindhyas,
slope is so gentle that though Lahore is 1220 miles

from Calcutta, yet the elevation of the plain between
them never exceeds 800
Economic
(a)
is
As water-carriers and
employed
step
near the
fertilisers
hills).
:
Their water
in irrigation, either directly as
when
they
over their banks, or artificially by means
of
which they carry down from the

very
fertile layer on the soil which
spreads a
canals.
hills
feet (except
aspects of the Indian rivers
The
sill
they overflood.
(6)
As land-makers and
land-destroyers
The
fall
CH.
INDIAN RIVERS.
I.]
upper courses
in elevation is very rapid in their
among
and as they dash through gorges with rocky

walls rising many thousand feet on both sides, huge
the
hills,
On
boulders are broken into fine sand.

plain the fall
is
load of sand on their two sides
deposit their
rivers
reaching the
very gentle* and the slowly moving
or at their mouths.
The
year
is
silt
of
the Indus."
Lower Bengal
The whole
of the Bengal
is
is
"the gift of
Delta,
50,000
miles in area, has been created by the Ganges,
square
i.e., it
the Indian rivers every
the Ganges", just as Sind
of
gift
*'the
down by
carried
an enormous quantity.
has been raised from the ocean-bed to
height by the annual deposit of Ganges
At Ghazipur
its
mud
present
for
many
Ganges discharges every year

cubic
million
feet
of silt, and the quantity
6,368
deposited at the combined mouths of the Ganges and
the Brahmaputra must be at least six times as large
ages.
as
this.
the
Similar extension of land
is
going on at the
mouths of the Indus, the Godavari, and the Kistna.

But the Indian rivers, especially in their lower
courses, are great destroyers, too.
*
The Indus
passed in the
hills
is
1800 miles long, of which 860 miles are
with a
fall of
14000
ing 940 miles (passed in the plains) the
The Ganges, 1550

first
Every year they eat

feet,wliile in the
fall is
remain-
only 2,000
feet.
miles long, has a fall of 12,776 feet in
180 miles situated in the
course lying in the plains
its
hills,
while in the 1,370 miles of
bed sinks only 1,024
its
At the
and below
f^^t.
head of the Bengal Delta the fall is 4 inches per mile,

Calcutta from one to two indies only.
its
away
their
fields,
houses and
banks at
and Rohri
this place or that,
cities
swallowing up
Dera Ghazi Khan
(at present
[CH.
are undergoing this fate).
every
Moreover,
soft
INDIA.
now and
then the rivers in the
of Bengal or Sind suddenly desert their
soil
beds and thereby cause the ruin and abandonment of
many
old capitals and
alluvial
there
tract
river to the
is
commercial
no means
same channel
In
cities.
an
of confining a vast
for ever.
The Brahmaputra, for example, is a terrible menace

Northern and Lower Bengal. It is like a big drain
to
into
same
which a smaller
level.
volume
of
drain, the Ganges,
falls
at
the
The natural result is that the bigger

water moving down the Brahmaputra forms
back the water and silt of the

Hence the Ganges is year by year becoming
more sluggish it is more quickly depositing silt along
solid wall forcing
Ganges.
its
of
course, raising
its tributaries.
bed, and blocking up the mouths

Thus the natural drainage of many
its
is becoming obstructed,
and marshes
and stagnant pools are being formed where there were
parts of Bengal
The mass
Lower Ganges, already depleted by
the huge canal
systems of Northern India,
further reduced
fresh flowing streams before.
by the
being
falling off in the supply
tributaries.
will
is
One day a
take place
to find a free
way
still
from
its
of water in the
now
sluggish
gigantic convulsion of Nature
the tributaries of the Ganges unable

to
their
main stream,
will
take
advantage of an earthquake or subsidence of the
soil
CH.
RIVER TRANSPORT.
I.]
to burst their
banks and transfer
waters to the
their
Brahmaputra, carving out new channels
by destroying
and hamlets on
fields
Teesta river did
it
for themselves
their
The
way.
These natural operations
in 1787.
on too stupendous a scale to be prevented by man.
are
(c)
As highways
called "the great
The
high-way
thousand miles above
for a
Ganges
of Bengal."
its
mouth
The Ganges-borne
even beyond).
was worth 40
crores of
Rupees
Khan).
Until
It is
navigable
Cawnpur and
(to
trade
of
Calcutta
The Indus is
mouth (to Dera
in i8gi.
navigable for 800 miles above

Ismail
has been well
its
the
recently
Brahmaputra,
(navigable for 800 miles up to Dibrugarh),
was
the
only highway of Assam, and very large steamers have

plied
on
carrying goods worth 6 crores of Rupees
it,
annually (igoo).
These
rivers supply the easiest
and cheapest means
India being the land of small producers
of transport.
and petty dealers, a man has only to hire a boat or

two to carry all his produce or merchandise to the
market.
He can
the journey,
his
own
rich
and
eyes.
consult his
his
own convenience
during
goods will be perfectly safe under
The Ganges,
cities and
and populous
particularly,
shrines
on
its
has
many
banks, and
has been the commercial artery of Northern India
from time immemorial.

not ply on
it,
and
But
(i) large
(2) the frequent
caused by the deposit of sand
steamers can-
changes in
make
its
bed
water- transport
uncertain and unprofitable except for boats of light
ECONOMICS OF BRITISH INDIA.
draught.
The huge
(3)
quantities
of
[CH.
goods
I.
dealt
with by modern commerce cannot often be transported
by
river, at least
not so cheaply or quickly as by
rail.
Crops The Northern Plains yield two harvests

and sometimes three in the year. Rice is the chief
crop of Bengal and Bihar. In Lower Bengal the
other distinctive crops are jute, plantain and cocoanut.
:
[Bamboo, too,
of first-rate importance to the people.]
is
Proceeding westwards from Bengal, the crops are

Beand (4) potatoes.
main cereals, pulses, sugar-cane, oilseeds,
tobacco, spices, and an immense variety of
edible
vegetables and fibrous plants grow both in Bengal and
in the Upper Provinces of the Gangetic Plain.
The
(i) wheat, (2) barley, (3) millets,
these
sides
jungles produce (i) lac, (2) tassar, (3)

millets,
(5)
eaten and
and
when
(6) the
Mohua
distilled yields
silk, {^)
whose flower
plant,
timber,
spirit
which
is
the
is
chief drink of the wild tribes.
C.
THE SOUTHERN TABLELAND OR

DECCAN.
Its
average height
land gradually
is
minates in the plateau

sea level).
land,
viz.,
of
Coorg (4000
The
feet.
south,
till it
feet
cul-
above
Three mountain-walls support the tablethe

;
Vindhyas with
Kaimur range
and in
two converge in
Eastern Ghats
last
we advance
in the north the
continuation,
The
from 1000 to 3000
rises as
in
their eastern
the
east
the
the west the Western Ghats.

the Nilgiri
Hills
(rising
to
CH.
DRY DECCAN PLATEAU.
I.]
a height of 7000
feet),
and
beyond the gap of

Cape Comorin in a
then,
Palghat, they run southwards to
single chain, called the Travancore Hills.
At
the northern end of the
Deccan the two large
rivers,
Narmada and
Sea.
But from Surat southwards the Western Ghats
Tapti,
flow into the Arabian
form an impenetrable barrier and
all the
of the plateau flow eastwards into the
The
rainfall
on the table-land
inches in the year.)
other rivers
of Bengal,
scanty (about 30
is
But the two
west and the east are extremely
Bay
coast-strips
fertile
on the
and well-watered
by the monsoons, especially the deltas near the Madras

coast, which rival Bengal in the richness and close
succession of their crops, and the abundance of rice
and cocoanut. Irrigation canals have utilised the
waters of the Madras rivers from the days of Hindu
rule, and greatly increased the agricultural wealth of
the land.
Many
parts of the tableland are subject to
drought, as the rainfall, small in the best seasons, varies

greatly from year to year.
here frequently.
Consequently famines occur
From time immemorial
the people
have followed the system of storing the precious rainwater at various places by damming up valleys and
thereby forming artificial lakes and tanks, the water of
which
irrigates lands
entirely dependent
on
on a lower
artificial
level.
Agriculture
irrigation.
is
There are
four great forest regions in the Deccan.
The most valuable crop

which the black
soil of
of the
Deccan
is cotton,
to
Malwa, Khandesh, and Berar
lO
is
remarkably
The
grown only
is
and
Delta, C.P.,
rice
extensively
is
in the
other agricultural products are
jawav and hajva ; pepper and
pulses,
south
Wheat
suited.
northern valleys.
[CH. I.
INDIA.
and the Malabar
spices
grown
abound in the
Madras
in the
coast-strip only.
Sugar-
cane and tobacco are also cultivated in certain parts.
The minerals
of
India are mostly to be found in the
Deccan plateau and its hill spurs, Chota-Nagpur and the

Central Provinces.
They are of immense value, though
Among them
inadequately worked as yet.

(in
Chota Nagpur), lime,
(fast
iron,
rising into importance),
and gold
are coal
manganese, and mica
diamond (now
closed),
(flourishing in Mysore).
Economic influences of land and climate*

The Deccan plateau in spite of its agricultural poverty,
and manufacturing industries
dependent on mineral substances must be established
is
rich
minerals
in
within easy reach of
The
it.
chief disadvantages here,
however, are scarcity of water and difficulty of transport.
The mines
many hundred
are all situated in far inland places,
miles
away from
the
navigable river or canal close to them.

is
the only
means
sea,
with no
The railway
of transporting their output to the
populous northern plains and the ports of embarkation.
But the broken nature
of the country
of railway construction,
adds to the cost
and the scantiness
of the local
population throws this cost entirely on the mines.
Thus the
price of the output
manufacturer and consumer.
is
unduly raised for the
Modern metal
factories
CH.
INDIAN CLIMATE.
I.]
II
cannot be worked on the tableland, though the rawmaterials
are plentiful there.
heavy cost has to be
incurred before they can be taken from the pit to the
The absence
factory.
coal
ganj and Jheria

trial
of
water-power in India's vast
and plateaus and her unequal distribution of

of which 90 p. c. is concentrated in the Rani-
plains
fields,
have hitherto rendered
indus-
production very laborious and costly in most of
her provinces.
The
and
semi-tropical
tracts
fertile
of
climate
of the
most populous
India stands in the
resources being developed as economically
ently
as
in
European
between nations
and by Nature
is
The
herself...
of her
and
effici-
Division of labour
countries.
" chiefly
way
determined by climate
countries of the world
most favoured by Nature... are evidently those whose

soils
of
bring forth the most comnlon necessaries of
life
quality and in the largest quantity,
and
the
whose
best
climate
is
most conducive
mental exertion, and these are

perate zone
for in these
to
bodily and
the countries of the tem-
countries
the
manufacturing
power especially prospers, by means of which
the
nation attains to the highest degree of mental and
development and of political power." {List, 131).

Labour requiring the agency of fire can only be
social
"
given abundantly in cold countries

suppleness
warm
of
body and
labour requiring
sensitiveness of touch, only in
ones... The production of great art is
climates
warm enough
to
admit
limited to
of repose in the
open
12
and cool enough
air,
The labour which

place cheapest."
But India
is
at
to render such repose
any place
easiest,
and climate, she
object of Nature with
which her
soil
She can be
same
is
is
is
that
in
She
has, therefore,
if
we
own
needs
of civilised
self-sufficient in industry
time,
a con-
hardly any
not already
capacity of supplying all her
of producing almost all articles
at the
delightful.
rather
is
There
which she cannot grow.
the natural
and
is
I.
Muneva Pulveris, ch. iv.)

immensely rich in raw materials. In
than a single country.
gifted, or
[CH.
(Ruskin's
variety of products
tinent
INDIA.
life.
and agriculture
two
take care to develop the
those regions which are specially suited to each,

and land transport is cheapened between her tropical
parts (growing raw materials) and her temperate
in
regions
(where
worked).
This
alone
we must combat
it is
factories
may happen
can
be
efficiently
in the distant future.
So,
the orthodox economic theory that
the natural function of India (like other tropical
countries)
to
produce raw materials only and to get
manufactures from the colder countries of Europe by
The United
was long regarded as

raw materials
only.
But by properly utilising her immense variety
of climate and natural resources, she has become a
exchange.
States
destined by Nature to be a producer of
first-rate
manufacturing country
also.
India has
the
same continental vastness and variety as the United

States, and can attain to a similar industrial growth
by education and proper guidance.
CH.
MONSOON
I.]
RAINFALL AND
The
the
life
air currents that
is,
I3.
ITS DISTRIBUTION.
govern India's welfare and
come mainly from
of her peasantry
The scanty
in the south.
RAINS.
Ocean
the
rainfall of the cold weather"
however, greatly dependent on storms that origi-
nate in the higher atmosphere north-west of India,

especially that of Persia
We
and Central
Asia.
have two monsoons or seasons of strong wind-
currents, viz.,
North-Eastern monsoon, from
the
(a)
middle of December to the end of March, during
the
which the wind

cent,
of
is
comparatively dry and only lo per
the annual rainfall
often produce light rain
is
These winds
received.
and storms
the
in
plains of
Upper India and heavy gales and snowfall

western Himalayas.
This cold-weather rain
important for the Punjab.
From March
in the
is
to
very
May we
have storms and moderate rainfall in North-Eastern

This hot weather rain
India.
(b)
is
very useful
to
Assam.
The South-Western monsoon, from June
September, bringing vapour-laden clouds from
Ocean and yielding heavy rain (90 per cent,

rainfall). In
to
the
of our annual
October the wind-currents begin to retreat
south-wards from India and the rainfall soon ceases.
During
the
monsoons the trade-winds blowing
northwards over the Indian Ocean are divided.

portion,
coast
(the
Bombay
current),
and waters the Deccan and
another, (the Bengal current), of

rushes
strikes
up the Bay
of
much
the
Central
One
Bombay
India;
smaller volume,
Bengal and gives rain to Bengal
14
and
the Gangetic Plain
rent),
disburdens
its
INDIA.
[CH.
while a third (the
I.
Burma cur-
moisture over the Irawady Valley.
The Bengal current, as it advances northwards

from the head of the Bay of Bengal, is arrested by
the Assam and Manipur Hills and deflected westwards
over the Northern Plain, distributing rain
all the
way
from Bengal to the Punjab.
The Bombay
when arrested by the long

Western Ghats, yields copious rain (about
loo inches in four months) to the coast-strip and the
current,
line of the
That portion of it which is

moves eastwards over the
Peninsula, but with little rain-giving power left in it.
At the same time the Bengal current is blowing in an
adjacent
hill districts.
Ghats,
forced across the
opposite direction over the plains of the north, the
two currents being separated by an imaginary line

drawn through Agra, Allahabad and Hazaribagh.
The northern portion of the Bombay current passes
over Guzerat and Western
rain,
and
Eastern
Rajputana, giving
at last mingles with the
Punjab.
From
union.
this
of
rainfall
should
The
(a)
vary greatly from year to year
crops would be either washed
The
early in
Indian agriculture two things
are necessary in the monsoons

not
in
Eastern Punjab
and Eastern Rajputana get moderate rain.

The Bombay current begins to give rain
June, two weeks before the Bengal current.
For the success
little
Bengal current
away
he intermittent
must
rainfall
or else the
or burnt
young
up.
(b)
during these three
CH.
RAINFALL AND AGRICULTURE.
I.]
months
i.e.,
there should be intervals of fine weather
between every two periods
allow
of rain, in order to
the soil to be softened, the seed to send up sprouts,

shoots
the
to
grow, and the ears to ripen, without
up by continuous sunshine
their being either scorched
or rotten by unbroken rainfall.

rainfall
is
normal
in
Hence, even
amount but concentrated
if
in
the
two
or three weeks, cultivation will be as thoroughly spoilt

as
if
no rain had
fallen.
Of the provinces
of
India, Guzerat, the western
portion of the Northern
and the Deccan are
Plain,
subject to very great variations from the normal rainfall,
and to consequent
risk of
famine.
The
other pro-
more secure, especially Burma and Bengal,

where the normal rainfall is in excess of the needs of
cultivation and consequently even a large deficiency of
rain cannot do harm to the chief crops.
It is only in
the districts whose normal rainfall is just sufficient for
vinces are
the crops, that agriculture
is
precarious, for there even
a slight shortage of rain means ruin to the peasant.

In Central India the S.
monsoon of
{Ind. Emp. i.
the N. E.
failed.
The following
W. monsoon
also often fails
the preceding cold weather

144-146).
table {Cd. 8157, p. 125) of the rain-
fall in the different parts of
India
the crops which Nature has
meant
is useful,
for
the help of
irrigation.
as
it
shows
each of them.
Rice requires about 60 inches of rain
grown without
if
had
to be
For wheat a
if it is
lighter rainfall suffices, while the hardy millets
grow
in
i6
home
is
the dry Peninsula
Divisions of India
Excessive Rainfall
123
...
half or
Malabar)
Assam
and Rajputana.
Normal rainfall
in inches.
Lower Burma
West Coast (southern
West Coast
[CH.
from the sky, and hence
tracts that receive little rain
their chief
INDIA.
...
(northern half or Konkan)
127
109
98
...
Bengal Delta
92
Eastern Bengal
85
Heavy Rainfall
Western Bengal
59
Orissa
57
Chota Nagpur
53
Central Provinces, East
53
Bihar
50
Moderate Rainfall
Upper Burma
42-2
Central Provinces, West

45-1
Central India, East
Central India, West
Madras
coast,
North
34-8
.
United Provinces
40-3
39-4
Berar
31-10
Guzerat
33-6
Bombay Deccan
31-9
Nizam's Dominion, North
35-7
Mysore
36-5
CrI.
MADRAS AND BOMBAY
I.
I
Scarity Rainfall
I7
SOILS.
Madras Deccan
...
...
Rajputana, East
...
...
24
Punjab, East and North
...
23
Rajputana, West
...
...
12
Punjab, South- West
...
...
Sind
...
...
The
...
Provinces of India
and Economic aspects.

The Madras Presidency
regions,
24
their Physical features
consists
the short and narrow western
two
of
strip
coast
along the
Arabian Sea, and the very broad and long eastern plain
along the Bay of Bengal,
which are well-watered,

and highly cultivated and grow abundance of
rice, pepper, spices and cocoanut, and a third region,
the table-land between the two coasts, which is dry,
fertile
treeless
and sterile
like the
Deccan plateau generally.
The Bombay Presidency with Sind contains widely

different
varieties
divisions, Gujrat
are
of
soil
and climate.
and the Tapti Valley
(in
Among
very rich in productivity and population
Konkan
or western coast-strip (north of the
coast-strip belonging to the
the
the
Malabar
Madras Presidency) has
plenty of rainfall and grows rice and plantain
abundance
its
Khandesh)
Deccan Plateau
is
in
dry and barren,
much labour a bare measure of subsisthe Bombay Karnatik or the South Maratha
Country has many well-watered fields and large
""yielding to
tence "
forests
and
is
agriculturally better off than the Plateau,
l8
INDIA.
[CH.
I.
Bengal, as reconstituted in 191 2, consists of the

lower valleys and deltas of the Ganges and the Brah-
maputra with some
the
in
tracts
hill
north
{viz.,
Jalpaiguri and Darjiling)
and
in the south-east (viz.,
Tippera and Chittagong).
" It
is
a vast fertile alluvial
plain, intersected in its southern portion

of
made up
Bay
the
of Bengal.
Bengal
is
is
density of populathe square mile.
to
551
thus more densely populated than any of
the other Indian provinces or any
of jute cultivation
and
ducer of rice and tobacco, with
and
oil-seeds,
Bihar
plains,
dense
of
cultivated plain from
its
except Belgium and England."
monopoly
belt
infinity
and swamps, (named
The average
Presidency
the
tion of
*'
of forests, creeks
Sundarbans) separates
the
and channels."
creeks
rivers,
jungles,
by an
European country
It
has practically a
is
the largest pro-
fair quantities of
sugar
but no wheat or cotton.
consists almost entirely of fertile
yielding large crops of
pulse,
rice,
alluvial
potato,
wheat, maize, sugar-cane and tobacco, besides vegetaJute cultivation
bles of all sorts.
north-eastern parts.
extending in
is
Chota Nagpiir
is
region rich in minerals and forests.
its
a mountainous
Nearly
two-
thirds of the cultivated area of the province of Bihar
and Orissa are devoted

coal output of
16-4:
to rice.
million tons,
Of
India's
annual
10 J millions
come
from Bihar and 4^ millions from Bengal, while the

rest
of India supplies
cent, of the total.
only i^ million tons or 8 per
CH.
of
UPPER INDIAN
I.]
I9
SOILS.
The United Provinces of Agra and Oudh consist

portions of the Himalaya and \lndhya ranges and
the great
Gangetic plain (which latter covers more

This plain
than half the area of the province).

very
In
peopled,
densely
most places
of
fertile
canals have
it
The rocky
water supply.
and
secured
to
an assured
tracts are infertile, thinly
peopled, and in the southern border

liable
Bundelkhand)
{i.e.,
The northern hills (i.e.,

The province is
forests.
the
famine.
layas) are rich in
largest producer of
wheat
is
closely cultivated.
in India,
maize, gram and sugar-cane.
and
Hima-
the second
first
as regards
Rice, millets, oil-seeds,
cotton and tobacco also are extensively grown here.
The Punjab and

together
W.
the N.
Frontier Province taken
hilly
one-fifth
are
and
four-fifths
plain
The
plains
country gently sloping to the south-west.

of
east
Lahore have
just
sufficient rainfall to
cultivation possible without irrigation

seasons,
but failure of harvest
least shortage of rain.
is
sure
The population
in
if
make
favourable
there
here
is
is
the
large,
300 to the square mile, with many large cities and

much trade and manufacture. The plains west of
Lahore, on the other hand, have a scanty rainfall and
a thin population (loo per square mile), and in them
cultivation
But
British
is
possible only with the aid of
engineering
skill
irrigation.
has covered this tract
with extensive canals, protecting
it
from drought and
famine and enabling a large and growing population

to
colonise
it.
This province
is
the largest grower
20
INDIA.
[CH.
I.,
wheat (ii million acres) and second in respect of

gram and sugar-cane. But about a million and a half
of
acres are also devoted to each of the
millets,
following crops
cotton and maize, while half a
oil-seeds,
million acres are under
rice.
Central Provinces and Berar, which conand plain country, rice, wheat and the
millets grow equally well, while this division is first
The area devoted to each of
in cotton and oil-seeds.
In the
sist
of uplands
these
five
crops ranges from
The population
is
to
million acres.
sparse, but the forests are
valuable
and the mineral deposits very promising.

Burma, leaving out the northern and western
and highlands,
is
hills
one vast plain, consisting almost
entirely of a rich alluvial deposit
with abundant
and
the
in
fertile
by
predominant crop, 10 million acres out of a
total of 13*74 being under rice, while moderate
highest
degree,
rainfall.
Rice
is
far the
quantities
grown.
of
tobacco,
Wheat and
oil-seeds
and
millets are also
cotton are. unknown.
But Burma
has the richest petroleum deposits in India

is
one of
its
main sources
some gem mines
also.
area of the province
of
wealth,
timber
and there are
Nearly two-thirds of the total
is forest.
[Based upon Code 220
of 1913.]
The
Rice
distribution of our chief crops (191 1).

is
grown
in
nearly one -third of the entire
cultivable area of India.
It
is
the
staple
crop, in
CH.
OUR CHIEF CROPS.
I.]
21
regions of heavy and assured rainfall, such as

Bihar,
Madras and Burma,
which
Bengal,
provinces
four
contain between them nine- tenths of the total
it
are
rice-
Elsewhere fairly good quantities of
area of India.
grown, but only with the aid of irrigation.

in
Bengal and
Bihar together (38 million acres), while
Madras and
Half the total
Burma
India
rice area of
lies
together supply another 38 per cent. (20 million
acres).
Wheat
is
cultivated extensively in Upper
India,
namely, the Punjab, the United Province, the Central

while moderate
and Central India
quantities are grown in Bihar and Bombay also
but
hardly any in Burma, Bengal or Madras. The area
under wheat has been extending since igoi owing
Provinces
to the steady
The two
demand
larger
for the grain in foreign markets.
Millets jawav
cholum in
(called
Madras) and hajva (Madrasi name, cumbu)

rice,
the most extensively
especially
among
are, after
eaten food -stuffs in
the lower classes in
India,
Southern India
and C. P., and to a much less extent in Bihar, U. P.

and the Punjab. So also is Ragi (or marua), a smaller
variety
of
millet.
cattle fodder of
The stem
important food of the poor
which grows mostly

Punjab (about
Among
chhola)
is
the
of
a large part of the
in
is
jawav
is
country.
the chief
Another
maize (mako or bhutta)
Bihar,
the
U.
P.
and the
la million acres in each).

pulses,
gram
very important,
it
or
chick pea {boont or
being the most extensively
22
consumed food
large numbers
for
men
of
pulse soup (dal).
besides
horses,
The
[CH.
INDIA.
I.
being eaten by
in Upper India in the form of
growers of
chief
are
it
the
U. P. (7 million acres) and the Punjab (4^ mil. acres),

while Bihar and the C. P. each devotes a little short
of a million acres to this crop.
Sugar-cane,
acres),
is
grown mainly
Punjab
the
(|-
mil.
in the U. P.
acres)
(i-^
mil.
and Bengal and
Bihar {^ mil. acres each).

Jute grows mainly in the swamps of Bengal (2f
million acres), while N. E. Bihar supplies the remaining quarter of a million acres devoted to this crop
in India.
Its
but rapidly
grows
it,
small in
cultivation
is
extending
there.
No
Assam
other
at present,
province
except in negligible quantities.
Tobacco grows everywhere in India, Bengal,
Madras
and Bihar being engaged in its cultivation to the

extent of 3, 2 and i hundred thousand acres respectively, and the U. P. and Burma coming up close
behind the
last.
and Bombay devoted about

Madras 2^, the Punjab &
Province together li, and the U. P. a little
In 19 II, the C. P.
42-
N.
million
W.
F.
acres
each,
below a million acres to cotton.

The Staple Crops of the
19 1 3
will
{Code 220 of 19 13).

different
provinces in
be found in the following table compiled
from Code 8157.
(Areas cropped more than once

have been counted as many times as they were under
different crops).

CH.
PROVINCIAL CROP AREAS.
I.]
Cropped area
Rice.
Province.
in millions of acres (19 13)
Wheat.
Bengal
197
0*14
Bihar
16
1-34
Assam
47
U.P.&Oudh...
23
Millets
3 kinds.
i'i5
Oilseeds.
Jute.
Total
cropped
area.
r8
27
287
0-3
31-8
0-3
O'l
6-4
Cotton
6-4
4-5
078
1-5
39'4
11*5
3-17
27
38-3
1*3
1-8
30
I "4
4'4
307
2-2
47
25-8
I '5
o'3
147
io*6
0-8
9*5
Bombay & Sind
rg
14-4
and Berar
3'2
10-4
Madras
Punjab
&N.W.
F. Province...
C. P.
Burma
Total
The
...
77
22-6
4'37
077
41-1
14-6
lesser crops, area in acres ;in
Sugarcane.
15-8
1913):
Tobacco.
247
Tea.
Bengal
216,500
319,000
156,000
Bihar
263,000
115,000
2,000
37,800
8,000
367,000
Assam
24
The
lesser crops, area in acres (in 191 3)
Sugar-
[CH.
INDIA.
I.
{contd.)
Tea.
Tobacco.
cane.
Bombay and
97,000
83,600
207,000
26,800
442,000
55,000
9,800
1,389,300
75,000
8,000
20,000
26,000
15,000
95,000
Madras
Punjab
& North -West Frontier
& Oudh
United Provinces
Central Provinces
& Berar
63,400
Sincl
...
Burma
1,700
Total
From
2'5 mil.
the above
we
572,000
mil.
see that the U. P. contain
more cultivated land than any other province

portion of India
is first
in sugar, second in
wheat,
far
this
and
third in millets.
Bombay
is first
in millets^
a good second in
cotton,
third in oil-seeds.
Burma
is
fourth
in
rice
and
oil-seeds
and
fifth in
tobacco.
Madras ranks as first in oil -seeds, second

and tobacco, and third in rice, cotton and tea.
Bengal
ea
seeds,
in
Bihar
is first
is
jitte.
tobacco.
millets
and tobacco, and second in

and jute and third in oilAssam is first in tea and third
in rice, jute
second in rice
sugar and
in
CH.
PROPORTION AMONG CROPS.
I.]
The Central Provinces (with

cotton, second in oil-seeds,
The Punjab
and
and
25
Berar) are
first in
third in wheat.
easily first in wheat, second in sugar,
is
fourth in cotton.
The
importance of the different crops to
relative
each province will be seen from the following table.
The percentage
province devoted
to
of
its
the
total cropped
different
area which each
kinds of produce
in
1913:
Rice.
Wheat.
Bengal
68-6
Assam
73'4
Bihar
50-3
4-2
Millets.
3-6
Oil-seeds.
Jute.
9-4
47
r6
6-3
Cotton
Bombay
. .
97
6-2
47
4-5
H'3
30
Madras
28
Punjab
2-6
32
14*6
4.3
U. P.
15-2
i6-2
11-4
3-8
C. P.
19-3
12-4
i5'5
8-5
i8-2
Burma
707
5'2
IO'2
India
31-1
i6-6
6-4
9-2

26
INDIA.
[CH.
I.
India's total out-turn of her chief agricultural

exports
given below
is
Produced
Exported
(1913)
(1913)
Proportion of expor
to production
28
2-45
9 per cent.
8-42
I"2
I4'2 p. c.
190
51 P-
Rice
in million tons
Wheat
in mil, tons
Raw
Cotton
2319
3557
1720
48-3 p.
307"25
289
94
in mil. lbs
Raw Jute
in mil. lbs
Tea
in mil. lbs
Our
principal crops
c.
c.
P- c.
and the conditions
of thcii
growth.
RICE
It is
is
by
the staple
grain
is
eaten
far the
food
b}^
of
the
most important crop

most parts
Bengalis, Assamese,
Madrasis, Biharis, and all but the poorest
and
its
use
One-third of
one-eleventh
is
all
of India.
of India.
This
Uriyas,
Marathas
extending to the other races of India.

our cultivated lands
is
under
rice,
under wheat, one-sixth under millets,
and one-sixteenth under
cotton. (191 3.)
Then, again,

CH.
RICE CULTIVATION.
I.]
forms 60
rice
p. c. of the
value of food grains
total
exported from India, wheat 30

3'5 P-
p. c.
where the annual
rainfall
must be irrigated
most parts
climate.
below 60 inches the
is
It
rice-
artificially.
only one crop of rice
India,
of
raised in the year.
damp
and consequently
requires about 36 inches of water,
In
and barley only
c-
Rice grows only in a hot and
field
27
It is
sown
as the rains set in
is
and
autumn. In Bengal there are two sowsame season but not in the same field
(a) the Aush or early crop sown in highlying lands
in April and reaped in October
and (b) the Aman^
sown in the lower fields in June and harvested in
harvested in
ings in the
December.
In
some
rich
canal-irrigated
lands
of
Madras, three successive crops of rice are raised from

the
tlie
same
field in
Rice
is
a year.
sown broad-cast where
peasants lazy
select
bed,
and then
transplanted
are
elsewhere
to
after
the
it
first
a month the
of
fields
cultivation,
method producing a great economy

large increase of out-turn in
areas
sown
WHEAT
It is
is
always grown
irrigated
Sown
areas
in
this
and a
yield of an acre
30 maunds of paddy.
in
the cold weather-
greatly benefited by the heavy dews,
light rain only.
the
rice is
of seeds
comparison with equal
The usual
broad-cast.
under transplanted
is poor and
sown on a
young plants
the soil
is
late in
five
October,
and requires
it
months, and in
ripens
in
Bombay

28
and C.
Fhe
p. in four months.
may
ciency of rainfall
The
is
dry area.
and harvested
One
variety
October, in
in
is
annum.
rain in the sowing season.
Marna)
and are eaten

is
sown
crops of
grown
in
in
June
areas with about 35
Another variety,
reaped in March,
October,
(or
are the staple
Deccan, Jawav
inches of rainfall per

in
of food grains
They
the
In
rotation with cotton.
sown
"Wheat
10 maunds for the latter.
by the poorest people.

the
canal
harvested in April to June."
is
cheapest kind
the
defi-
15 to 20 maiinds ior
The MILLETS, Jawav, Bajva, and Ragi

are
I.
latter variety requires
be supplemented by
per acre
yield
the former and

in India
[CH.
while in the case of the former any
little rain,
water.
INDIA.
Jawav
is
requires some
also
a valuable
one acre often yielding 375 maunds of

green fodder. The yield of grain per acre is about
fodder crop,
maunds,
besides
grown mixed with

sandy
one or two subordinate

the Jawav.
Bajva
crops
flourishes
on
soil.
The PULSES
among
(dal) are only
second in importance
our food-stuffs, because they are an even more
necessary addition to our principal food (rice or bread)
than butter
is
to bread in a European's meal.
advantage of the pulses
is
One
that they are a second crop
grown in rotation with some principal

grain.
Sometimes they are sown mixed with wheat,
barley or oil-seed.
The leaves of the pulse Arhav are
the most effective of green manures.
of the year,
CH.
VARIETIES OF COTTON.
I.]
The
29
pulses require little rain or watering,
(sown in October, reaped in
Crown only in winter,
The
March).
and are
gram
out-turn of
is
7^ to 10 maunds per
acre.
SUGAR-CANE
essentially a tropical plant
is
and
requires a great deal of water but a well-drained soil.

It
The
takes a year to ripen.
fined
in
sugar ranges from
li-
yield
of
to 3 tons per acre, while
refined sugar
Java the out-turn of
gur or unre-
is
3I-
tons
and
Hawaii 4 tons per acre. In 191 3 India produced

2^ million tons of raw sugar (gur) from 2' 5 million
acres devoted to this crop.
COTTON
months
In
its
a tropical plant, taking
is
to ripen according
to
the former kind the fibre

cultivation
rainfall-
is less
The
liable
is
to
five to eight
different
its
coarse
and
injury
varieties.
shorter, but
from defective
other or late-ripening variety requires
a deep moisture-holding black
soil (as in the
Deccan)
or a prolonged rainy season like that of the Gangetic

Plain, but cannot bear
winters.
Its
fibre
is
the
severe
longer, finer
cold
of
northern
and more valuable.
The quality of Indian cotton has rapidly deteriorated

owing to the mixing up of seeds and the absence of
Even the long-staple Egyptian cotton,
manuring.
though
it
lias
been grown with
profit in Sind,
is less
hardy and steadily declines, and the staple becomes

shorter year
by
year.
The indigenous
varieties of the
cotton plant, while producing a short and coarse type

of
fibre,
require
a shorter period of growth, give a
JO
larger yield,
and are
less
INDIA.
susceptible
to
[CK.
I.
changes of
weather and rapid deterioration than the long-stapled

foreign
Moreover,
cottons.
the
whole were hitherto accustomed

staple only,
to
consume short
and hence the Indian producer
of
long-
could find no ready or remunerative
stapled cotton
market
Indian mills as a
This disadvantage
locally.
is
now being partly
removed, but only in our largest centres of trade.
Experiment has shown that two varieties of longstapled American cotton (technically called Camhodia
and Buri) can be acclimatised without deterioration

and grown under normal circumstances in many
parts of India, esp. Sind, Madras, C. P. and parts of
Bombay and U. P. In 191 2 Madras alone yielded
Camhodia worth 1^7 crores of Rupees and the C. P. a
tenth of that sum.
The
total
under
area
increased from
cotton in
British
India
9*6 million acres in i960 to 15 '8 mil.
acres in 1913, (or, adding the Native States, from 14-5
The average
to 25).
yield per acre
and 3f maunds
of fibre
5'6 million cwt. of
pounds
it,
about i^ maunds
[Cotton seed
of seed.
great commercial importance.
is
In
is
of
we exported
191 3
valued at a million and a half
sterling.]
The
3aeld per acre of Camhodia
is
4 or 5 times that
of the indigenous varieties.
TEA
above
is
grown
sea-level.
at all heights
from 300 to
In North-Eastern India
well-distributed rainfall of 100 inches.
it
7,oo(.^ ft.
requires a
The gardens
:H.
TEA CULTIVATION.
I.]
occupy alluvial land, but deep sandy loams
:hiefly
ivith
The
a free sub-soil are most suited to tea.
jeg'm to be plucked
when
manufacturing
In
irtilicially
the plants are three years old.
tea, the leaves are first
They
are then rolled
oxidation by mixing them with
and
The next
:wisted in order to let the juices escape.

is
withered
by passing over them dry heated air which
:emoves their moisture.
Drocess
leaves
damp
cool
Finally the leaves are rolled a second time, dried,
lir.
lifted,
In
and packed ready

1
91 5,
for sale.
India produced 372 million
lbs.
of tea.
3ur total export of tea that year reached 338 million

ibs., and three-fourths of this quantity were taken by
England.
We
n the British
JUTE
[ands,
supply 60
consumed
Isles.
grows on river-banks and other lowlying
where the young plants can remain partly sub-
merged
in
On
water for some time.
manuring and
requires plenty of
whole period of
stalks
p. c. of all the tea
its
growth.
are cut in September
higher lands
it
irrigation during the
Sown
in April, the green
and steeped
in
water for
which the loosened bark is stripped

by hand, and the fibre is separated from the stem
three weeks, after

off
and washed clean.

of clean fibre,
amount.
An
acre usually yields 15
but a good crop
may be
(Compiled mainly from
Irrigation*
improvement
The
problem
of
/wcZ.
maunds
double of that
m^.,
iii.
ch. i.)
Indian agricultural
is
mainly a problem of water supply.
Eastern Bengal,
Lower Bengal, Assam, Burma, and
32
INDIA.
[CH.
the two coast-trips of the South, enjoy heavy rainfal

and are naturally secure from famine. Other tracts o
good rainfall have to be protected by irrigation work
in order to ensure the necessary supply of water during
Such
the growth of the crops.
is
the case in Northeri
Madras Delta, and the U. Provinces

Punjab,
Thirdly, on the Deccan plateau and certain parts o
the
Malwa, the Central Provinces and Guzrat, cultiva

tion
extremely precarious because the (moderati
is
normal) rainfall
is liable to
great variations.
This area
about one million square miles, is exposed to grea

But the configuration of the grounc
risk of famine.
and the nature
the
of
soil
do not
permit the construction of canals.
in
every case
Lastly,
in Sind
South Western Punjab, and Western Rajputana,
annual rainfall
is
th(
nominal, and here cultivation
always impossible without
irrigation.
{Ind, Ejnp.,
ii
iii
316-28.)
The Madras Presidency

variety and extent of
its
is
distinguished by
the
irrigation works, ranging fron
the great canal system of the deltas of the Godavari
Krishna, and Cavery rivers, to the 60,000 tanks whicl

are
more
or
dependent on the local rainfall,
works of Northern India dra\^

supply of water from large rivers fed by the
whereas the
their
less
irrigâtion
melting of the snow
Tank
irrigation
Southern India.
are of ancient
is
on distant mountain ranges

the
system
most prevalent
ir
Most of these tanks or storage work
Hindu
origin.

CH.
IRRIGATION METHODS.
I.]
The above
facts prove the
33
importance of irrigation
to India,
an importance which has been recognised
by our kings and farmers from very ancient times, and
has led to splendid achievements by the British. Three
methods
of
watering
From
(a)
wells,
13*86
are
in
[Of these
million
the U. P., 3f mil. in the Punjab,
million acres in Madras and

Ac>^.ent
million acres or nearly 30
p. c. of the total irrigated area.
acres
India
fields are practised in
Bombay
and
taken together.
from Bengal, but very prevalent in Bihar,
thret-fourths of a million acres.]

(6)
From
tanks, 6*3 million acres,
mainly
in
Madras,
Bengal, Bihar and C. P., and to some extent in Mysore,
Hyderabad, Rajputana, Bombay, and Upper Burma.

(c)
From
Of the
is
canals, 20*44 million acres, or
44
p. c.
cropped area of India about 19 p.

irrigated, namely 8"2 p. c. from canals, 5*6 p.
total
from wells and 2*5
p. c.
c.
c.
from tanks. The comparative
importance of irrigation to each province will be seen
from the following table
34
INDIA.
[CH.
Area ordinarily
Proportion of
irrigated, in
millions of acres.
area irrigated.
Sind
total
3'44
Punjab
& N. W.
cropped
75 P-
12-36
41*2
U. P.
ii"56
29*3
.>
Madras
9-85
26
0-94
17
,,
Upper Burma
F. P.
...
...
Bihar
12-7
Bengal
2'I
Total for India
All
46-83
above
the
figures refer to 1913.
c.
7"5
,,
19
(Cd. 8157
p. 129.)
Artificial
since the
irrigation
dawn
has been practised in India
of history. (See Arthashastra
Some large canals were

madan rulers in Northern
in
Madras
River).
{e.g.,
The
ii.
constructed by the
ch. 24).
Muham-
and by Hindu princes

dams across the Cavery
Government about 1840 began
India,
the anicuts or
British
wise policy of canal construction, which has been
vigorously carried on to our
has driven
home
own
days.
Each famine
the lesson that canals alone form the
insurance against famine, and the public expenditure
on
The
irrigation
results
works has greatly increased since 1905.

have been equally good to agriculture

CH.
CANAL PROFITS.
I.j
and public
8157,
as the
finance,
146)
p.
35
following statistics {Code
the working of the State irrigation
of
department in 19 13 will show

Productive major works only.
:
Percentage of
Capital
outlay in
mil. .
Province.
Area irrigated
in mil. acres.
net revenue on
total capital
outlay.
Punjab excluding
W.
6-87
i2-i8 p.
...
i3"62
...
6-48
8-09
5-6i
2-14
9-83
...
3-58
0-809
2-13
& Sind...
2-66
i'3
478
Burma
1-27
0-28
5-i6
All Br. India
36
1474
8-62
N.
U. P.
F. P.
&Oudh
Madras
Bihar and Or.
Bombay
Some
of the
able, e.g., the
2i million
The
Punjab canals are extremely
Lower Chenab Canal, (which
acres) yielded 42 p.
three great canals of
Godavari, and
water if million
c.
net return on capital.
which between
earned 20,
net revenue respectively (1913).
207 and
is
a second
them
17*6 p.
c.
Besides the Productive
Canals which yield more than the

capital cost, there
profit-
irrigates
Madras, (the Cavery, the
the Krishna,
acres),
c.
interest
on their
class, called Protective
Canals, which are undertaken as an indirect protection

against famine, though they are not directly remunera-
36
tive,
the
than
less
INDIA.
[CH.
net revenue yielded by them being a

p.
little
of their total capital outlay.
c.
I,
The
from the Public Debt (or surplus

revenue), and the latter from certain taxes set apart
under the name of 'Famine Insurance Grant.'
first
class is financed
Both the above

while there
is
"
classes are called
major " works,
a third class called "minor" irrigation
works, which are constructed and maintained out of

the ordinary revenue.
The
totals for
19 14 are
capital
outlay on all
three classes 42*66 million , area irrigated by the state
25*6 million acres, net receipts on capital outlay on
productive major works 8'97 p. c, on protective major
works o'59 p.c, and on minor works 4*52
p. c.
(Cd. 36
of 1916.)
In
the
Punjab a grand scheme, called the Triple
Canal Project,
is
nearing completion.
the Upper Jhelum Canal,
the
It
comprises
Upper Chenab Canal,
and the Lower Bari Doab Canal. It will water two

million acres at an outlay of seven million sterling.
When
completed,
the
Triple
Project will help
to
"convert the Punjab from the Indus on the west to the
Jumna on the east into a vast irrigated tract permanently insured against famine." Another irrigation
scheme, called the Sutlej
Valley
Project,
not
yet
undertaken, aims at throwing open to cultivation

three
million acres in
what
is
now
the great desert
south of the Sutlej River, at a capital expenditure of
6 million
sterling.
{Code 220 of 1913, pp. 319-320.)
CH.
FORESTS.
I.]
Forests.
economy
the
soil,
of
Forests
Nature
prevent
its
play
most useful part in the
they store the rain water in
(i)
37
too rapid surface flow,
its
evaporation (which inside a forest
of
that which
slowly
during the
minimise
only one-half
and send
proceeds outside),
u\ t regularly
is
rest of
By communicating moisture
through
they reduce the temperature
of
the
it
down
the year.
their
air.
(2)
leaves,
(3)
They
supply a vast amount of grazing to cattle,
timber for building and
fuel.
(4)
and also
Many minor forest
gum, rubber, lac, tanning

materials (bark), cardamoms, and Sabai grass (for
paper making) have great commercial value, and
products, such as turpentine,
importance will increase with the
their
development
ability
of
the
industrial
and the increasing

modern
utilise them in
country
the
of
people to
ways.
But ignorance and neglect led to many
forests
being denuded in consequence of the increase of population during Indian rule
At
period.
last in
and even
in the early British
1878 Government began a regular
system of conservation and replanting, which
has
saved our remaining forests from destruction
and
greatly improved their trees
(1913)
forests
cover
227
and produce.
p.
c.
At present
of the total area of
63 p. c. of Burma, 46 p. c. of Assam, 19 of
C. P., 14 of Madras, 10 of Bombay, 8*6 of the Punjab,
India,
13*5
of Bengal,
(Cd, 8157).
and only
3*4 p.
c.
of Bihar
&
Orissa.
38
[CH.
Indian forests have been divided by law into three

classes
(a) Reserved,
and
strictly controlled
(b)
less
which are permanently maintained
Protected, in
by the State
which State control
laxer
is
and
exclusive, and to which the neighbouring popula-
tion have free access for

(c)
Unclassed,
many
use with slight restrictions
The
forest
purposes
which are given over to the public
areas
of
by Government.
the
different provinces
were
thus classified in 1913
Reserved
Protected
Unclassed
sq. miles.
sq. miles.
sq. miles.
Net
forest
surplus of
1 91
if
Burma
27,332
114,111
19,684
...
82,000
Madras
18,863
802
84,000
Bombay
11,857
C. P.
& Berar
Assam
4,381
Bengal
4,871
U. P.
Punjab
All India
...
476,000
167,000
385
18,401
12,000
1,711
4,030
65,000
4,121
33
39
121,000
2,165
5,203
946
29,000
96,297
8,390
140,925
1,050,000
The most valuable products of the Indian forests

wood (79 lakhs of Rupees worth exported in
are teak
CH.
RAW MINERALS PRODUCED.
I.]
39
myrobalans (57 lakhs worth exported, but not

forests), lac (nearly 2 crorcs worth
1913),
from the State
all
exported),
/ubber,
and
sandal
The home
ebony.
consumption includes bamboos (very useful to millions

of poor people), sandal,
(esp.
and
sal
sisu)
grass,
fuel,
and
teak
building timber
Nor
wood.
should
elephants be forgotten.
Minerals*
Our mineral deposits
the
in
richest
world
but
as,
among
are
the
with the exception of
and Steel Co. of Barakar and the

newly started Tata Iron and Steel Works, we have
no metal industry conducted on modern advanced
lines, nearly all our metal ores go abroad for manuthe old Bengal Iron
The out-turn
facture.
of our
few old fashioned metal
works has no power to compete with foreign manuHence India's import of wrought metallic
factures.
ware
is
steadily advancing,
production of raw ore.

11
crores of
Rupees worth
coal, salt, petroleum,

33-|-
crores
and
inspite
In 19 13,
of
raw
of
her increased
we
exported only
minerals,
saltpetre,
while
worth of metals and metal manufactures,
excluding railway materials (10 crores)
ments
excluding
we imported
(i'8 crores).
and
instru-
40
Our imports
INDIA.
in croves of Rupees.
[CH.
I.
1913
1915
3 '94
2-38
775
477
Unwrought and wrought metals
22'02
iri5
Total metals and metal manufactures
337
i8-3
Hardware and
cutlery, excluding apparatus
&
instruments
Machinery
Even
in raising the ore our
methods are primitive,
and inefficient, partly from the ignorance

and partly from the smallness of capital of our mineExcept in a few big concerns (owned and
ow^ners.
laborious,
conducted by Europeans), such as the Kolar Goldfields
and some
of the
Bengal
collieries,
go deep enough, the quarrying
is
the
mines do not
performed by hand,
and no labour-saving machine or power
Our labour
supply,
skilled in mining,
be very
employed.
admittedly
must under these adverse conditions
inefficient
the output.
is
though cheap and
and
costly
when compared with
For instance, the average Indian miner
employed underground, raised 167 tons of coal per

annum in 191 1, while a miner ill England raises
about 317 tons. The deeper strata that have been
now reached (esp. in our coal mines), will make the
use of machinery indispensable in future.
The
distribution of our minerals (1913).
Coal.
Half the total output for
from the Jharria
fields,
all
India comes
one- third from the Raniganj
CH.
I.]
and 5
p. c.
DISTRIBUTION OF MINERALS.
4I
The
other coal-
from the Giridih
fields.
mines of Bengal and Bihar are in Daltonganj (70,000

tons),
Rajmahal, Ramgarh-Bokaria, and Samhalpiiv,
which last three yield a few thousand tons only. Ninetyfour per cent, of our
coal production belongs
total
Outside these two provinces,
to
Bengal and Bihar.
the
most important mines are those
in
Dominions, which yielded half a million
the
Nizam's
tons, or 3 p.c.
Assam (311,000 tons) and C. P.

The Mohpani mines of C. P.
the Khost and Sor Range of Baluchisyielded 52,000,
tan, 41,000 tons, the Salt Range of the Punjab,
30,000 tons, and the Bikanir mines, 14,000 tons in
The native States together produced 744,000
191 1.
of India's
output, in
(250,000 tons in 19 15).
tons in 1915.
Gold,
Mostly
Mysore gold-fields
from the
(at
Kolar and other places), which contributed 93*3 p.

of the total,
and about
3 p.
British
c.
from the Hutti mine in
The only gold produced
the Nizam's Dominions.
India comes from
c.
the
Anantapur
in
district,
Madras.
Petroleum.
98 p.
from Assam, and a
Manganese.
Madras (12
c.
from Burma,
trifling
less
amount from
than
2. p. c.
the Punjab.
From the Central Provinces (80 p. c),
p. c),
Bombay
(5 p. c),
and the remainder
from Bihar, Mysore and Central India.

Saltpetre.
From U.
P. (40 p. c), Bihar
',^y p.
c),
and Punjab (20 p. c).

Mica. From Chota Nagpur, Madras, and Raj-
42
[CH.
INDIA.
I.
India turns out more than half the world's
putana.
supply.
Iron.
Orissa (Maurbhanj),
Central Provinces, and
Chota Nagpur.
Salt.
In
of salt, of
and
lakes,
(a)
191
India produced 33^ million
which 88 p. c. was derived from sea-water

and 12 p. c. by mining and quarrying.
By evaporation
Madras
of sea-water
&
Sind
...
...
...
By evaporation
of the
...
...
Bombay
Burma
(b)
maunds
11*28 mil. mds.
1274
0714
4*5
Sam-
bhar and other lakes in Raj-
putana
(c)
Rock-salt from the Salt

in the N.
the
W.
Range
and
F. Province
Punjab mines
Our annual
...
...
.,.
production of minerals {1913.)
CH.
ANNUAL MINERAL OUTPUT.
I.]
Value of
output in
Quantity of
millions
output.
43
Number of
labourers
employed.
Exported
abroad.
sterling.
2-3 mil./:
Gold
2-29
Coal
379
Petroleum
Salt (all kinds)
0-472
1-3 mil. tons
0'2
14,462 tons
Saltpetre
ATanganese ore
"034
1-21
595,761
oz.
16-2 mil. tons
133,000
277 mil. gallons
815,047
i:205,598
53,891 cwt.
= ;^302,564
Mica
Ruby,
i:46i,424
dtc.
Wolfram
Total
...
o'055
278,706 carats
...
0-127
1,688 tons
9'63
Transport. (fl)
rivers
Rivers.
181,260
In
the northern plains,
have formed the chief path for the carriage of
goods from time immemorial, and large
and commercial centres have

(b)
5 mil.
Navigable canals.
flourished
There
is
very
cities, shrines,
on
their banks.
little traffic
on
the Indian canals, which vêre constructed primarily

for irrigation only.
cities
They do not pass through large
and important trade marts, nor do they connect
with the sea and the great

afford a
roundabout route.
to pass
by towns and
rivers.
Besides, they often
The Indian boatman
villages
likes-
where he can buy
his-
44
daily provisions
and
his meals,
INDIA.
[CH.
I.
and get down on the bank and cook

also to take his
own
time in moving
These things are impossible on a canal, especi-
on.
ally
on one with locks to be
The railway
crossed.
often offers a shorter and cheaper route for goods.
Hence, the numerous irrigation canals of India are not
much
fiat
The Madras
used for navigation.
well adapted to boat
and populous country
them barely pays
the
canals are
as they flow through a
traffic,
;
but the navigation on
working expenses.
In Bengal,
the Orissa and Midnapur canals (connecting Cuttack
with Diamond Harbour) have attracted
little traffic.
There are certain canals constructed for navigation

only
the
e.g.,
Buckingham
canals, north of Madras,
(262 miles), the Orissa Coast and Hijili canals, from
Diamond Harbour,
north of Chandbali to west of
and the Calcutta and Eastern canals,

(135
between the Ganges and the Brahmaputra, (47 miles
of canals and above 1000 miles of connected river
miles),
They
channels).
just
suffices
good deal
Emp.y
canals the
iii.
of traffic,
which
meet the annual expenses and the
to
on the capital spent on
interest
(Ind.
carry on a
355).
traffic
is
In short,
their construction.
on most
Indian
purely local, while the railway
popular for long distance transport.
can succeed only
of the
in the deltas of
is
Navigable canals
Lower Bengal, where
railways would entail a prohibitive expenditure on

bridges.
(c)
In
(Cd. 220 of 1913, p. 316.)
Muhammadan
times our
only
highways
CH.
ROADS.
I.]
45
were the military roads connecting the
provincial
towns with the capital, e.g., the road built by

Shah (1540 A.D.) from Bihar to Rohtas in the
Punjab, the Imperial Mughal roads (shah-rah) from
chief
Slier
Delhi to Lahore, Kabul, Bijapur,
Over hard
etc.*
soil the
Ahmadabad, Patna,
roads were well kept, and
their remains excited the admiration of Elphinstone
and Burnes, early
in the 19th century.
In
low lands
they were effaced every year by rain and flood.
but the smallest rivers
had
None
There were no
bridges.
pucca feeder roads running from these few

to the
highways
an agricultural
Bengal or Madras, that depends for its
villages
country like
and marts.
Indeed,
crops on the annual flood, cannot maintain high roads
except by ruining
agriculture or spending a fabul-
its
ous amount on bridges and culverts. So necessary
is
the
Bengal village-roads have to be

breached to admit the water, and I have seen the oppoannual
site
flood, that in
banks of an old village-tank
river flood
Land
and slow
cut, in order to let the
sweep through it and reach the
transport
is
fields beyond.
conducted mainly by primitive
bullock-carts.
carts could
make
trips
The Indian carrier,
But in the pre-British days even

only on the Imperial highways.
therefore, used ponies, oxen, buffaloes,
donkeys and camels to carry his packages of goods.
Each animal could transport only a small quantity.

But the Bunjaras or professional grain -carriers formed
*
For details about these roads, see
Topography,
Statistics,
and Roads, 1901.
my
India of Auvangzihy.
46
[CH,
L\DIA.
1.
and successfully supplied the armies of

Aurangzib and Cornwallis with food during longcampaigns. Each man loaded his pair of bullocks,
and a whole party of them, sometimes numbering
large
parties
10,000 men, organised under a leader, would accom-
pany an army over roadless

as a beast of burden in
the
mule
in
most places
tracts.
the
of
is
used
Northern India, and ponies,
donkeys and even sheep in the
The camel
Punjab and Rajputana,
hills.
opened
August 1854. ^^
March 1915 we had a total open length of 35,285
the standard (in which
miles, of four different gauges
Railways.
{d)
First
in
the rails
stand 5 feet 6 inches apart),
the metre (3
ft. 3I- in.
apart), 14,552 miles,
or narrow gauge (2 feet 6 inches apart),
miles,
17,827
the special
and the
light
railway gauge (2 feet apart), 2,906 miles for the last two.
India has, no doubt, a greater proportionate mile-
age of railway than any other country outside Europe,

but the chief defects of the Indian railways are the
variety
of
gauges and the comparative absence of
bridges over large rivers.
ment
and this
of
goods
is
Consequently the tranship-
frequently necessary in long journeys
results in increase of freight
breakage and
and the
risk
of
theft.
The economic effects
Railways
(i) Saving time to pilgrims, who number several
As they are mostly of
millions of men every year.
in
this
gain
time means increase
class,
labouring
the
in their earnings.
of
CH.
EFFECTS OF RAILWAYS.
I.]
47
Helping the quick and cheap migration of the
(2)
and hence increasing the labour

supply where needed. The railway alone can feed a
surplus population,
large population of labourers assembled for
work
tion
at
insufficient.
construc-
where the local food supply
places
is
[Hence equalising wages.]
(3) Securing good prices for the surplus agriculFor instance,

tural produce by extending its market.
kitchen vegetables from Patna, and sheep and goats
from Buxar, are carried 350 miles away to Calcutta.

Fish from Saraghat and Katihar reach Darjiling. The
producers are enriched,
local
have to pay
neighbourhood
less
than
if
The
only.
while
the
consumers
they had to depend on their

surplus
longer wasted or sold for a
trifle
produce
is
no
at the place of its
growth.
Equalising prices within a certain distance of
(4)
the line.
Natural produce has been cheapened in the
big
and manufactures and imports have been
cities,
cheapened in the villages served by
the
railway.
to the badness of the Indian roads, " the culti-
Owing
vator in the past probably imported next
from the world outside

imports very
little
his village,
and
to
to this
nothing
day he
but in respect of what he does
import he has been a gainer by the reduction in the

cost
of
137.)
carriage" effected by railways.
But at the same time the dumping
machine-made manufactures
away
(M orison,
of
p.
foreign
in the villages has taken
the hereditary village craftsmen's bread.
48
(5)
Helping the
[CH.
I.
famine by enabling large
relief of
quantities of grain
INDIA.
be promptly carried to the
to
affected area.
(6)
Moral
effect
they act as a solvent on caste,
provincial isolation, and the narrowness of
untravelled Indian.
F'or
(Ind.
Emp.,
of railways see
Commerce, 2nd
ed., 193,
of
an
of the
L.
view there
two
is
iii.
362.
Levi's
On
iii.
354,
the general
History of British
From
the
economic point
the greatest possible contrast between
countries,
island,
see Indian Emp.y
304-6.
India and England.

the
mind
385-388.)
a comparison between railways and canals as
means of famine protection,

and as means of transport,
effects
iii.
(i)
Geographically England
is
so advantageously placed that the hemis-
phere of which she
is
the centre contains the largest
amount of land on the earth's surface. Thus, Nature

has meant England to be the mistress of the world's
carrying trade, and the land which can most economically send her manufactures abroad.
India
a half-
is
way house between England and Australia she is

close to Persia and Egypt on the one hand, and to
Siam, China, and the Eastern Archipelago on the
;
other.
This position will be of great advantage to us
in distribution
we
begin
to
when our
export
and
industries are developed
our
manufactures.
Eastern
peoples must necessarily be our best customers (except

for
raw produce, which they can

(2) The coasts of England
raise themselves).
are
indented
with
CH.
ENGLAND
I.]
countless harbours
A.,'^
and creeks
the most violent storms
INDIA.
in
'
49
which ships can
duction in the island has a harbour close to

often the choice of
other hand,
is
two
is
iai
"furiously beaten. by winds and
a tolerably safe refuge to
Rangoon, though good
mouths
of rivers,
and
Her
harbours.
Bombay
waves during the monsoon months."

affords
it
on the
India,
or three ports..
singularly deficient
rocky western coast
def}'
almost every centre of pro-
are
ports,
and every year
has to be spent in dredging
a,
away
alone
Karachi and
ships..
situated
good deal
at
of
the
money
the deposits of sand
and keeping the channels open.
River-sand long ago
closed the historic port of Surat.
On
India there
and
inland,
risky
the east coast of
not a single harbour. [Calcutta
is
reached by an intricate passage, rendered
by sandbanks. The pilotage charge
The
86 miles
is
eastern coast also slopes
big ships cannot
come within
away
is
is
very heavy.]
sp gently that
three miles of
it.
Break-
waters have been constructed at an immense cost to

turn Madras into a port, but
iii.
it is
not
safe.
(Ind.
Emp.y
All the centres of production are far inland
272.)
places with no short or natural communication with the

sea.
Hence our heavy cost and loss of time in transport.

England
(3) As regards inland communication,
made about 1775 a
splendid set of canals- connecting
her great rivers together and affording shbrt and cheap

routes
between London, the west, the north, and the

These canals greatly helped her "indus-
south-west.
trial
revolution in the last quarter of the
1 8th
"^
century.
50
INDIA.
[CH.
I.
Indian canals are not so well suited to navigation,
and costly land transport is our only resource

moving large quantities of goods.
England
(4)
is
a wet country
the
for
Gulf Stream
sends up moist currents of air which always keep the
damp, and
soil
in
rain sometimes falls nearly every
But India
the year.
week
a dry land, subject to long
is
periods of rainless weather, and with a soil which (in
most places) quickly absorbs the moisture and presents

a hard or sandy parched surface.
England's coal mines are near her beds of iron
(5)
and
tin,
seashore.
or (in the case of
Welsh
coal) close to the
Hence, she easily holds the
cheap manufacture of metal.

dance of wâter
in
place in the
is
abun-
her northern districts, the chief
seat of her industries.
Thirdly, her water-power has
employed
been usefully
first
iMoreover, there
economising labour for
in
small village industries.
All these favourable condi-
tions are absent from India.

(6)
England
is
essentially a land of cities: three-
fourths of her people live in towns against only one-
tenth in
industry
With
India.
of
the
people
agency,
while England
turing
country
is
the
main
and so we have to depend
greatly on regular rainfall,
agriculture
us,
is
i.e.,
on a precarious natural
predominantly a manufac-
three-fourths of her people live
by
non- agricultural work, against one-fourth in India.
Manufacture
effort
is
more dependent on human
than on Nature's
gifts.
skill
and
CH.
NATIONAL ck. ÂCTER.
I.]
(7) In the cold climate of
tion
England, physical exer-
a delight and a means of preserving health
is
the average duration of
unknown
life
is
(except in a few favoured
epidemics are
longer,
or have been banished

tracts
by
science.
far
death
short
to
do strenuous labour
life
(except
In
unaided by science,
As
(8)
in
is
to
the
fibres of the
court premature
vegetating kind)
very
is
and "tropical diseases" have found here a
congenial home.
race
the
of
is
In India
away from
populous plains), the climate relaxes the
body
is
is
the struggle with Nature,
man,
not yet more than half victorious.
the land, so are the people.
The English
methodical, cool-headed, strenuous and thorough

they undertake.
all
Their liigher minds are
confident, filled with a divine discontent
self-
with things
as they are, and

Ever reaping something new,
That which they have done but earnest
of the
things that they shall d<x
The Indian labouring

permissible
in
the
case
classes
of
(if
generalisation be
such a vast and varied
population) are slack-nerved, easy-yielding,

the stupendous forces of Nature
awed by
and the might
of Fate,
and, though generally industrious and sober, apt to
be led
passion,
wisdom
away by
occasional outbursts of impulse or
habitually
conservative,
believing
in
the
of their ancestors, fond of letting things alone.
In their present stage of neglected education,
they
are essentially mediaeval in their thoughts, and as far
52
INDIA.
[CH.
I.
removed from the abstract "economic man" as can be
Some
imagined.
of
their
very virtues, such as the
domestic habit, patience, content with

to
aversion
adventure or speculation, and softness of
spirit of
heart,
little,
handicap them
in the
economic struggle with
the pushing races of the West.

In the past, particularly in the mediaeval
madan
sit
Muham-
our thinkers were mostly inclined
period,
to-
under the Banyan tree dreaming of metaphysics,

Annihilating all that's made
To
To
a green thought in a green shade.
the Indian population their frugality, socialistic
and domestic virtue are moral assets of great

If, even in the economic sphere, the
ultimate
victory is due to the race and not to the individual
(however brilliant), then a nation which recognises
spirit
value.
it
as the duty of everj^
woman
to
a nation of
commit
man
to
marry and of every
to undertake motherhood,
selfish
race-suicide.
must prove superior
pleasure -seekers,
When
who deliberately
education and sanitary
improvements have overcome our heavy

death-rate
and
opened new
fields of
the
untimely
development of industries has
work
and regularly replenished
home, India's immense
at
man-power
must be of
great advantage to her as a producer.
When we
have passed above the harmfully low
standard of living which makes sanitation at
home
and proper physical and mental development impossible,
the very frugality of our people will be a
force
CH.
SOCIALISM IN INDIA.
I.]
in our favour.
In a country
high thinking
still
where plain living and
prevails
and
low pay, the cost
men
than where
of
production
of equal ability
Again, the socialistic
wages.
expert
scientists,
accountants and clerks can be secured on a
foremen,
53
command
spirit of
very high
Indian usage
and domestic organisation, which will be fully

ed
in the
lower
naturally
is
describ-
next chapter, exerts a steadying force on the
community and tends automatically to correct the

vils and sufferings due to outbreaks of individualism
on the part of particular persons. Such socialism
as still prevails among us is, no doubt, mediaeval,
uninformed, not scientifically organised.
now been
alism may
even one
good
lead to success in the case of one
class,
the
of
organisation
For
such
already
But
it
has
recognised in Europe that though individu-
man
or
the future of the race and the abiding

community
of
the
as
nation
organisation
a whole
on a
we have
possessing a frame-work,
demand
socialistic
the
basis.
the advantage of
though old and
unscientific.
I
have described above the natural influence of
climate and geography on the Indian character.
But
under proper education and far-sighted guidance the
human
brain and the
nearly all
the
obstacles
human
of
will
Nature,
can overcome
and man
can
triumph over climate.
The
resources of
daily increasing,
and
modern science are immense and

if
they
are
applied resolutely
54
INDIA.
[CH.
and systematically, Indians can achieve

economic as in other spheres practically
natives
of
other climes have achieved.
in other lands,
potentiality,
man
I.
in
the
all
that
In India, as
has within himself a boundless
which
it
is
the
duty of statesmanship
to develop to the utmost.

In
the
facture,
ancient
world Indians did excel in manu-
agriculture,
artistic
production,
scientific
and even economic organisation. There

no inherent incapacity in the Indian character todo the same now\ In our own times there have been
investigation,
is
examples of the successful organisation of business
on modern
lines
and clockwork regularity by Indians

who have received no European
educated in the land
training or assistance.
CHAPTER 11.
THE PEOPLE.
The
lation
village system.
large
is
Though
the Indian popu-
on an average 224 per square
{viz.,
mile in British territory), yet almost

live in villages,
of
towns.
24
and there
of
c.
p.
is
all the
people
a comparative absence
our total population live in
more (191 1), whereas
places with 2,000 inhabitants or
in England and Wales 78 p. c. of the population is

But if we fix the minimum population for
urban.
a town at 5,000, then

Indian population
In
is
a few years
or the
the
later on, a
became a complete
of the land
the
of the
special
religious
sanctity
Wherever our Muhammadan sovereigns
a place.
and when,
of
per cent,
urban.
or their provincial viceroys

In
io'4
India cities wêre created in the past either by
the royal residence

of
only
tents
lived,
defensive
city.
cities
sprang up.
were replaced by houses,
Here
wall was added,
it
all the best artisans
were concentrated, and here most part
revenue was spent.
facturer of old never
Again, the Indian manu-
thought of going out to seek
his customers, he expected
them
to
come
to his doors.
Hence, every famous centre of pilgrimage, such as

Benares,
of
Puri,
thousands
Kanchi or Mathura, by drawing tens

every year afforded an
of visitors
56
excellent
flourishing city.
sertion
art
became the
II.
large
and
''Capitals, ex-capitals retaining
some
or manufacture
centre of a
[and surviving their de-
by the monarch], the colonies
or ex-capitals,
ness,
[cH.
market, and induced artisans to settle there.
In time, the temple
special
INDIA.
villages
grown
and a certain number

.
of such
capitals
to exceptional great-
towns which have
of
sprung up round the temples built on
sites of extra-
ordinary sacredness, would go far to complete the

of Indian cities."
list
(Maine's Village Com., 119).
commerce and industry are

Bombay,
leading to the rapid growth of new cities.
Karachi, Gawnpore and Howrah, besides many towns
in Burma, are the most striking examples of such
growth. But the Indian people have not yet been
Under
British
habituated to
virtues,
cities,
habits
entire city (as
rule
of
nor have they developed civic

association
opposed to one's
extending over the
own
street
or
ward
and ''the communal soul," which characterise

European races. The village is, therefore, still the
only),
real
is
its
unit
of
the
Indian social organisation.
a continent of villages," and
this
fact
"India
determines
economic conditions.
Rural economy. In several parts of Upper India

and the Deccan we have survivals of old village
communities, which are "little republics, having
nearly everything they can wânt within
and almost independent
of
any foreign
(Elphinstone's History of India, Bk.
II.,
Ch.
themselves,
relations."
II).
Every
CH.
VILLAGE ORGANISATION.
II.]
even when
village,
community,
It
has
is
own
its
such as the
blacksmith,
in
exist
all
it
57
does not form a regular village-
self- contained y
whole.
self-suijicing
set of hereditary officers
and menials,
scavenger,
barber,
priest, watchman,
They
and even its favourite beggar.
villages,
with
this difference
only that in
a "village community" they are paid by the allotment

of plots of cultivated land held
sion
and
in
hereditary succes-
in
other villages by an allowance of grain,
and secondly, that a village community has

additional
officers,
the
headman and
The medicine-man (who

doctor and often
the midwife,
the
both quack and witch-
is
a religious mendicant in addition),

the
oilpresser,
carpenter,
washerman (where such a luxury

shared in
dealer
to
common by
is
any
is
and the
maintained), are
The
a group of villages.
a wanderer and does
not regularly
grain-
belong
village.
The horizon
and nearly
of the villagers
all their
get their necessaries and

surplus produce,
fluctuations
of
are
many
extremely limited,
The markets where they

at
which they
to them
very close
demand and
the world do not touch
only after
is
simple wants are supplied by their
immediate neighbourhood.
years.
them
The
familiar travelling traders
two
the accountant.
sell their
;
and the
price in the big marts of

at
or
all,
villagers
who come
affect
have their
them
own
to their doors in
definite season every year, sell manufactures, or take
away
the village produce.
Villages that supply big
58
in
cities
[CH.
II.
neighbourhood, or stand on important
their
and more subject to rapid

Sometimes we have a
group of villages, each of which with its special
produce or industry supplements the others, and they
railway
are less quiet
lines,
changes of prices and wages.
together form one self-contained whole.
Such was the picture of
still life
long as society was stationary.

ten
or
But within the
last
the network of railways has spread
years,
15
in our villages so
over the country,
(the
mileage open having
total
doubled between 1891 and 191 3), and most villagers

in the valleys of the Ganges, Indus, Krishna and
now have
Godavari
of
the railway within a day's journey
Travel has become more frequent^
homes.
their
because easier and cheaper
and search
of
more
lucrative
increasing numbers of people
pilgrimage,
litigation
employment are taking
away from
their
native
and bringing larger numbers of commercial

travellers to them.
In these, the most populous parts
villages
of India,
therefore,
extended
he
mouse"
that his father was.
is
the
villager's
horizon Has been
no longer the unsophisticated "country

Change, even rapid
change, has invaded our rural tracts,
and the old
generalisation about the immobility of Indian

life is
no longer
in the chapter
true.
Agriculture
people.
*'
It
This fact will be illustrated
on Consumption.
The economic
(a)
village
is
effects of the village
system
almost the only occupation of the
has been estimated that nine-tenths of the
CH.
villagers' occupations.
II.]
59
rural population in India live, directly or indirectly,
agriculture."
showed that out

52
population
Indian
entire
by
of igoi
growers of special products or engaged
in estate
20
the
The Census
2).
labourers,
c. field
p. c.
of
iii.
were either landlords or tenants,
p. c.
12 p.
Emp.,
{Ind.
management,
and partly follow-
p. c. partly agriculturists
ing some other form of employment,
6 p.
c.
general labourers, but mainly supported
bv work
Total
in the field.
c*
73^- p.
Thus nearly
three -fourths of the entire Indian popula-
depend directly or indirectly on agriculture for their
tion
livelihood.
Industries are absolutely impossible except in our
larger towns.
Even the system
of associated cottage
Europe a century ago and
industries practised in
Japan to the present day,
is
unknown
in
in the Indian
villages.
(b)
tlie
In the stationary
and out
of the
way villages,
people are extremely conservative and impervious
We arrive at nearly the same
numbers employed
in 191
2247 millions
i'8
,,
figures
if
we
take the total
and pasture.
and hunting.
in agriculture
fishing
226*5 millions out of a total described population

of 313*4 millions,
:. e.,
72*3 p.
c.
'6o
to
new
[CH.
INDIA.
narrow bounded isolated

Economic improvement is almost impossible,
ideas, because of their
lives.
and custom
among them. (But when

new method has been clearly
reigns supreme
the practical benefit of a
demonstrated before their
enough
to adopt
fessions
the
is
eyeSy
The
it).
rule
ambitious enterprise
our villagers are ready
pursuit of hereditary pro-
and the
spirit
away
tempts them
The
staying,
ment
to
of
in
villages,
is
wanting, except when easy
railway connection with a large town in the
(c)
II.
new
district
fields of action.*
village system
makes the people home-
and prevents any rapid supply or displace" The Indian peasant is immobile"
of labour.
was found that over 90 p. c.

-of the inhabitants of every district had been born in
that district, 6 p. c. had been born in the districts
immediately adjoining it, and only 3 p. c. had come
from more distant places. {Hunter^ 83). It is true
that even in England the fluidity of labour is much
in the Census of i8gi
less
of
than
we
moving
it
are apt to assume, because " the difficulty
the labourer's
home
limits the field within
which he can seek work." {Cunningham & McArthiir^

But in India the evil is aggravated by caste, by
108).
clnnatic, linguistic
and
social differences
between the
various provinces, and mainly by the narrow spirit

* "
no
The
villagers are ignorant of the outside world,
facilities for
improving
their position.
important factors governing their material

Morison, p.
15.
and have
In respect of the
life,
most
they are helpless."
CH.
EFFECTS OF VILLAGE SYSTEM.
II.]
which the
"
The
each village
of
self-sufficing life
fosters.
villager looks on the inhabitants of surrounding
more or
villages with
less distrust, unless
to be of the
same
Association
or concentration of labour
scale
is
(Dupernex, 173).
caste as himself."
impossible
without
they happen
on a large
down
breaking
rural
habits.
(d) Division of
of
labour being limited by the extent
market and the
the
possibility of co-ordination of
labour in producing the finished
opening for division of labour

labourer has to perform
Hence
there
villager
is
has no incentive to
new
artisan or to seek a
are
(See
The markets
entirely
there
skill
make
no
and time.
himself a skilled
opening, unless he migrates to
orison, p. 8).
of the villagers being
small,
influenced by local conditions,
differences of price
is
a village, and each
processes of production.
a great waste of
a large town.
(e)
all the
article,
in
they
and great
in two
have been known to prevail
few miles apart owing to the ignorance

of the villagers and the difficulty of communication.
The contact with the big markets of the world which
villages only a
railway expansion has

equalise prices
and
brought
about,
tends
to
limit the range of fluctuation with-
in only a certain distance of the lines.
In short, the village system compels production
a small
scale,
deepens the
effect
on
of custom, checks
individual ambition and initiative, and offers resistance

to the
wave
of progressorof
any vast economic change.
62
Peasant-proprietorship
In
India the
INDIA.
[CH.
II.
only true peasant-proprietors are to
be found in certain villages of Bihar and Benares,
where Government made the Permanent Settlement

with groups of cultivators, and recognised them collectively as zamindars. Their descendants
the
fields
are full and inalienable

Government revenue is fixed in
and they can
{malikana)
settled
cultivate
which they
of
prietors, their
petuity,
still
when
parts
of
they
their
sell
In
please.
Bengal,
right
of
proper-
ownership
permanently
the
the hereditary
and absolute
rights of certain classes of tenants ("occupancy
ryots'')
have been secured by the Bengal Tenancy Act.
These
men can
at
will,
sell their rights freely,
and
their
they cannot be evicted
rent cannot be
increased by the
zamindar unless the rent of the neighbouring
tracts
higher or the price of crops has increased.
Against
is
^very enhancement of rent they have the right to
They
appeal to a law court.

proprietors.
But over the
are
rest
State lets the land temporarily,

in the ryotwari
and mahahvari
of
the
in
effect
India,
peasant-
where the
cultivators (both
tracts) are
mere
lessees
and not at all proprietors, as they are liable to eviction

and enhancement of rent at every periodical revision
of settlement.
Their rent
is
fixed solely at the discre-
tion of the Settlement Officer (a
mere servant of
landlord), against whose decision there
to
any
court.
In
many
been restricted by law.
is
their
no appeal
places their right of sale has
Thus
the direct tenants of the
[CH.
PEASANT-PROPRIETORS.
II.]
63
State have no legal right to the three F's secured by
and
the Irish peasantry, viz., fair rent, fixity of tenure,
freedom of
cannot prevail
own
because their
sale,
against
idea of fair rent

or even
opinion,
the
the
arbitrary will, of the State landlord's agent, the Settle-
ment
Officer.
In
Madras even the old mirasdars,
families co-sharing a village as
and representing
its
or
hereditary owners
had lost their

and sunk into tenants at will.
But some of their original rights have now been restored.
its
original colonisers,
rights under British rule
In the parts of Bihar
and Benares where peasant-
proprietorship as described above prevails, the descen-
dants of the original grantees (or those to

iiave sold their sharesj live
usually cultivate their lots in
and threshed grain
is
in
the
same
common.
divided
among
whom
village
and
The harvested
the co-sharers.
This results in great economy of labour and

nearest approach
they
the
is
to agriculture on a large scale that
we have in India. In Bengal, isolation is the rule

man cultivates his own field, the limits of which
;
each
are jealously guarded by means of raised grass-paths

called als (corresponding to balks in England).
sometimes
in the
lowlying lands near swamps
But
(bils)
number of neighbouring owners (or occupancy ryots)

work in common, dig up the boundary lines, and divide
the harvest in proportion to their respective shares.
Thus we see that in most parts of India " the

magic of property " is absent. But land is still greatly
in demand, as it is the only investment of the lower
64
classes,
and
position
among
possession
its
INDIA.
11.
owner a higher
gives the
his castemen.
[CH.
Partly for this reason,
but chiefly owing to the pressure of population on the

soil,
various
the
tenancy,
sub-tenancy,
The Indian
are sold at
etc.,
ownership,
of
good
prices.
remarkably hard-working and attentive
But unlike Europe, partition
business.
their
rights
peasant-proprietors, like those of other
countries, are
to
agricultural
is
frequent here and the holdings have a tendency to
grow very much smaller with each succeeding generation.

Hence our peasant-proprietors are seldom richer
than the temporary farmers in their neighbourhood.
Caste and
its
economic significance
The advantages
session
of caste are
hereditary skill
of
training of
(a)
apprentices.
ensures the pos-
It
and trade
and the
secrets,
[Machinery and technical
schools have greatly reduced the importance of these.]

(6)
society.
insists
(2)
It
acts as a trade-guild
Each
caste forms
on the proper training
regulates the ivages of
and a mutual
benefit
an association which
of the
its
youth of that
members,
(3)
(i)
craft,
supplies
courts of arbitration, (4) punishes social delinquents
and keeps up a
(5)
fairly
" Caste takes the place of a
etc.
and allows none

times.
of
high standard of morality, and
promotes social good feeling by means of dinners,

of
{Hunter, 247
its
Poor
Law
in India
"
members to starve in ordinary

The chief local industries
249).
India in pre-British days were developed under
the supervision of caste, (especially at
Ahmadabad,
CH.
CASTE AND ITS EFFECTS.
II.]
Where a
Amritsar, Benares, etc.)

still
65
certain profession
is
members enjoy
their wages at will.
confined to a particular caste,
its
a trade monopoly and can raise
Recently barbers and midwives have done so at Patna.

" It has saved the purer races in
(c)
venting
intermarriage
mentally
inferior,
to
and
with
it
India by prephysically
others
keep the higher races from excess in eating and
drinking and insanitary habits."
Thus
1908.)
[Athenceum, ii Jan.,
caste has preserved unimpaired certain
valuable types of mental capacity and industrial

(d)
It
secures
but renders any
division of labour to
new
distribution
and co-operation, except
possible,
extremely
of
some
functions
in
is still
as strong as before in
other respects
its
force for
good and
public.
evil alike
being rapidly broken by the modern conditions and
spirit
which
features
its
im-
in fixed grooves,
regulating marriage and dining together in
But
skill.
extent,
difficult.
over India, caste
All
is
and
has to a certain extent helped
British
rule has introduced.
noted above in
ideal condition,
The good
(6) characterise caste only in
and have almost
totally disappeared
from Bengal, the most thoroughly modernised province of india. But they are still to be found in Bihar,
the United Provinces, parts of the Punjab,
and Guzrat.
Change is greater at the ports, capitals, and other big
towns, and in districts of which the population is predominantly urban and given to travelling. But where
the towns are few and the people mostly follow
66
agriculture or village industries
or travel far from
home
way but
may
[CH.
II.
and do not emigrate
in search of work, the caste
many
though
unimpaired,
organisation continues
railway lines
INDIA.
cross the district.
It is
not the
rail-
emigration of single families or indivi-
the
duals (as distinct from the transplantation of an entire

village or caste-section) to a great distance
original home,
that
is
and local custom.
caste
from the
the most effective destroyer of

(See Maine's Vill. Com., 39.)
The disadvantages of caste are (i) Emigration

free movement of labour is difficult, and change
:
occupation
is
but there
rule,
is
This
a plasticity in caste too
general
the
is
;
some lower
castes have deliberately changed their ancestral
pations for better ones in historic times.

245.)
And
of
Certain occupations
almost impossible.
are forbidden to certain castes.
or
occu-
(See Hunter,
a caste revolt against fixed professions has
been going on in Bengal
for
some time
(2) Invention or originality
is
past.
checked, because
every workman's social prospects are limited to the
customary position of his
He cannot
caste.
any
rise
higher than the level of his caste-fellows, however
much he may
is
distinguish himself.
Hence the
intellect
not placed at the service of labour in India.

also
are
many
There
depressed or untouchable castes
the
dignity of labour cannot be recognised in such a society.

(3) Caste, unlike
way
of
the
European
infusion
However worthy
guilds,
stands in
the
of fresh blood into a profession.
or desirable an
acquisition
man
CH.
may
it.
DEFECTS OF CASTE SYSTEM.
II.]
be,
The
67
he cannot enter a caste, unless he was born to
grow by
strength of a caste can
not by the assimilation of
men from
birth only,
outside.
and
" Caste
is a symbol of disunion and weakness. A guild may expand and develop it gives free play to artistic endeavour. A caste on the other hand, is an organisation of a
;
lower type
it
-till
grows by
many an
In England
{Ind.
fission."
Emp.
i.
343.)
able apprentice rises step by step
at last he marries his master's daughter
his business as a partner.
and
enters
In India the ablest servant
low post ordained for him

seek his advice, and may
even get all his work done by him, but cannot transfer
Ihe business to him by making him its avowed head.
must remain
by
his birth
for ever at the

his
master
may
Caste stands in the
(4)
way
American
of the rise of "captains
though a
few individual workmen may grow rich in their
own particular business or by acting as contractors
to Government or modern factories. Once a carpenter
of industry" like the
(or smith),
always a carpenter
millionaires,
(or smith),
such
is
the
rule of our society.

Hence in our past
war (which does not stand any sham or false
convention) was the only occupation in which genius
unalterable
history,
rose
to the
status.
sion,
highest position
irrespective of birth or
Rapid extension of business, change of profesand rise from a lower to a higher rank in the
scale of labour, are extremely
difficult
communities which observe
caste.
industry of Western India
is
among
those
Hence, the cotton
mainly conducted by
68
Bengal by Europeans, our
Parsis, the jute industry of
foreign trade by Europeans, Parsis, and
and the import cloth trade and

are
hands of Marwaris,
the
in
from
caste,
and
all
[CH. IL
INDIA..
but the
Muhammadans,.
internal
distribution
whom are free

whom have na
all of
of
last
vexatious restriction about food.
Caste enables
men
amount of success in those small

which require high or specialised skill and
to attain to a certain
industries
to
allied
are
we have
the
fine arts,
but
it
breaks
down when
to organise vast industries, especially factory

like
industries,
those
of
Europe.
(See
Bluntschli's
Theory of the State, p. ii8).

(5)
Even a
Caste causes great material waste.
small Hindu household has to keep too
many servants,,
because each caste will do a particular kind of work
and no
There
other.
a frightful waste of fuel and
is
cooked food, because no non- Brahman will eat food

cooked by any non- Brahman caste other than his own.
And
within the same caste one section
section
partake
to
refuses
!
of
Lastly, there
in the absence of
(sreni)
often
a meal prepared by another

is
a great
a cook of one's
because
loss of skill,
own
caste,
a genius
has to waste several hours daily in doing the drudgery

of the kitchen,
employed
he
is
in
when he might have been more
mentally capable.
great as
if
usefully
doing the highest kind of work of which
The economic waste
is
as
a master sculptor were to spend three
hours daily in sweeping his
own
grounds.
(6) Caste distinctions, by preventing the natural
CH.
JOINT FAMILY
II.]
ITS EFFECTS.
69
adjustment of the total female population of

country to the total male, are killing
The
castes.
rule of marriage within
off
the
certain sub-
one's
sub-caste
(endogamy) also drags down the best members of

each caste to the low level of the average.
The
joint family:
of India the family
social
as
unit,
Europe.
effects.
its
was the case

members of
the family live
common
head,
who
rules
thing of patriarchal authority.
pay
their
earnings
the wants of
and
starts
all,
them
most parts
into
is
his
still
the
and mediaeval
in ancient
All the
under the
In
and not the individual
together
them with somewage-earners
All the
hands, and he supplies
brings up the young,
marries them,
This system
(i) ensures the
in life.
education and protection of orphans, and saves Indian
workmen from being
left helpless in
old
age or
dis-
because all the members of a family share the

same food even if they have to go half -fed. The joint
family makes work-houses and old age pensions unease,
necessary in India.
But
(2)
no member
of
or bequeath to his children
a joint-family can enjoy

the
entire
fruits
labour.
Hence, the keen money-making
western
workmen
is
(3)
spirit
his
of
usually absent from India, and
the incentive to exertion
member
of
is
not very strong in any
of such a family.
As the few bread-winners
of the family feed
members, the drones are not roused from their

laziness.
But in Europe everyman has to work or
all its
70
he must starve
INDIA.
[CH.
II,
and even the younger brothers are

by the eldest when he succeeds to the
ancestral property.
There stern necessity calls forth
every man's latent powers. It is the unendowed
cast
adrift
"younger sons" who have created England's colonies

and world-wide empire as well as her trade and
But such
manufacture.
(4)
No
can continue long

are
distributed
in India,
among
many
individual firms in
the Marwaris
because a man's earnings
his
kinsmen.
Hence,
rich
cases cannot last longer than
But a joint-family (especially among
one generation.
company
not the case in India.
is
accumulation of large capital in one hand
and Banias) is often a private joint-stock

and the business is smoothly carried
also,
on generation
after generation as
a family property.
modern ideas
and individual freedom of action
and growth. A joint home is now-a-days usually
rendered unhappy by a soreness of feeling which is
hardly suppressed and even by open bickerings. The
evidence of our old literature shows that the jointfamily system did not always create idyllic homes
(5)
This system
is
inconsistent with
of domestic peace
even in the days of our forefathers.
The
Indian law of inheritance*
In India the
only properties that descend to the eldest son by
undivided succession, are certain ancient zamindaries
which partake
everywhere
partition
else
among
of
the
all
nature of sovereignty.
the
the heirs
sons have equal rights

is
the rule.
But
and
Even a property
CH.
INHERITANCE LAWS.
II.J
acquired by a
indivisible
man
through his
during
in
soon as he
In
ed).
as the absolute owner,

right
in
is
direction
invalid."
(Mayne's
Bengal where inheritance
regulated by the Sanskrit code
(composed about 1400
but becomes
"Any
dies.
a will prohibiting a partition
Hindu Law, 7th
exertions remains
only,
lifetime
his
liable to partition as
own
71
named
a.d.), the
and
law
refuses
treats the father
recognise
to
the son to a partition during his father's
But brothers and other collateral members

joint-family have
the
right
succeed to
to enforce
the
is
still
undivided.
an undivided family has the right to

her dead and childless husband's share and
a partition on her
own
account.
Southern India and the
Provinces,
Western Presidency follow the legal

(c.
life.
of
in
The United
kshara
any
to dispose of their shares
at their pleasure while the property
A widow
is
Dayabhaga
the
treatise
Mita-
by which the sons are consiowners with their father, and to
1060
a.
dered to be joint
d.),
have by birth an equal ownership with the father in
immovable property. The result

that the right to a partition at any time, between
respect of ancestral
is
co-sharers,
is
now
admitted universally.
The son
or
grandson can enforce a partition of the property in

the possession of the father
the
consent of the
In these provinces
managed by
latter,
we
or
grandfather,
against
under the Mitakshara law.
generally find joint holdings
the head of the family, though the right
of every sharer
is
recognised.
"Under the Mitaksharay
72
an absolute discretion
joint
the
income]
is
the
[as to
vested in the
INDIA.
manager
[or head],
and
Under the Muhammadan law there

variety of heirs,
and partition
but
an
and complexity
the inheritance of the
members
a Muhammadan's land
in
infinite
the very
is
of rights characterise
To buy
of this creed.
often
"to
buy
There are usually numerous co-sharers,

case,
an
is
effected
is
Minute and troublesome sub-
succession.
division of land
cular
to
(Mayne, 370).
account."
of
II.
expenditure of the
family have a right to partition
act
[CH.
litigation."
one parti-
(in
66 were represented in court), having
microscopic interests in the property, any one of
whom
can contest the sale and prevent the transfer of the

property for years by instituting a lengthy civil
The conveyancing
is
of
often an impossible
realisable
asset.
suit.
a Muhammadan's real property
and the land
task,
With such a host
of
is
not a
co-sharers,
constant friction and mismanagement by the managing partner are the usual results, and the estates are
saved only by being placed under the Court of Wards.
Unlike the law of primogeniture which obtains

in
England, the Indian law of inheritance does not
favour the concentration of capital or accumulation of

large estates in a few hands
tion of small holdings
ly,
even
if
encourages the forma-
it
and petty
cultivation.
an individual builds up
business on a gigantic scale,
than one generation.
it
in his life-time
does not
Thirdly,
Second-
last
longer
"a necessary conse-
CH.
CUSTOM AND COMPETITION.
II.]
73
quence of the corporate character of the family holding
whenever any transaction
that
is
property all
single
members must be privy
the
member cannot
cution
to
sue or proceed by
the
it.
of
exe-
(Mayne, 379). Then, there is

which almost always accom-
ruinous litigation
panies
to
way
recover a particular portion of the family
property for himself."

the
that
affects
partition
where the estate
is
property
of
in India.
small and the co-sharers
Lastly,
many and
dependent on other sources of income, the manage-
ment
all
is
apt to be negligent and wasteful, whereas,
the other heirs sold their
rights
to
one
(as
if
they
always do in France and Belgium), the sole owner
might have put
it
to the best use.
Status and custom^

rents,
and their influence on

wages and prices. Until recently competition
had a limited operation in India except at the large
which were
constant communication
Even now custom is a powerful factor in villages remote from railways and towns.
The place of competition as an economic force was
taken by status (i.e., a man's social position as determined by his birth) and custom yor the immemorial
sea-ports,
in
with foreign countries.
of ancestors).
Dastiiv (or customary usage)
was appealed to as a god, and any departure from old
ways was condemned by public opinion as an act of
impiety.
Apart from the stationary character of
practice
Indian civilisation and the conservative instincts of our

people, there
was a
third cause of this, viz., the preva-
74
lence
of natural
economy
villages of
money
the part of
were
things
paddy
likely to be
taxes
at
many
so
many remote
customary payments of
money
and most
small cane-baskets of
"So long as barter
but as
prevails, there are

rent,
wages,
to
known among
limits,
and
us,
left
of competition has
but
it
most
competition
is
a force of
than in European industry,
less
Undoubtedly there
'economic
it
is
importance in Indian
is
not neutralised by
in India
a great deal of
impeding the operation of general

again, " Inside the narrow circle of the
friction'
And
Indian village, competition
is
the rule,
but
tion between illiterate men, ignorant

beyond their village." (pp. 3 and 15).
villages there
petition
always been
of our economic life

"I do not think that
sides
Morison writes,
laws."
&
operated within very narrow
untouched.
custom.
they
(Cunningham
be settled by competition."
McArthur, 141).
A certain amount
and
may be
introduced, there
is
frequent rearrangements of these payments and
come
II,
North Bengal grain used to play
in the harvesting season,
sold,
for each.
[CH.
or barter in rural India be-
Until recent times in
fore British rule.
and small
INDIA.
is
competi-
it is
of the
But
in
world
many
only one dealer of stores, and hence com-
among
sellers is
out of the question.
The same
cause operates in regulating the wages of nearly all

classes of village servants
and
artisans.
of grains, vegetables, fruits, fish

is
a brisk competition, though
In the purchase
and other produce there
among
local
men
only.
CH.
CUSTOM
II.]
IN FIXING
RENT.
75
But whatever might have been the condition of

India in the past, the spread of English civilisation, the
money economy, and the extension of

communication are rapidly breaking down the force of
custom, and competition is now the predominant force
substitution of
everywhere except in a few out-of-the-way
The
shown
influence of custom on rents.
in
how
the sixth chapter
in
districts.
It
will be
most countries
of
the world custom has a great influence in regulating

rent,
and
India rent
petition
how custom comes
also
was
settled
among
for nearly
the
by custom (and not by comand
Permanent Settlereason, but mainly on account
two generations
sparseness
after the
of population.
times a landlord had often to call
defend him
hence
In
the ryots) in the pre-British days
ment, partly for this

of
to be broken.
and strong body
it
was
In those unsettled
upon
his interest to
of tenants.
his
ryots
ta
have a large
There was plenty of good
land lying uncultivated, and landlords competed with
one another for attracting cultivators.

the last
fifty
duced the opposite condition, and

ing ryots competing for
for their only
has, thus,
we now have
offering
means of sustenance. The force

estate has
same family that got

are
land and
been almost entirely broken in
When an
there
But within
years the growth of population has pro-
it
remained
at the
generally friendly
landlord and his tenants.
He
starv-
rack-rent
of
custom
many places.
hands of the
Permanent Settlement,
relations between the
in the
feels socially
united to
76
them
rack-renting and eviction are
many
INDIA.
of the
Bengal estates were sold
[CH.
unknown.
for debt since then,
owners have very often regarded
But
for default in the
generation after the Settlement of 1793 and
first
more have been sold
II.
many
and the new
their lands
merely
for their money and have resorted to

The Rent Act of 1859 has legalised
custom by laying down (i) that no zamindar can en-
as
an investment
rack-renting.
hance the rent of a plot of land beyond the rate prevailing in the neighbourhood, (2) that a twelve years*
right' or
him an 'occupancy
permanent tenure without any title-deed, and
(3) that
a tenant has not the right of selling his holding
occupancy by the tenant, creates
unless the
In
same
many
right
parts
is
of
in
enjoyed in the neighbourhood.
Bihar and the U. P. the old
customary division of the crop (hatai) between landlord
and tenant
rent
is
still
continues, though the system of
money
rapidly extending.
The
diaeval
influence of custom on wages.
In
me-
India wages did not follow the "iron law,"
but were determined by custom, and varied according

to the labourer's caste or social position
ing to the severity of the task.
paid in kind,
i.e.,
and not accord-
Labourers were always
received real wages, with a small
money allowance added in a few cases. When the

population exceeded the demand for labour, the surplus portion
did not
immediately lower the wages,
but swelled the ranks of the unemployed or of beggars.
On
the
other hand,
when a sudden
decrease
of
CH.
CUSTOM
II.]
WAGES.
IN FIXING
a particular trade took place, the want
labourers in
could not be supplied by bringing
The
any other trade.
monopoly
old rate
77
surviving labourers enjoyed a
and only got more work, but
of skill
Emigration
remuneration.
of
workmen over from
now-a-days steadily raising the wages of

labourers
where the emigrants go, as

often
fixed
by
in
Assam, the wages are
custom or contract and are not
local
which
modern
subject to the constant variations

free
and open competition.
petition does
common
congested parts of India, but even
the
in
operate
in
In
result
India,
from
"com-
regulating the salaries of
All the world over, wages vary
village artisans.
the
at
no doubt
is
much
more
wages of an artisan (i) employed by a body of villagers
and (2) receiving his wages in kind, must naturally,
of all wages, be the most difficult to alter.
But when
slowly than the price of
a village artisan
is
commodities, and the
attracted to a
town
or to public
works, the other villagers have to offer better terms in

order to keep his successor at his post.
is
broken.
Thus custom
Definite alterations, too, have been
by the village
elders
in
the
wages
some great convulsion which disturbed
(M orison,
i8o
raised the
wages of the artisan
i8ij.
All over India

class,
made
of labour, after
rural
economy."
competition
has
such as masons,
But in some cases the customary remuneration has long remained unchanged such
carpenters, smiths, etc.
as doctors' fees
and
but the reasons are excess of supply
professional etiquette.
78
The
[CH.
INDIA.
II
influence of custom on prices. The price
of agricultural produce
by custom
was never
their prices are
factures,
in the past regulated
manuthe law ol
Even in
as for other commodities, especially
now
subject to
demand and supply everywhere
in India.
the villages the fluctuations of prices in the big towns
make themselves felt, though after an interval of years.

Our producers now have the choice of a wider markel
and can get
the best terms
if
they are
sufficient!};
But, on the whole, the Indian petty dealer,
clever.
and especially the simple villager, are unable to take

immediate advantage of higher prices in foreign
markets, as they are too ignorant, disunited and incapable of holding out.
prices
is
at
The advantage
reaped by the middlemen or exporters,
first
w^ho are almost always Europeans.

price of hide has been greatly
it
of such a rise in
For example, the
enhanced
in Europe, bul
took the Indian ryots six or seven years to
this change,
and
hides at the old
until recently they
low
prices.
the Punjab ryots for the

surplus
wheat
of selling
in the
it off
It
first
hope of a
at harvest.
realise
were selling
was only
time held back

rise in
theii
in 19 10 thai
theii
Europe, instead
The knowledge
of the rise
of price in Europe now-a-days rapidly filtrates through

the buying agents of these wholesale exporters to the
village producers.
The
organisation of Agriculture, Handicrafts
Domestic Industries in rural India.

Agriculture. (i) Each locality has
-and
its
specia
CH.
VILLAGE HANDICRAFTSMEN.
II.]
land-tenure,
rules of
which often respect the local
Sometimes the tenants
customs.
79
possess,
by
virtue of
old usage, the full right of sale, and sometimes they
do
not.
{2)
some
In
money
others
tracts
metayership
organisation of agriculture each village
In the
body
often acts as a self-contained
and
of artisans
and mart, and

some
servants,
its
its
own
return
But speaking
it
and the cultivation
management (which
villages the
arrangements for
its
broadly,
India has been
parcelled out into millions of petty farms,
and
scientific
of a large estate
by one
from capitalist farming)
result
dreamt of here.
Handicrafts.
India local
(3) In
to the tenants
some
In
makes
collectively
irrigation.
are not even
set
in others each holding
rent.
community
agriculture
own
elsewhere the landlord stores rain-
a higher
for
its
water supplied by the State
water by embankment and supplies

in
has
peculiar system of irrigation.
on the land
well
it
special brokers, carriers
its
tracts they use canal
for a special tax
has
followed, in
is
rents or even competition rents prevail.
In
nearly all the rural parts of
handicraftsmen supply the few simple
wants of the
villagers,
or
the
latter
resort to
neighbouring town once or twice a year to make

their
purchases.
But certain places
in
India
have
been famous for their special handicrafts, which go to

all
the
the markets of India,
embroidery of
e.g.,
the pottery of Bidar,
Ahmadabad,
the
printed
cloths
of Brindaban, the brass-work of Benares, the huqqas
8o
[CH.
INDIA.
II.
These partake of the nature of

and are manufactured in large villages
as well as towns, and usually by hereditary artisans.
In some matters of local supply, however, an entire
of
Lucknow,
etc.
objects of art,
group of villages often depends on a single family

or a small cluster of families living in their midst
and plying a particular

is
impossible
naturally
Division
craft.
labour
of
such small and isolated
in
communities, and no improvement can be effected as

each handicraftsman
is
succeeded by an apprentice
trained by himself in the old methods.
The simple
crafts of the
hamlets are
important in the aggregate of
The weaver,
all
still
the
most
Indian industries.
the blacksmith, the potter, the oilpresser,
community as well as
Hence they have
inheritors of a family occupation.
a sure market for their production, and their trades are
the brazier, are
regularly
701.}
members
of a
(Hunter
taught to the rising generation.
But
in
the
course
of
the present generation
mill-woven cloth has penetrated to every nook of India,
and the weavers, beaten
in
the
competition
with
machinery, have mostly abandoned their trade, while
a few eke out a scanty living by making towels

(gamcha) and coarse coating.
most places has
new plough-shares,
are
now
hoes,
and big knives
different
make
in
out
which
(dao),
imported from foreign countries
continues to
the
The blacksmith
lost his chief business of turning
but he
the subsidiary articles, as he
knows
shapes of the minor metal utensils of
CH.
8l
DOMESTIC INDUSTRIES.
II.]
domestic
use
which
and cannot
prefer.
localities
different
(Machine-made goods are
all cast in the
satisfy peculiar local
tastes.)
same mould
The smith
now
gets higher wages than before for his repair work.

Domestic industries. The few surviving small
industries of India are cultivated in the homes of the
artisans, and all the members of a family help in their
processes, e.g., women and children conduct the easy
process of reeling the thread.
This arrangement tends
and ensures honesty,

and the apprenticeship of the son
Cotton spinning, for instance, was a
to reduce the cost of production
careful supervision,
to the father.
domestic industry
among
Bengali
days,
and great
from
their hereditary skill.
among
fineness
women
in pre-British
and evenness of thread resulted
The prevalence
of caste
us necessitates the pursuit of industries at home.
Factories are a very recent innovation here
the Indian
workman has for ages been accustomed to take his

work to his home and finish it at his leisure he is
;
averse to congregating in a factory
regular hours.
first,
that
families
the
The disadvantages
for
of this system are,
decay of any industry ruins
whole
without any exception, and, secondly, that
any rapid increase of production

distant
and working
demand
is
Domestic industries are valued

not as a substitute
to
meet a new or
impossible.
for,
in the
modern world
but as supplementary to factory
They enable every member of a family to earn

something, and utilise the labour of those who cannot
work.
;;
82
give their whole time to production
away from
their
[CH.
II.
cannot work
or
India, being the land of the
homes.
and purda systems, needs domestic industries
caste
The
even more than Europe.
successful introduction
of small industries to be carried on at home, will be
the salvation of millions, especially of the helpless
Hindu widows.
Caste guilds.
Most of
its
(i)
caste
members follow
is
often a trade's union.
same
the
profession,
and
are kept in discipline by the panchayet or representa-
Not only
tive heads of the caste.
even in petty trading each caste has
Many
special work.
of the hundreds of sub-castes or sections into
which the Hindus (and
madans
their
in industries but
its
origin.
caste,
in
also) are divided,
some places the Muhamwere entirely functional
in
Thus, the thread-dyers form one sub-
and the thread-spinners another.
It is
due to
and poor relief

ensured, and each individual workman, so long
caste that the training of apprentices
are
as he does not disobey the rules of the caste-leaders,
backed by the strength of the whole caste

struggle with capitalists or purchasers
he
is
is
in his
protected
members of his craft

pay his dues and keep
against the competition of other
he can force
his
employer to
by preventing any of his

fellow-craftsmen from working for such an employer
and he is sure of an even distribution of business
the terms of his contract,
among
all
the
members
by reason of the
work by any one of the
of the guild
panchayet prohibiting overtime
CH.
MEDIEVAL CITY INDUSTRIES.
II.]
when employment
brethren in seasons
is
is
83
scarce.
This
a great advantage from the workman's point of
view.
But a caste-guild also checks individual liberty
and accumulation of capital, discourages the spirit
of invention and enterprise, and prevents or retards
the reform of any old industrial process.
It is suited
only to the stationary stage of society and is the foe
of progress.
{Bombay Gazetteer, vol. iv, ed. 1879, pp.
106-115
Hunter, 245-249.)
City industries.
Many
were
industries
highly
developed in India and gained a world-wide celebrity

during the
on
Muhammadan
period.
They were all carried
in cities or in clusters of villages
agricultural
which were
life,
leading a non-
cities in effect.
manufactures formed India's chief exports

of the
till
These
the end
8th century. Usually a particular industry had
a particular city for
its
chief
seat,
e.g.,
muslin at
Murshidabad, inlay metal-work
Dacca,
silk
Bidar,
shawl weaving at Amritsar, brass-work at
at
at
Mirzapur, horn manuwork at Katak, and woodcarving and bronze work in certain cities of Madras.
In each such town the best workmen of that trade
assembled, and their skill was perfected by long
specialisation and daily intercourse with other masters.
Whole streets were occupied by the members of the
distinctive craft of the place and the importance and
Benares,
facture
prosperity
Their
carpet weaving at
and
silver filigree
of
the
productions
city
depended entirely on them.
commanded
the
whole Indian
84
The European
market.
INDIA.
travellers of
[CH.
11.
the seventeenth
century have noted the chief industries which they
saw
Indian
different
flourishing in
these
Many
cities.
of
were directly promoted by the patronage of the
Emperor
stable's
of Delhi or his provincial

ed.
the rulers
of
Bernier,
had been
the public
satisfied,
(Con-
governors.
After the
259).
demand of
made their
Such were the con-
purchases or gave their orders.
Ahmadabad, the enamelling of Delhi and Lucknow, and the "India

paper" manufacture of Kashmir.
The best goldditions of the embroidery
of
smiths, too, have lived in cities, but not exclusively in
any particular province.
Some
of
these
city
indus-
muslin, silk and shawl weaving) depended

raw materials on the neighbouring villages.
City industries command more distant markets and
can meet an increased demand more quickly than
rural ones. Yet, even in the cities, we had no factories,^
except the few work-shops (karkhanahs) owned by
the Mughal emperors.
Every artisan did his work
by himself at home, though he had usually to be
supplied by the customer with the materials (or a part
tries
(esp.
for their
of
the price) in advance.
Mughal
times, see
my
(For the industries of the
India
Topography, and Roads).
of
Aurangzib
Inscriptions
Statistics^
speak of city
guilds in Western India as early as 150 A.D.
Muhammadan
guilds
being a democratic religion,
and
industries
Islam
Muhammadan workmen
form brotherhoods more quickly and extensively than
CH.
MUHAMMADAN
11.]
Hindu
artisans,
once formed,
though a Muslim trade- guild, when
has a tendency to become exclusive of
other Muslim guilds just like a

Bevnier, 259.)
their guilds of
same ward
85
GUILDS.
Most large
workmen, who
(See
Hindu caste
Mughal India had
!
cities of
lived together in the
and puva in the

was often walled off from the rest of
the town.
Each guild had its special religious processions, festivals, dead saints, and mosques (with
schools attached).
The guild, by deducting a certain
percentage on sales, raised money for communal
(called mahalla in N. India
South;, which
purposes, such as trade dinners, relief of poor brethren
and the building
mosques,
of
ordinary duties of a trade's union,
down
doing
besides
among
(a)
viz.,
the
putting
members and (6)

preventing deterioration of the standard of workmanship or materials.
A handsome imamhava at Seroot
in the Faizabad District of Oudh was built by the
local Muhammadan cloth weaving guild paying a
unfair competition
voluntary contribution of
cloth
woven and thus
industries of India
-\
of
the
a pice
raising
Rs.
for
each piece of
6,000.
Certain
have been entirely in the hands of
Muhammadans, such
as artistic book-binding, paper-
making, leather- work,
silk- embroidery in
steel
work, damascening,
Benares, fine
copper-smithy,
of them are now in decay.

Indigenous organisation of
etc.
But
most
port.
The internal trade
distribution
is
entirely
of India,
trade
i.e.,
and transthe
work
of
conducted by the people of
86
the country.
The Vaisyas
provinces internal trade
now
is
II.
in the different
mostly confined to certain
Bombay
classes of people, e.g., in
[CH.
or trading caste of Manu's
But even
time have disappeared.
INDIA.
to the
Guj-
Parsis,
and Marwaris, in the Deccan and Mysore to the

Lingayet sect, in Madras to the Chetti and Komati
ratis
castes, in the
Punjab to the Khatris,
Banias, in Bengal and
show remarkable
of
new
markets.
in the U. P. to the
to every
who
to the Marwaris,
and
hardiness, perseverance
and penetrate
prise,
Assam
nook
enter-
of the land in search
Most of these are petty
dealers,
who
buy from wholesale importers at Calcutta and other

big ports through a chain of middlemen and personally
sell their wares in their chosen localities.
Each village
has at least one resident trader,
own
person the functions of
merchant, cloth-seller
laneous dealer.
(in
who combines
money-lender,
a few places only), and miscel-
This man, called the Bania or Ma/m-
been condemned as an usurer, but he
jan, has
in his
grain-
is
a very
and in his absence the whole rural

economy would collapse, as " he is the only thrifty
useful
person,
person
among an improvident population" and he
supplies
"capital to the land in the minute doses
which the agricultural condition

{Morison, loi, Ind. Emp.,
iv.
of India
In every fairly large village a hat

circuit,"
is
demands."
523, Yusuf Ally 61-63.)
or
"market on
held twice a week, the stall-keepers
visit-
ing different centres in rotation on the days fixed for

each.
Permanent shops are found only
in the biggest
CM.
WHERE VILLAGERS
II.]
which aspire
villages,
hamlets there
is
who combines
BUY.
be towns.
to
87
In
the
pett}'-
sometimes a resident store-keeper,
agriculture with retail trade.
He
has
no regular shop, but keeps his store inside his house

and brings out the things as his customers call for
them. During the agricultural season he opens his
*'shop" only after his return from the field.
A most
important centre of distribution
is
the
meld or
fair>
held once a year on some religious occasion, at which

I
many
and a brisk trade

"making purchases on the
attending a Ganges bathing festival " has
the people of
is
carried
pretext of
villages assemble
Indeed,
on.
passed into a proverbial expression in Bengal.
Taken
collectively the Indian cultivators are at once
and consumers in the country.

They expect the dealer to come to their own doors.
Hence, an army of pedlers or travelling salesmen is
spread over the country, chiefly in winter, going from
village to village with their wares and supplying the
the chief producers
local
needs for miscellaneous goods, especially metal
utensils
and
occupation
they buy
European
is retail
their
internal
Their only
among the villagers, and

some provincial chief town.
no hindrance to this branch
dealing
stores
Difficulty of transport
of
manufactures.
is
in
trade, because each pedler's stock
is
small
and can be carried on the head of a coolie or the back

of a pack-animal.
Increasing numbers of Peshawari
Afghans are engaging in this trade, cheap German
winter clothing being their specialty.
88
Lower Bengal, the land
In
done
see trade
INDIA.
[CH.
we
of waterways,
II.
often
Barges loaded with earthen-
in boats.
ware, mangoes, jack-fruits, or kitchen vegetables, pass
through the
the
and
rivers
two banks buy
villagers
An
from them.
their stores
Calcutta
prising
and the
nullahs,
on
enter-
even sent a big boat
publisher
(budgerow) load of his books and patent medicines to
make a voyage on
the
as a travelling shop
On
Nadia and Murshidabad
the export side of our trade
rivers
we have some
very
rich wholesale shippers at the chief ports, nearly all of
whom
are Europeans
and a few
the villagers either through
Parsis.
their
through a chain of middlemen.

season the country
who buy
the
and
collect
buy
class of brokers
goods
they are
to
the
special
its
canal wheat,
is
richer
and accumulate
or provincial centres, whence
centres
leaf,
ports of embarkation,
Rangoon
rice,
and Bombay
for jute, Barisal for
for
in local centres.
at these
in the district
expoit has
tobacco
oftener,
cotton in small quantities from
them
Calcutta for jute and

for wheat,
or
taken by the highest class of brokers or the

agents
shippers'
agents,
Hence, in the harvest
covered with travelling brokers,
jute, grain or
ryots
their
is
They buy from
for
rice,
Hoshangabad
&c.
a few weeks
Travelling
in the
done and new post
Each
Karachi
staple
of
centre, e.g., Sirajganj
district
Bengal
for rice,
cotton.
viz.,
Lyallpur for Punjab
for
cotton,
Rangpur
brokers assemble
for
here
year at harvest, a brisk business

offices
opened
but when they
89
INDIGENOUS BANKING.
depart the places return to
their
normal quiet and
obscurity.
grain
of
In the days before railways the transport
and other bulky agricultural produce to long distances

was extremely difficult and almost unknown. Hence a
famine in one part of the coimtry could not be relieved
by importing the surplus crops of another. In ancient

times, only costly manufactures and objects of art were
transported to distant places. (See Ind. Emp.,
iii.
301).
Indigenous organisation of banking and agricultural credit. The trading classes described above
Marwari
were formerly the only bankers of India.

cloth-dealers
and the heads
of rich temples
teries (maths) often receive deposits

interest.
In
and monas-
and lend money at
big towns the bankers are mostly
the
Marwaris or Khatris, and they conduct nearly

moderate
financial
Their main work
means
of hundis
is
is
the
or notes
correspondents in
Marwari firm
operations within
many
transmission
of
credit,
distant parts
efficiency
from
generation, dishonesty in the officers

of the firm being rare.
in the
money by
and they have

of India.
usually a family concern, and
on with remarkable
up
of
Much
all
country.
the
is
carried
generation
to
and bankruptcy
of their capital
is
locked
form of loans to zamindars, and they seldom
modern manufactures. The new joint-stock

banks on European lines which Indian syndicates have
been establishing (esp. in Bombay and the Punjab),
are diverting many depositors from the Marwari family
finance

90
INDIA.
[CH.
II,
banks, and the latter are distinctly losing ground in

the chief towns.
The
bad
Bania described above
village
security
of
The
debtors.
his
the
is
His high rate of interest
rural banker.
is
only
due to the
vast majority
of
Indian ryots have no ownership in their lands and

All that they can
consequently no credit.
is
the
expected harvest, which
on rain and therefore uncertain.

to
agricultural
improvement
is
mortgage
entirely dependent
The
in India
chief obstacle
the weakness
is
of rural credit.
On
the other hand, as the price of
land has
risen,
the
ryots
(or
thirty
permanent
them
to get loans easily,
purposes.
for
and
marriage
a danger-
of the
Bania enables
so tempts
them to ex-
and
other unproductive
Banias and sometimes zamindari
money
lend
to possess a
years') tenure, enjoy
The presence
ously facile credit.
travagance
who happen
to
officers
the cultivators on the security of the
next harvest, and the rate of interest in such cases

usually
37i
to be written
Bad
is
debts are frequent, and have
p.
c.
ofiE
after the ryot
has been ruined and
turned into a penniless day-labourer.
The money-lending
classified thus
I.
may be
Rural Bankers
I.
agencies of India
The Bania
twofold,
or Mahajan,
viz.,
capital (which
(a)
is
whose functions are
to supply agriculture with
good),
and
(6)
to
practise
H.
INDIAN MONEY-LENDERS.
II.]
usury
money
by lending
purposes (which
The
2.
recently
Societies,
is
QI
unproductive
for
bad).
Co-operative
started
which mainly
Credit
finance agriculture.
3.
The urban societies are comparatively few.

The Government, which grants taqavi loans
to the peasants in years of distress, and
This
recovers the amount in better years.
system has been inherited from the days of the
Mughal emperors.
Indigenous Urban Bankers
II.
4.
The Seths
or Sahukars,
family banks (not
managing hereditary
advance loans on the
landed estates or ornaments,

(6)
finance
agency
(c)
with
joint-stock)
large
They
capital.
(a) chiefly
inland
traders
the
or
security
of
(this is usury)
distributing
sometimes help with capital or loans,
local
manufactures.
Modern
III.
Joint-stock
capitals
3.
Banks
at
the
provincial
The EUROPEAN BANKS
chicfly transact
exchange
and
to a lesser
business, assist the foreign trade,
extent finance industries and transport agencies.

6.
The INDIAN BANKS mainly

and the inland
trade,
finance industries
and often grant loans ta
zamindars, just as the Seths do.
92
The Postal Savings Banks
IV.
They help
7.
INDIA.
[CH.
II.
the middle class people of the towns
(and a few of the villagers) to save money.
But such savings are not capital, as the banker

{viz. Government) does not employ the deposits
reproductively.
Amateur Money-lenders
V.
Zamindars'
8.
officers
who
practise usury in the
villages like the Banias.
Temples and monasteries
g.
money on
in
the
cities
the security of house -property
lend
and
ornaments.
Professional
10.
trict
towns,
men (mainly lawyers) in the diswho open " Loan Offices " on a
and exclusively practise usury.

members of class 4 have become landowners by buying up the estates mortgaged with them.
Muhammadans are forbidden by their religion to lend
money at interest, and hence the higher and richer
joint-stock,
Several
classes
among them
abstain from banking business
and sometimes even do not draw

deposits in the banks
ally
Bengal,
in
lending
the interest on their
But the lower
unhesitatingly
when they happen
to
classes, especi-
engage
in
money-
have the funds.
The
Peshawari Afghans are as often usurers as pedlers.
Co-operative Credit Societies
The indebtedness
to India.
of the peasantry
All over the world
we
is
find
not peculiar
it
a normal
state of things for the small farmers to be constantly
peasants' need of credit.
II.]
In the countries
in debt.
93.
where peasant-proprietor-
ship prevails with equal rights of all children,
one heir has to
buy out the other
heirs,
and
he becomes
heavily involved in debt in the very act of succeeding to the property, and has therefore no capital
for
making improvements.
owing to the
ised countries,
the
which
is
a bad year suffers
upon the seasons, the peasant in

a heavy loss for no fault of his
own, and he must borrow

period
of
on
has to be practised,
Agriculture being a precarious
very costly.
industry, dependent
left
civil-
pressure of population
cultivation
intensive
soil,
Moreover, in most
difficulty.
in
order to tide over the
Plough-cattle
and the better
kinds of agricultural implements cost more than the
small savings of the average peasant
borrow
in
order to buy
and he must
Thus
them.
agriculture^
except in the case of the capitalist farming of England,
cannot go on without borrowing.

India
In
more
the
the indebtedness of the peasantry
intense form
ryots
have to
is
of a
some districts more than half

borrow even their seed-grain, and
in
very often three -fourths of the peasantry are in debt
and
their
closed.
tural
running account with the Mahajan
The
recent increase in the
price
of
is
produce, and consequently in the value of
has enormously increased the peasant's
power.
vident,
As the Indian peasant
is
never
agriculland,^
borrowing
ignorant and impro-
he borrows not according to his need, but
according to his capacity.
Hence
his
extravagance
94
INDIA.
[CH.
11.
and indebtedness have increased with his increased

Easy credit leads to reckless borrowing, and
credit.
more rapidly than the
the ryot's debt has increased
value of land.
Government has tried to remedy the

vil by restricting (in the Punjab and Bundelkhand)
the peasant's power to sell his land except to members
The
British
agricultural
of a bond fide
The
tribe.
money-lender has thereby been
money
lending
legislation
payment.
and
retical
disadvantages
and
children.
foolish like
interfering
of
is
the
has the theo-
with the freedom of contract.

agricultural
indebt-
establishment of village land-banks
and co-operative credit

banks of Germany.
Raiffeisen
It
reducing the ryot's credit
better solution of the problem of
edness
This paternal
only where the peasants are
justifiable
is
helpless
from
no longer buy
discouraged
to the ryots, as he can
their holdings in default of
professional
societies
(died 1888), a
like
humble
the
Raiffeisen
village
mayor
of
Western Germany, applied Schulze-Delitzsch's principles

talists
of
co-operation in banking
among
small capi-
from the city to the rural population, (with
some important changes).
He
regular loan society
of
type in
movement became a
great success after 1879.
this
established
borg founded similar institutions in

Raiffeisen's
first
aim was
1865,
his
first
and the
Wollem-
Italy.
to substitute for helpless
individual peasants a strong associated body.
He saw
CH.
CO-OPERATIVE RURAL BANKS.
II.]
95
that the credit which the individual could not
com-
mand, would be accorded to an association framed

As
in such a manner as to inspire public confidence.
unlimited
liability,
it
his association was based upon
became the direct interest of the members to exact
a rigorous
good character from candidates for

Each association should be strictly-
test of
membership.
The
local
among
reserve
tation to practise usury.
These
fund must never be divided
members, hence they will have no temp-
the
societies
peasant witli
{Dupernex, 39-40, 172).
have two aims
facilities for
so that agricultural
interest,
ed capital
may
(i) to
provide the
borrowing at a low rate of
improvement on borrow-
be profitable, and
(2) to
guard against
the peasant's tendency to borrow imprudently
spend the loan

influence
of
peasantry
results.
the
is
educational
such banks on the character of the
even more important than their economic
Where they have been
worked,
successfully
prudence, self-restraint, business capacity,
mutual help.
progress
poorest,
Such a bank "forms a centre
and reform.
if
mere
All are
admissible,
they are of a worthy character.
and
of local
even the
In
Italy
possibility of joining a society [of this kindj
has reclaimed
men from drunkenness and
and has given them an impetus
and education."
ties
to
peasants have been raised to a higher level of
thrift,
the
The
unproductively.
and
It is difficult
to
extravagance,
sobriety,
industry
to introduce such socie-
among a people of low intellect and
character
but

96
[CH.
INDIA.
II.
where the attempt succeeds, the people learn confidence,
and mutual help through association.

is worked in the following manner, (i) A bank is started by some select
thrift, self-help,
co-operative credit society
persons in
a locality subscribing the capital
themselves either entirely,
on
their
own
more than a
fixed
money only
lends
No member
credit.
in
number
own
its
and the debtors belong
of
of
of shares.
The bank
(2)
i.e.,
the creditors
same place and know
new applicants
(3) The
good character.
bank work
the
it
permitted to take
locality,
to the
membership are men
managers
is
Strict care is taken that the
each other.
for
among
or raising a portion of
and the
gratuitously,
dividend on the shares cannot exceed a low fixed rate,

usually the market rate of interest.
profits are
only to
added
known
to the reserve.
(4)
The
rest
of
the
Loans are given
persons and for productive purposes,
such as agricultural improvements, the purchase of

plough-cattle, digging wells, &c.
The general
features of a co-operative credit society
are the following
(a) It is strictly local
the limits of the village (or
group of small villages) are the limits of

ship
its
member-
and operation.
(6)
The administration
alone can hold

hence,
(c)
being
office,
economy
There
is
and
in the
is
equally local
members
their services are gratuitous
management.
but small share capital
borrowed on the corporate
security
all
funds
of
the
CH.
PRINCIPLES OF RURAL BANKS.
II.]
members and
paying the
village (or group

is
(e)
residents of the particular
i.e.,
"The
at the borrower's doors."
All funds are the result of local thrift
employed
locally
(Nicholson,
Tn
all profits (after
of small villages) can get loans.
these banks create local capital

to be
hence
interest) go to swell the reserve.
Only members,
{d)
bank
the reserve
of
97
144
i.
hence
and cause such capital
a reproductive manner.
147.)
bank
the
short,
in
is
managed
gratuitously (and
by the most substantial and

the community who have a perfect
therefore economically)
trustworthy
men
of
for loans and can reject

As shareholders of the bank can
themselves borrow money from it on easy terms, the
peasants are induced to practise thrift and industry in
knowledge of the applicants

all
unworthy men.
order to
membership.
and
themselves for the advantages of
qualify
spends
If
a debtor proves false to his contract
the
loan
he
unproductively,
can
be
immediately checked, or at the worst prevented from

Moreover, the public opinion
contracting fresh debts.
of his neighbours as represented
by the managers of
him to his promise in most

cases and prevents fraud.
Even more important is
the moral good done by such banks, viz.,
their steady
the bank, effectually holds
*'
educative
and
influence
self-help,
and
in
matters of
their
thrift,
association,
tendency to develop high
forms both of individual capacity, of public

of national character."
{Nicholson,
i.
372.)
life,
and
9^
INDIA.
[CH.
II.
The Indian Government passed on 25th March,

1904, a Co-operative
Credit Societies Act,
to
"en-
and co-operation among

and persons of limited means."
In the next few paragraphs I summarise the main
courage
self-help,
thrift,
agriculturists, artisans
provisions of this law.
The
Societies
divided into
are
three
classes,
and urban. A Central Society is a union

representatives of a number of small societies
central, rural,
of the
raises loans
affiliated
to
on behalf
of the latter,
mand
It
it.
because
and accepts deposits

can better com-
it
In a
the confidence of capitalists.
Rural
Society
members must be agriculturists, and in an Urban Society the same majority are
non-agriculturists.
Each society consists of ten or
more members above the age of 18 years, residing in
the same town or village (or group of villages), or
belonging to the same tribe, class or caste.
The rural societies as a rule work with unlimited
liability and without share capital (except in Madras)
at least four-fifths of the
the majority of urban societies have limited
liability.
Rural Societies are forbidden by law to pay dividends

to the
members, and
Every urban society must
reserve.
a quarter of
dividend.
its profits
to
in
to
form a
must go
set apart
it).
member
A
or
{i.e.,
the
paying
one or more
he must have a pecuniary
society shall
to
to
each year
reserve, before
Every member must hold
shares in the society

interest
all their profits
make no
loan except
another rural society.
Money

CH.
PRIVILEGES OF CREDIT SOCIETIES.
II.]
99
should not be lent on the security of movable property.
The following privileges have been granted

by Government
The shares are not liable to attachment or
to such societies
(i)
sale
by a
(2)
civil court decree.
Next
claim
is
crops,
cattle,
land revenue and rent,
to
prior to
that
society's
other creditors, upon the
of
implements, and raw materials of a
member, for the unpaid portion of the loan advanced

by it to him for the purchase of the last three.
(3)
Free audit of the accounts of each society by
the Registrar appointed

(4)
by the
State.
Exemption from income-tax on profit or diviand from regis-
dends, from stamp duty on documents,

tration fee.
(5)
As soon
as the Registrar of Co-operative Credit
Societies registers
all the
a society
(free of charge),
it
enjoys
advantages of a body corporate under the laws.
The Co-operative
Societies
Act of 191 2 has widen-
ed the application of the principle of co-operation
and reconstructed the Act

classified
as
those
instead of as rural
extended
to
of
of 1904.
unlimited
and urban.
societies
other
Societies are
and
now
limited liability,
The Act has been
than credit
societies;
permission has been given to some societies with unlimited liability, but share capital, to distribute profits
and provision has been made for societies of which

other societies should be members, i.e., central unions
or federations of
societies.
100
The two main

societies
difficulties
INDIA.
[CH.
II.
the case of village
in
were as regards proper supervision (most of
members being illiterate) and the provision of

funds.
The remedy has been found by establishing
their
central
central banking unions,
or
societies
tions of village societies within a
These
inspectors
staff
(in
supplementing the
for
auditing
as bankers
maintain a
unions
central
radius
the
i.e.,
federamiles.
trained
of
staff
inspecting
official
village societies)
of
and
also act
their affiliated societies, as the former
for
can more easily secure loans for the
open money market.
In
Bombay
latter
this
work
from the
is
done by
a Central Co-operative Bank for the whole province.
Such big or "apex" banks are being established

other provinces also.
societies
and banks
[In 19 13 there
in
were 329 central
in all India.]
The village societies have unlimited liability.

The rate of interest charged by them varies from gi
to 15 p. c, while they
they receive.
pay 6 to 9
The urban
p. c.
credit
on the deposits
societies,
small
but growing number, are limited liability concerns,

chiefly
formed
nearly
one-fifth
among
of
the
salary-earners.
amount
possessed by agricultural societies.
of
They hold
working capital
PCH.
The
lOI
PROGRESS OF CO-OPERATION.
II.]
progress of the
the following table
Number
Year.
movement
Number
of
be seen from
of
Working
members.
Societies.
capital
in Rs.
4-8 lakhs.
28,600
283
1905
will
807
igo8
1,963
184,700
191
8,177
403,300
335
16,295
762,000
857
1914
The
total
working capital
in 19 14
was thus made
up :
Rs.
Share capital and deposits of members
546
lakhs
Loans and deposits of non-members

or other societies
543
Reserve funds
50
Loans from Government
Of
the 16,295 societies in
1914,
II
as
many
as
16,016
were agricidtural, holding about half the total working capital,
little
banks a
while the non-agvicidtuval societies hold
over one-tenth and the central societies or

little less
than four-tenths of the
In spite of the war, these societies

to
progress.
In
total.
have continued
Bengal, for instance,
number
number of
their
rose from 939 in 191 2 to 2243 in 19 16, the
.ECQ^ÔMICS OF .BRITISH INDIA.
I02
members from 40,600
to 1,21,000,
and
[CH.
their
II.
working
capital from 26 lakhs to 124 lakhs in these four years.
By January 1917 the capital had increased to 130

lakhs, and the number of central banks to 40.
In the
Punjab the number of rural societies has increased
working capital nearly doubled
is supplied by
the members and only ij p. c. comes from Govern60
p. c.
(igii).
ment
and
their
Two-thirds of their capital
loans.
The members not only supply
the share
capital, but place considerable deposits at the disposal
of the (rural^' societies,
The movement
The
is
which thus act as savings banks.

tending to create a revolution
ryots have developed
in rural India.
an extra-
ordinary capacity for united action, and the Co-operative Credit Society
and
in sanitation.
is
stimulating interest in education
A demand
for
night and verna-
cular schools has sprung up in Bengal and the U. P.,

to which the local
profits.
The
societies
villagers
contribute
out of their
in certain districts are begin-
ning to submit their disputes to the Co-operative
Committees.
Another most hopeful development
is
by the local committees of extravagant expenditure upon marriage and funeral

ceremonies.
As the members of the society stand to
lose if one of their number borrows more than he
the discouragement
is
able to repay,
local
for
societies
many
cases have
arisen
where the
have cut down the amounts of loans
such ceremonies.
In
this
way
village opinion,
which compelled the ryots to incur ruinous expenses
CH.
II.
I03
GOOD DONE BY CREDIT BANKS.
on ceremonial occasions,
is
now
exerting an
opposite
influence.
some
In
cases village feuds of long duration have
been settled as a result of the movement, and rival

factions
have
society.
There
joined
is
mic regeneration and
made
harmonious work
in
healthier in all
and
of village life invigorated
{Bengal
relations."
its
"The general atmosphere
1910).
one
in
indeed here the "promise of econo-
Report,
of progress engen-
dered by the societies makes the members keen on the

extension of education... In
of
tlie
Pasi and
Chamar
Unao and
societies
use of intoxicating liquor."
Punjab,
the
Benares, several
have forsworn the
{U. P. Report, 19 10).
money-lenders,
In
both professional and
zamindars, are lowering their rates of interest in order

to
compete with the
societies.
and 191 2 the success of the movement in

"The small moneythe Punjab was most gratifying.
lender has disappeared from some hundreds of villages
in Jullundur... Agricultural economy in the Central
Punjab is already in process of revolution, and the
Punjab peasant is rapidly becoming the financier of
In
his
191
own
industry.... The Sessions
attributes
a decrease of 1,100
district last
year (191
1)
Judge of Jullundur
civil
cases
in
that
mainly to the existence of
village banks."
"
The
village societies are
much
utilised
by the
Agricultural Department for assisting demonstrations,

distributing seed, &c.
In
some
cases they have
begun
i04
[CH.
INDIA.
to interest themselves in primary education
Their
sanitation.
members have
tion
II.
and village
between
efforts at settling disputes
led to an appreciable decrease in litiga-
Surprisingly
little is
drawn
[as loan]
un-
for
economic purposes such as expenses of ceremonial."

{Moral and Mat. Pro. 1913-14,
In
p. 51).
Bengal
it
was found (191 2) that one -third of the loans taken by

members of rural societies was for productive purposes
and nearly one-half 'for the repayment of old debts,
while the amount borrowed for ceremonies (such as
marriage) was less than 5 p. c. of the total. But we
must " remember that this is only the beginning. We
have touched only the fringe of the great problem of
(Lord Carmichael).
indebtedness in India."
Considered as a whole, the economic
effect of co-
operation has been to cheapen rural credit greatly from

the average 25 p.
15 p.
c.
c.
of the money-lenders to the 12
of these societies.
members
of credit societies
or
The agriculturists who are

make a total saving of 20
lakhs of Rupees a year in interest alone
by borrowing
from them instead of from the mahajan, (19 14). The

" Business
other benefits are still more important
:
habits have been inculcated with the... result that the

(Indian)
agriculturist
work more
efficiently.
has learnt to conduct his

Thrift
own
has been encouraged,
the value of savings better appreciated,... and a sense

of
communal
life
instilled."
{Indian
Year-Book for
1917, p. 487).
The
co-operative
movement has spread
in India
I
CH.
PROBLEMS
II.]
with astonishing rapidity.

are
assisting at the
Private Indian gentlemen
work
out any remuneration
IO5
CO-OPERATION.
IN
in very large
numbers with-
unlimited liability has
not
away members societies have not found the

absence of a summary legal procedure an insuperable
difficulty in collecting their debts much capital has
scared
been
from the public, while loans from
attracted
Government
have
declined from
15
p.
at
c.
the
beginning (1905) to only i"3 p. c. in 1914. Indeed,

with a view to prevent a too hasty and unsound
growth, the Government policy in most provinces has
been one of consolidation rather than expansion.
Three serious problems are facing our co-operative

societies in this the second
The
India.
in
adequate
relation
question
The
fluid reserve.
a part of the
by a
first
first, is
decade of their existence

is
the maintenance of an
which
second,
is
really
the maintenance of a proper cor-
between the period of the deposits received
society (or union of federated societies)
loans issued by
it.
The
third
is,
should
and the
central
banks be allowed to attract capital from outside

(which they cannot do under the present rules), instead
of
having to
raise
it
locally
The removal
of
this
restriction
would, no doubt, increase their resources
when most
money
locally.
of
needed,
namely, when there

But
this
course
is
has
a dearth
its
dangers,
much more subject

to panic than local men, and several German cooperative banks have come to grief by securing capital
too
because outside depositors are

Io6
from
and
far
exercised
to
Indeed,
near.
INDIA.
special
[CH,
care
II.
has to be
prevent certain societies (especially the
urban ones) from becoming mere joint-stock companies paying a high
dividend,
while enjoying
the advantages of registration under the
Credit Act.
To guard
against this
rate of dividend can be fixed only
all
Co-operative
evil, the
maximum
by the Registrar
of
Co-operative Credit Societies.

In 19 1 5 a Co-operation Committee, appointed
Government with
commended
(i)
Sir E.
as follows
Maclagan
by
as President, re-
Great care should be taken in forming
new
and the principles of co-operation

should always be borne in mind if the societies are to
last and do real good.
primar}^ societies,
(2)
made
To
encourage
every effort should be
thrift,
amount
to increase the
of local deposits.
(3) Securities for loans should be taken in preference to mortgages on land, because " real credit on a
wholesale scale
is
not quite compatible with the
spirit
of co-operation."
(4)
Primary
societies
which accept
deposits, (in-
stead of merely borrowing from the central banks),
must provide an adequate
fluid resource for themselves.
After this has been done, they

assets
by adding to
question
is,
how
ment Paper
is
their
may
utilise their surplus
working
this reserve to
capital.
[The
be kept, in Govern-
or as floating deposits in central banks
(5) Central Banks must keep fluid resources
?]
suffi-
CH.
MACLAGAN COMMITTEE.
II.J
IO7
meet half the deposits due for repayment in

the next 12 months, and the "apex co-operative bank"
cient to
of each province
and has been

tion
(6)
but
it
The
one-third.
criticised as too
[This
amount
lies
idle,
high and rigid a propor-
enables the banks to meet a
crisis easily.]
share-holders of Central Banks should not
be exclusively individuals, but at
first
individuals and
other societies and ultimately societies only.

teeing unions of the
Burma
type,
banking functions, but are federations

of inspection, control
Guaran-
(which do not exercise

for the purposes
and mutual guidance), should

between the primary
be formed as intermediaries
societies and the financing agencies (viz., the Central

and Provincial or "apex" Co-operative Banks).
CHAPTER III.
THE STATE.
Pax
British
Britannica and
have established
economic effects The

the rule of one Power over
its
and brought even the native
India,
suzerainty.
states
under their
Thus, absolute internal peace has been
and the struggle of

kingdom against kingdom, race against race. At the
same time the strong arm of Britain has made foreign
invasion impossible.
Since the day when Gilbert
chased the Afghan horse back into the Khyber Pass
(1849), no armed foreigner has trodden the Indian soil
as an enemy.
The results of the peace that now
established in the place of anarchy
reigns over the land are
Security of
(a)
life
and property, from the suppres-
sion of dacoits or organised gangs of robbers. (6) Safety

in consequence of the extermination of
of
the
the
Thugs and lawless
roads,
a regular police.
their
roads,
chiefs
and the establishment
Merchants can
now
travel
far
of
with
goods without any fear of being robbed on the

(c)
population,
Peace has fostered an immense increase of

i.e.,
of the labour supply,
made
(d) Increase of
and peace has made

profitable, the extension of cultivation and internal
commerce. Hence the prices of land and agricultural
produce have risen, to the benefit of the landlord and
population has
necessary,
CH.
IO9
BENEFITS OF PEACE.
III.]
the cultivator,
(e)
At the same time the
pro-
cost of
duction has been reduced in proportion to the decrease
Formerly skilled
defence and watching.
in the cost of
on and even tolerably rich

security, only in walled towns
industries could be carried
people could reside in

or in
Our old
moated granges.
villages
mud
had
Muhammadan
penditure on defensive construction

(/)
hiding places, because no
tempted
"shyness of Indian capital."

is
(g)
that India
we can import
teachers in manufacture
come out
is
known
of its
risk
of
that he
destroying
the
This increase of avail-
is
foreign
and
to
runs the
steadily lowering the
now
Moreover,
empire,
This ex-
no longer neces-
if it is
Hence, British peace
has wealth.
able capital
it
man now
being tortured and plundered
(h)
period.
is
Peace has not only favoured the accumula-
of capital, but also
tion
Oudh even
In
walls or impenetrable thorny hedges
round them in the
sary.
houses were
private
built with a view to stand a siege.
rate
of
interest.
a part of the British

experts
to
be
to run our mills, at
lower wages than in the troubled times before
our
much
British
Mughal emperors, the European

cannon were attracted to their
dominion by very large rewards, and had then to be
rule.
Under
artificers
the
who
cast
forcibly prevented
The most
peace
is
from running away.
striking
example
to be seen in the
of the benefits to British
Bombay
Presidency,
had been devastated by incessant wars

before the English annexed
it
(1817).
which
for centuries
Population had
no
ECONOMICS OF BIRTISH
INDIA.
[CH.
III.
declined through war and through famine,

which was then the inseparable companion of war.
greatly
Large areas of arable land had lapsed into deserts or
and innumerable robber bands roamed over
jungles,
the country.
The English completed
ment
province about
of
the
of
years of
the commercial
it
Bombay
most
the
part of India.
and within
fifty
prosperity
industrial
wealth of Bengal,
rivalled the agricultural
fertile
districts of
1825,
and
their first settle-
Similarly, in the fertile
Noakhali and Backerganj in East Bengal,
a wide belt of land along the rivers had been utterly
depopulated by Burmese
late
as
1781
These are
The
One
of
piraj:es
and remained so as
when Rennell drew
now the
richest
his
Bengal Atlas,
growers of rice and betel-nut.
Disadvantages of
Pax Britannica
the great natural checks
U)
on population,
viz.y
war, having been removed, the Indian people are

increasing too fast for the food supply under the old
unscientific system of
cultivation,
and we have an
almost chronic state of scarcity which,

seasons,
is
intensified into famine.
port of food
affected areas,
to
rendered possible,
famines.
The
can
increase
in adverse
The rapid
alleviate
but
not prevent
population without
of
advance in the standard of comfort and
knowledge
of
the
common
crowding (especially in the
it
any
sanitary
people, has led to over-
cities),
has greatly risen in recent years.
Lower Bengal
trans-
which railways have
and the death-rate

In some districts of
has overtaken the birth-rate.
Thus
CH.
INCREASED FOREIGN COMPETITION.
III.]
Nature
turers
restoring
sternly
is
British peace,
by making
it
equilibrium.
the
safe for foreign
(2)
manufac-
send their cheap machine-made goods to
to
India, has killed
smiths,
etc.,
workmen, such
labourers in
and swell the ranks
the
as
being defeated in the competi-
tion with foreign manufacturers, have to give
hereditary trades
Every
our indigenous handicrafts.
year numbers of Indian skilled

weavers,
Ill
villages
of
up
their
poor landless
or casual wage-earners in
They sink to a lower stratum of society

the cities.
and increase the pressure on land. (Report of Famine
Com. of 1898, Ranade 29). The Indian workman is
ignorant and untrained in modern methods, and he
sure
is
be exterminated in a competition with
to
armed with all the resources of modern

and organisation. Thanks to British peace
and railways, European manufactures penetrate to
the humblest Indian village and the Indian artisan's
occupation is gone. The growth of modern industries
foreigners
science
is
the only possible salvation of our surplus population.
(3)
Foreign capital
and more
the country.
is
being invested in India more
proportion to the increased security of
in
This
is
partly a
gain and partly not.
These foreigners have greatly extended the

Indian labour and caused the development of
field of
many
natural resources which would have remained neglect-
ed
some generations) but for their enterAt the same time, however, they have quite
(at least for
prise.
naturally
forestalled
the native
capitalists
of
the
112
future
[CH.
Ill,
by taking up the most profitable lands and
concerns.
The belated Indian
venturing into the same

rate concessions are
in
INDIA.
for
left
who
capitalist
For
him.
now
is
that only third-
field, finds
reason,
this
Japan foreigners are debarred by law from owning

acquiring mining concessions, and the
land and
Railway Act prohibits the pledging of railway properties to aliens,

though eminent statesmen like
Count Inouye and Baron Shibusawa admit that such
restrictions retard the industrial growth
of their
country.
" the
But
future
of
(Japan by the Japanese, 315, 387, 410).

conservation of natural resources " for the
the
nation
of
is
deeper importance to a
people than the quick development of mines and

industries.
Moreover,
present
at
we
derive
in
the
form of royalty only a small fraction of the value of

"
our minerals exploited by foreign capitalists.

a metalliferous ore
the cost of
is
exported in
transport to market
its
than the price paid for
it
whatever changes in
its
after being
[i.e.,
[of
origin]
is
in India,
value
its
is
it
raw
many
and
times more
obvious that
is
may
When
state,
occur in future
manufactured in Europe], the country
not
now
than a small fraction of
getting for the mineral

its
actual worth."
more
Hence,
caution in exploiting Indian minerals would have

ultimately benefited the
Most
country (Sir T. Holland).
of these foreign concerns (a)
boards in England,
in the lowest
(6)
have their directing
employ foreign labour except
and least-paid grades, and
(c)
send their
CH.
MODERNISATION OF
III.J
annual
profits
India
outside
They, no
dividends.
resources of our country, but
and the only
classes
of
men
business
in
it is
Sir
T.
the
for their
whom
Indians
them concessions and the
As
exploit
landowners
in the process are the
they employ.
be paid as sterling
to
doubt,
II3
INDIA.
and
gain,
they benefit
who have
coolies
natural
own
granted
clerks
whom
Holland told a body of
England,
if
the capital of the
Tata
had been provided by England,

would have come to
England, whereas they would now remain in India.
[The good done to India by these foreign concerns
Hydro-electric scheme
the profits
of
business
the
will be described in Chapter V.]
What
British rule has done for India economi-
The
cally
economic change can be summed up by
saying that British rule has modernised India and
made
her free from the mediaeval
noticeable
country
is
feature
of
no longer
this
New
The most
spirit.
India
isolated, but has
is
that the
been connected
with the whirlpool of the world's commerce and specula-
Our horizon has been immensely extended.
tion.
man's opportunities are very much greater now

than they were a century and a half ago. He has a
larger
market to take
body
of suppliers to
his
goods
to,
field
skill,
transactions extending over provinces

tries,
a wider
and a more numerous

choose from, and he may deal in
wherein to hire out his
and even counthe narrow
instead of being confined within
bounds of
8
his village or city, as in the
days of our
114
INDIA.
[CH.
III.
Thus, greater careers (economically) have
ancestors.
been opened to the clever and the daring, though the
and the lazy find it harder to live in

this new world of hurry and strenuous toil than in the
old days of peaceful life and rude plenty.
vêak, the dull
In the sphere of economics open competition
is
the rule, and advancement depends not on race or

Here, career has been
creed, but on merit alone
opened
Men
to talent as the result of British rule.
are raising themselves from very low beginnings to
wealth and influence by their inborn capacity for

managing labourers, supplying contracts, and conductIn the present age their opportunities
ing industries.
are
much
and
greater
on a vaster scale
their rewards
than was possible in mediaeval India.
At the same time individualism has been developed

which held sway over
in the place of the collectivism
our ancient
leaving his
from the
the
A man
society.
one
minority of
he can
hereditary
can
now
profession
strict toleration
people,
old collectivism.
or
opinion by
creed.
Apart
enforced by the Government,
very fact that our rulers are
individualistic
safely be in
defy social
saps
Slavery
the
has
and
a casteless
foundations of our
been
abolished.
It
lingered in India as late as 1810, when, according to
Buchanan Hamilton, a full grown male slave

could be purchased in the Purnea district for Rs. 15
The dignity of labour is steadily asserting
to 20.
Dr.
itself
against status.
This individual freedom
will.
CH.
ECONOMIC CHANGES
III.]
though
in future, be the root of invention,
been
the outset has naturally
II5
IN INDIA.
merely
its
work
at
destructive.
Then, again, the English have placed Science at the
man,
service of
is
departments of production,
and medical
sanitation
transport,
with verity
for
the
in
the root of Science
custom or convention.
relief.
Contact
does not care
it
Hence, in proportion as
Science has been advanced in India, a social and
economic reconstruction has been

Other
of
effects
silently set
the modernisation
of
the substitution of money economy for natural
on
economy,
of cash for barter), of definite contract for
(i.e.,
usage, of machinery for

effort
manual
labour,
foot.
India are
vague
of corporate
for individual undertakings, (e.g., of joint-stock
Hence, works
firms in the place of family concerns).
which the
richest
undertake are
banks.
now
banking houses
easily financed
old could not
of
by our joint-stock
Public corporations carry out water works,
land reclamation schemes, and harbour extensions,

the
cost
of
which would have staggered our kings
in
the past.
The
influence
of
British
rule
in
increasing the
and giving us a modern system

communications and transmission of news, has
capital in circulation
of
already been noticed.
From
business has gained wider range
A factor which we
contributes to the
the
latter
are apt to forget, but
same
result, is the
one currency and one language
cause our
and greater mobility.

which greatly
establishment of
for public business all

Il6
over India.
which
The
confusion, loss
[CH.
INDIA..
and waste
of
III.
time
from the existence of divers currencies
result
and variations
of value
among
the
same
class of coins
according to differences in the year of coinage, can be

easily
British
perceived in the course of a day's journey from

India
to
Nizam's Dominions.
the
other hand, not to
On
the
speak of our metallic currency,
even a Government currency note has one fixed value

from Simla to Cape Comorin. The benefit to trade
from such a fixed and portable medium of exchange
is
very great.
The study
of a big capital like Calcutta reveals
the full extent of the economic modernisation of India.
The following
(a)
features of
it
are most noticeable
Higgling has given place to fixed prices not
only in the bigger shops, but also
among
the retail
Chandni Chowk, Radhdbazar and Murgihdtta, and among the dealers in

traders of foreign goods in
country-made brass utensils and foreign cutlery in

Barabazar.
(6)
The value
of time
practised as a habit.
the European
offices,
is
is
but also
many
Indian employers.
sieves,
wooden
cases
recognised and punctuality
This
and
observable not only in
among
the servants of
The makers of tinboxes>

and the braziers
furniture,
and coppersmiths, who live in the narrow lanes, ply

their trades all the day with patient regularity, with
very few intermissions of idle chatting.
Evidently
they have got the keen money-making spirit of the
OOD SUPPLY OF CALCUTTA.
and are determined to make every day yield the

utmost possible amount of work.
west,
(c)
made
Advertising has
great progress.
Apart
from posters, handbills, newspaper advertisements and

other printed means of drawing the consumer's attention, the attractive decoration of
was not practised even by
shop-windows (which
the
European firms of
Calcutta before i860), has been developed into a fine
and houses
art,
in the
commercial quarters are
now
being rebuilt with a view to securing big front windows.

(d)
city
The concentration
offers
of
a vast population in one
a ready market for immense quantities of
goods.
Hence the rise of a class of wholesale dealers
and importers and of dealers specialising in particular
varieties of goods.
(e)
The
attraction of a big city alters the economic
condition of the district around
hundred miles or more (by
it
rail).
over a radius of a
The mechanism
the food supply of Calcutta deserves a special
of
treatise
by itself. There is a belt of market gardens around it,

which has already spread beyond Dum Dum. Here
everything is grown solely in view of the Calcutta
demand, but the transport is usually by cart or boat.
Fish comes by rail from Damukdia Ghat and Goalundo,
125 miles away, mango, potato and cauliflower from
Patna, 330 miles distant, poultry from Bihar, sheep
and goats from Buxar, still further off. The dairy
market at Poradah (103 miles) has been known to
throb
in
sympathy
with
the
Calcutta
market.

Il8
[Similarly,
with
fish
the
summer
[CH.
INDIA.
Darjiling
capital
is
III.
supplied
from Sara Ghat, Katihar, and even Calcutta,
more than 300 miles away.] Special crops are raised

in particular spots and despatched in their entirety
to Calcutta.
For instance, boat-loads of edible stems
(danta) arrive from Kalna where the people cultivate
the Calcutta market in
Throughout a
of
respect
article
only.
hundred miles or more, local
belt of a
Calcutta
prices are raised to the
this
level,
after
making
allowances for the cost of transport and the inevitable
men and
exactions by the railway
The chief
the police.
British Indian systems of land tenure.
Three systems of land settlement are

tish India
(i)
found in Bri-
The Permanent
Settlement
which occurs in
nearly the whole of Bengal, Bihar, the Benares Division of the U. P.,
and the north-eastern part
of
Madras
(between the Godavari and the Mahanadi).

{2)
The Mahalwari
or Village Settlement which

^
found throughout the U.

Central Povinces,
while
P.,
in
Oudh
under taliiqdars or middlemen with
ment deals
directly,
but
is
Punjab, and the
the
villages are placed
whom the Govern-
who have
little
power over
their tenants.
which prevails in
(3) The Ryotwari Settlement
Bombay, Sind and Madras. The principle of this
system is also applied to Assam and Burma. A few
hilly tracts in Bengal and the coast strip of Orissa
y
have been temporarily
settled.
II9
PERMANENT SETTLEMENT.
III.l
One-fifth of the total surveyed area of British India
{vis., about f of Bengal

Assam,
|
xV of the U. P., and i of
Madras), one-third is under mahalwari and 47 p. c.
has been permanently settled,
and Bihar,
of
under ryotvvari settlement.
The Zamindars, as a class of men standing

midway between the king and the actual cultivators
I.
collectors of revenue, while possessing
and serving as
some sort of ownership in the land, were known in the
Hindu period
the
name was
first
given
by the
Muhammadan Government to its agents in the collection of revenue, who had no permanent right to the
But the
land.
far
away from
fact of
the êvershifting
character
land surface (which

2 or 3 years),
Bengal being a frontier province
Mughal empire and

its rivers and alluvial
the capital of the

of
made a new survey necessary every
enabled the zamindars in the seventeenth
century to acquire in practice a hereditary ownership of
many of the powers of the feudal barons.

Lord
Cornwallis made the Permanent
1793
Settlement with the zamindars, by which [a) he recogthe soil with
In
nised
free
them
as proprietors of the
hereditary
subject
to
succession,
soil
sale
with the rights of
and
mortgage, but
the loss of their property on failure to
the revenue on a fixed date,
(b)
He
pay
limited for ever
demand to a fixed revenue and certain duties

or services.
Some of these services were afterwards
(1870) commuted into cesses, (c) He stipulated that
the State
the
zamindars should safeguard the rights of their
I20
INDIA.
[CH.
III.
tenants by granting them pattds or documents stating

the area and rent of their respective holdings, (d) The
zamindars were made " subject to such rules as
might be enacted by the British Government

ring
the
rights
and
and
for secu-
privileges of the tenants in their
respective tenures
protecting them against
for
undue exaction or oppression." All ahwahsy or cesses

levied by the zamindars in addition to the rent, were
abolished.
The transit duties and road and ferry tolls
were taken over by the Government, but the market
tolls and profits from fisheries, trees and waste-lands
were
the zamindars.
left entirely to
of Bengal were raised
and
allowed
to
zamindar.
In
(/)
(e)
tho position
pay a
Government,
the
to
The
of
taluqdars
zamindars
fixed
revenue directly to
of
through a superior
instead
Madras and Orissa
many
petty
tributary chiefs have been deprived of their ruling

powers and reduced to rank of zamindars, subject to the
payment
II.
of
a fixed revenue.
The
Village Settlement {Mahalwari)'Yhe
a limited period (30 years in the

U. P. and 20 years in the Punjab and C. P.), with the
revenue
is
settled for
entire body of villagers
who
are jointly
responsible for the revenue of the
head,
called
the
Lambardar^
and separately
whole
village.
signs
the
Their
agreement
with the Government to pay the revenue, on behalf of

the villagers.
among
The
total revenue
the villagers,
ancestral shares
of
the
some
of
is
then apportioned
them retaining
village-lands subject
to
their
the
H.
121
MAHAL WARI SETTLEMENT.
III.]
payment of this revenue. The assessment of the

revenue by the village council (or Lamhavdav) is superSettlement Officer of the Government,
vised by the
and the
village
maps and
records of right are carefully
preserved and brought up to date.
demand
is
The Government
estimated by a careful calculation of the
value of the land, the price of the crops, and the

recorded actual produce of the
at each nev^
the revenue or a portion of
it
in years of famine.
Mahalwari settlement, the Government
the
deals only with middlemen,
groups of villagers,
whether
individuals
these
tenants
subject
to
the
but
or even
cultivated
it
less,
to
the
has
now
been
The
reduced to 50
be the economic rent
net
asset
In
p. c.
no
is
taken to
is
which the actual cultivator
pays to the superior proprietor, where there

letting.
net
the
p. c. of
except in Bombay, where there
maximum.
The
middlemen.
Government demand was formerly 90
limit
is
middlemen themselves, and the other half by
inferior
assets,
or
who are held responsible for the
revenue. Nearly half the area thus settled
by
fixed
rate
But the Government remits
the next 20 or 30 years.
In
The
fields.
settlement cannot be enhanced during
other places,
the
net asset
is
is
sub-
arrived at
by deducting from the assumed price of the crop

the approximate cost of production, (including the
peasant's subsistence,
the
depreciation of his imple-
ments, and the remuneration of the village menials,)
and a
little
extra for his luxuries.
But
all
these
122
calculations are
made
who
Settlement Officer,
the
by the
the
price
of
consider
to
rules
crops,
fields
(where there
there
is
no appeal
to
and the
From
sub-letting).
any rent
been imposed for

the
his
decision
court.
and
(a) roads, schools,
remuneration of village
headman, the accountant and
cesses
usual rate of the cess

In
the
is
such as the
watchman, and
the
province of Oudh, the Government settles
30 years, with a taluqdar or
community
the
The
one-sixteenth of the revenue.
the revenue of a group of villages, for the

of
have
dispensaries,
officers,
"insurance against famine" [abolished in 1906].
(c)
soil,
neighbouring
of
addition to the revenue thus settled,
In
(6)
is
character of the
rent
of
directed
however,
is,
the
III.
discretion
the
at
entirely
[CH.
INDIA.
of
each
usual term
chief, instead of
village
separately.
revenue payable by the taluqdar
is
sums levied by him as rent from the
different
with
The
the total of the

villages
under him, after deducting the cost of collection and

the
sum which
him
taluqdars of
in
the
Government is pleased to leave to

and dignity. Thus, the
for the support of his life
two
Oudh
respects
temporary,
and
differ
(i) the
from the zamindars of Bengal

settlement with the former
is
(2) they have no absolute right over
estates such as the Bengal zamindars possess.

Hence the taluqdar i is a double tenure, i.e., the Government estimates and fixes the revenue of each village
their
(which
is
by the taluqdar as his

amount to be paid by him to
collected
as the total
rent), as
well
the Govern-
CH.
ment
123
TENANT RIGHT SECURED.
III.]
as revenue.
In fact the ialuqdav
is
merely a big
revenue-farmer with some pecuniar}^ gain, but none of

the rights
and influence
of the
Bengal zamindar.
The
the
Settlement. In
Ryotwari
the
deals
directly
with
Rvotwari tracts the Government
cultivators and recognises no middleman. Each village
III.
is
and every
carefully surveyed,
cultivator's holding or
it is marked and separately numbered.

maps with accurate boundary lines, classificathe soil, and the names of the occupants, are
plot of land in
Village
tion of
compiled and preserved, and the revenue
carefully
is
This right of occupancy
assessed on each occupant.
can be inherited and transferred by the peasants

hence there
is
some amount
Ryotwari provinces.
of
assessment
is
In
of sub-letting
same
the
even in the
other respects the

as
method
the Mahalwari
in
settlement.
The
rights of tenants.
Under
the
Permanent
Settlement the zamindars were required to give to
each tenant a pattd or document specifying the area
and conditions
of his holding,
from the
latter
the terms.
But
the
and they were
to
take
a qabuliyat or written acceptance of

this
was not done
in
practice,
and
zamindars enhanced rents and evicted tenants
In 1859 a Rent Act was passed which

granted to the ryots " occupancy rights," and limited
as they liked.
the zamindar's
who
power
of enhancement.
has held the same
gains the right to be
field
Every tenant
continuously for 12 years^
regarded as an "occupancy
124
tenant,"
and
INDIA.
[CH.
ill.
such he cannot be evicted at will,
as
nor can his rent be enhanced beyond the rate of other

occupancy tenants in the neighbourhood or beyond
by a
the limit indicated
rise in
The Bengal Tenancy Act
the value of crops.
of 1885 provides (i) that
the " occupancy right "
a ryot shall enjoy
he has held
if
same village for twelve years in succeswas enacted to prevent the zamindars from
evading the Act of 1859 by shifting tenants from one
field to another before they had completed 12 years'
any
field in the
sion.
It
-occupation of any particular

(2)
field.
The same law gave
position of
some
legal recognition to the
classes of privileged tenants,
between the zamindars and the actual
midway
cultivators, viz.y
gene-
(a) 'tenure-holders', (called taluqdars or jotdars,
rally holding 100 highas or more),
proprietory
rights
(b)
'ryots
at
who have
fixed
full sub-
who
rates',
cannot be ejected nor their rent enhanced (c) occupancy tenants' (formed under the Act of 1859), and
settled ryots' (who have held different fields in
(d)
'
'
the
same
village for 12 years).
The
last
two
also are
protected from unjust eviction, and their rent can be

increased only in certain circumstances, which
have to be proved
in a
law
may
court.
(3) The Act also empowered the Local Government

to make a cadastral survey and a record of rights by
means of its Settlement Ofiicers, one-fourth of the cost
being borne by the Government and the remainder
being equally shared by the zamindar and the tenant.
H.
In
RECENT RENT LAWS.
III.]
1 89 1
and
(4)
25
a cadastral survey of North Bihar was begun,
later
courts
on that
The Act
of Eastern Bengal.
enables a tenant to appeal to the law
any
against
enhancement
zamindar, and the court
is
of
empowered
rent
to fix
by the
what
it
considers a fair rent on the basis of the rates prevailing

in the neighbourhood.
(5) It
provides safeguards against the oppression
of tenants at eviction
distraint has to
and
distraint
by landlords. The
be made through a law-court (and not
by the zamindar's
servants),
and only the crop can be
Act of 1885 has greatly

reduced the zamindar's summary powers, and proattached.
In
short,
the
tected the tenants against oppression, unfair enhance-
ment
and unjust eviction.

1907 the law was further amended with the
of rent,
In
following objects
(1}
To
discourage landlords in evading the provi-
sion of the Act of 1885 with regard
to
the
enhance-
by entering into unfair inequitable and

"No court
collusive compromises with their tenants.
shall give effect to an agreement or compromise be-
ment
of rent,
tween landlord and tenant the terms of which, if thfey

were embodied in a contract, could not be enforced
under the Act.
The revenue
officers
and courts have
been given a wider discretion in dealing with such

agreements and compromises."
(2)
rights
To
give
when such
greater
authority
to
the record-of-
record has been duly prepared and
126
published.
In
rights has
now
[CU.
III.
the preparation of the record-of-
fact,
greatly modified agrarian
conditions.
law was most often evaded by the

In rent suits,
zamindar not producing the record, and getting an
The law
unfair decree in the absence of the ryot.
the
of 1907 provides for the production of the entry regarding rent in the record-of-rights in all rent suits, and
down
lays
that every entry in a record-of-rights shall
be presumed
to be
to be correct
it is
proved by evidence
and that a court passing a decree at
incorrect
variance, with
until
any such entry must record
its
reasons
for so doing.
'To
(3)
power
give
to
Government
to distinguish
between good and bad landlords and to take steps in

the
case
of the latter for the reduction of rent,
when
they appear to have been so unduly enhanced as to
be oppressive.
In
areas where a record-of-rights has
been prepared and is maintained, zamindars favoured

by the Local Government may recover arrears of
xent by a shorter and more summary process than
a rent-suit in a
issued
by a
ryot being
certificate
revenue
civil court
specially
first
without the
a civil court peon. {Rampini,
xvi).
Settlement
: (i) An enormous
chores of
officer,
executed on the defaulting tenant by a
The Permanent
4i
they can get a certificate
heard in his defence, and have the
officer instead of
4th. ed., xiv
tages
appointed
its
disadvan-
loss to the State of at
least
Rupees annually, being the unearned
incre-
H.
BENEFITS OF PERMANENT SETTLEMENT.
III.]
12/
loss of
which the zamindars take. (2) This

revenue has compelled the Government to in-
crease
the general taxation, so that the rest of British
ment
since 1793
India has to pay heavier taxes as the result of the

Bengal and Madras landlords enjoying a purely un-
earned increment.
by the majority
(3)
The unproductive
of zamindars.
use
of
rent
Cornwallis had hoped
would imitate the English

landlords by superintending and financing the improvement of agriculture but this hope has been falsified
that the Indian zamindars
the zamindars as a class spend their wealth in luxury
and many
them are
of
absentees.
{Ind.
Emp.,
iv.
231,
Seton-Karv, 47-48, 65, Jones, 143.)

Its
advantages :~(i)
of the State
ment
has saved the land-revenue
from annual fluctuations and uncertainty
of collection.
of
It
(2) It
to tenants
avoids the expense and harass-
which attend every periodical renewal
settlement in
the
other parts of India.
(3)
The
zamindars have greatly extended cultivation by bringing large areas of waste-land under tillage, planting
colonies
of
peasants by means of concessions and
pecuniary help, draining marshes, clearing jungles,
and digging tanks, [Seton-Karr, 45-49. The actual

work of reclamation of soil was done by the ryots, but
under the indispensable help and protection of the
zamindar.)
"The proprietorship conferred on
the
zamindars has also much to do with the introduction

into
Lower Bengal, nearly alone among Indian
vinces,
of
new and
vast
agricultural
pro-
industries."
128
spot,
he
The zamindar
163).
tahsildar,
and he enjoys the
increased production
the
is
Ill,
on the
not changeable like the rapidly shifted
is
Government
of
Com.,
VilL
(Maine's
[CH.
entire benefit
hence, he has every in-
ducement to increase the cultivation.
But he has
not yet attended to intensive cultivation or agricul*
tural
'improvement" as understood by English land-
The new Agricultural Colleges may, however,
lords.
equip our future zamindars with the knowledge necesthe latter purpose.
sary' for
(4)
The zamindar alone
can introduce costly agricultural improvements and

machinery, which are beyond the means of the petty
individual cultivators.
scale
Hence agriculture on a large
possible only in the permanently settled parts
is
of India.
(5)
At present the zamindar is the only

new knowledge and the com-
channel through which

forts
of civilisation
manor
is
an
can reach the cultivators.
ignorance and poverty.
In
Bengal,
a school, a dispensary and a post
neighbouring villages.
all the
time flock
all the peasants,
and Muslim
it
By
supplies
is
are
has generally
which
benefit
Puja
male and female, Hindu
his temple at
of collective
new method
and
amusement they
new sanitary
new kind
of cultivation, or a
can be quickly introduced
"Scarcity
office,
To
the agency of the zamindar a
measure, a
of crop
it
plays the part of a club to them,
affords the only source
have.
His
amidst a dead level of
oasis of culture
among
the peasants.
met, relief wôrks are set on foot, and

transported (in
a famine) with greater
CH.
GOOD DONE BY ZAMINDARS.
III.]
29
where there are large zamindars, than in provinces where the settlement has been made with the
heads of village communities, or with each ryot direct."
facility,
(Seton-Karr, 70).
In short, the
threads of village
good
life in
zamindar holds
and
his hands,
(as well as for evil) is great.
his
Where
all the
power
there
for
is
great resident zamindar, crimes are hardly known.
But where the peasants are independent (as in Backerganj), many murders are committed in the villages
[But unless the zamindar
and go unpunished.
resi-
is
he cannot police the rural parts, and there
dent,
is
nothing in the Permanent Settlement to compel him

to be in residence.*]
(6) It
has created a rich and loyal body between
Government
the
and the people.
The zamindars
were conspicuous for their loyalty during the Mutiny.

Their aid to education, sanitation,
69).
{Seton-Karr,
famine-relief,
literature
and
art, all
over the country,
has been most liberal.

(7)
The Permanent
Settlement, co-operating with
the law^ of equal inheritance of all the sons, has created
a large middle class wîth a secure income, which
is
the
cause of the social, literary and educational advance-
ment
of Bengal.
The
middle class cannot

*
political importance of such
be
exaggerated
without
a
it,
Town-life was the aversion and terror of our old-fashioned J
zamindars, and they preferred to live in inaccessible villages. But

the
new
race of zamindars, with hardly any exception, are
absentees and have a craze for
livin.sf
in Calcutta.
130
[CH.
III.
Government cannot be successfully conThe very absence of the law of primogeniducted.

ture, though it has split up many estates into small
bits (and thus rendered cultivation on a large scale
impossible), has tended to swell the number of the
representative
middle
enough
"squireen"
Bengal
Every
class.
just
educate his sons with, but not enough to
to
induce them to lead an idle

enterprise of " the
younger
life.
They, therefore,
proverbial
keenness
and
sons " of the
English
aris-
display something of the
tocracy.
has
(See also Dutt, 461.)
Disadvantages
of
temporary
settlement.
(i) The expense and harassment of the present assessment work, which have to be repeated every 20 or 30
years.
(2) Neglect of cultivation on the approach of
a revision of settlement, in order to remove the osten"
sible assets.
As the period
for revision
draws nigh,
a certain amount of distrust and disquietude arises in
minds
the
Wealth
of the population.
is
concealed
lands are purposely thrown out of cultivation
many
an
unfair
increase
means
of
and
are resorted to in order to avoid
rental."
{Seton-Karr
investment of capital in land

is
is
68).
(3)
The
discouraged, as there
no certainty that the improvements made at the
tenant's
expense
Government
in
will
not be appropriated by the
the form of enhanced revenue.
The people cannot lead a
full
and contented
life,
(4)
as
they are not the proprietors of the lands they cultivate.

{Ind.
Emp.,
iv.
231).
"The
peasant must have land

CH.
to
RECENT SETTLEMENT REFORMS.
III.]
must
or
till
therefore
The body
starve.
means
sovereign proprietor for the
and
...Intermediate
of the nation
dependent upon the
every case
in
I3I
of obtaining
independent
none; and great and small
classes
are... the
is
great
food.
there
are
slaves of that
master on whose pleasure the means of their subsistence wholly depend.... The tendency of such a state
of
things
to
is
perpetuate the despotism
(Jones, loo-ioi, 123.
See also
lit t,
it
creates."
^86, 502.)
Recent reforms in the revenue policy of the

Indian Government, For a longtime a strongparty
of reformers
sion
of
the
and philanthropists advocated the extenPermanent Settlement to all India. But
the vast majority of officers objected to

last in
it,
and at
1883 the Secretary of State definitely negatived
the proposal.
Mr. R. C. Dutt, in an open letter to
Lord Curzon, ably urged the improvement of the

position
demand
of the
by the
the
limitation
of
the
ryot's
State
to a definite share of the produce, extension
term of settlement, enhancement of revenue
on certain
in
statutory
definite conditions
price
of
crops,
only, such as increase
resort to civil courts to settle
the ryot's objections to a
new
assessment,
in
short
an approach towards the conditions of the Permanent

Settlement.
The Viceroy
fully
question and after negativing all
reviewed the whole

the
Mr. Dutt, authorised certain reforms,
were the foUovving

(i)
suggestions of
among which
Assessments are not to be made, as formerly,
I '^2
Upon the basis
of
the
prospective
yield
[CH.
III.
of the land
during the coming period of settlement, but upon the

actual yield at the time of assessment.
The
(2)
principle
of
exempting or allowing for
improvements by the ryots should be further extended.

should
(3) Where the enhancements are large, they
be imposed on a progressive scale and spread over a
of years, in order to mitigate the
number
a sudden
to 25 p.
In Madras, the Settlement
rise.
the enhancement which
c.
at once, the balance being
In
assessment.
may
Bombay
Code
the
12^ p.
c.
on the original
[But in
developing provinces like the C. P. and the
Punjab, there
(4)
instal-
maximum enhancement
not exceed double the former amount.
rapidly
limits
be imposed
imposed by annual
not exceeding
ments, each
may
hardship of
is
no such
limit.]
There should be automatic remission or reduc-
tion of the land revenue in years
The revenue
collection
of failure
should be more
of
crop.
elastic in future,
and promptly adjusted to the variations of the seasons

and the circumstances of the people. This is necessary
as the ryots are not provident
years for
bad
years,
and
it is
enough to save
in
good
also difficult to forecast
how many years of

(5)
the coming lease will turn out bad.

There should be a more general and prompt
to reduction of assessments even during the

course of the lease in cases of local deterioration, due
to famines, epidemics and other causes which decrease
resort
the population.
CH.
EFFECTS OF PERMANENT SETTLEMENT.
III.]
By
ment
33
previous legislation and the general improvethe
of
some other
administrative machinery,
reforms had already been made,
Where a
viz.
was properly surveyed at the last

settlement, and the old maps and village records have
been punctually corrected and kept up to date, the
measurements and records are usually accepted as valid
at the new settlement, and local investigations and
(6)
detailed surveys
tract
are
not repeated, so that the ryots
escape harassment and extortion.

(7)
and
The methods of assessment have been
it
now
an entire
made
for the
accepted as final by law, and in
many
Bombay a
second time
parts of
simplified,
re-settle
against eight years formerly).
district, (as
(8) In
takes four years to
is
classification of soil
Madras by custom.
consequences of the chief Indian
The economic
systems of land tenure*

(A). Permanent Settlement.
rights of the cultivators for
The protection of
the
which Government had

1793, was long
stipulated
with the zamindars in
neglected,
and has been secured by
later legislation.
The occupancy tenants of Bengal (who form 85 p. c.

of the total number of cultivators) and the cultivating
village owners of Biliar,
now
practically occupy the
position of the peasant-proprietors of Europe,
and are
The
first-named
class enjoy the entire fruits of their labour
and capital
subject to the 'magic of property.'
and always a
certain portion at least, in practice the
134
improving their lands, and
in
flourishes
under them.
by the zamindars,
levied
Where
it is
III.
They have every
whole, of the unearned increment.

interest
[CH.
agriculture
illegal cesses are still
due to the corruption or
weakness of the police, but cannot be called a necessary consequence of the
Permanent Settlement.
vigilant care of magistrates

rised extortion
down
putting
ryot
is
frequent, in the
less
The
rendering such unautho-
same way
dacoity and 'bad-livelihood.'
as
it is
Where a
non-occupancy he cannot spend his capital on
is
improvements, and industry
zamindari system
is
discouraged.
theoretically favourable to agri-
is
improvement at the cost
cultural
because he
his outlay
the
is
of
the
zamindar,
permanent owner and can recover
from the land.
being large in area,
But the
Moreover, zamindari estates
a zamindar betakes himself to
if
farming, he can derive all the advantages of production
on a large
plots
the
of
scale,
which
is
impossible in the small
mahaUvari and ryotwari
areas.
The
Permanent Settlement by creating a rich and leisured

class,
has fostered the accumulation of capital, and
large industries
may
be rendered possible in eastern
India by the financial backing of zamindars.
(See
Gokhale's Speeches, 493.)

(B).
*
It IS,
&
I
fC).
Mahalwari and Ryotwari
think,
essentially
system with the zamindari.
to
class
the mahalwari
True, there are some bodies of
by courtesy zamindars, wath whom the land is

by Government, and the actual cultivators are sometimes
villagers called
settled
wrong
Settlement.'^
r
CH.
EVILS OF SHORT SETTLEMENT.
III.]
Under
the State
this system,
among
rent presupposes,
is
only one landlord,

is
all
The competition
landlords for tenants which Ricardo's theory
of
ryot
a landowner with
is
of a monopolist.
the advantages
135
mercy
at the
wanting
is
viz.,
here, because there
the Government,
(i)
of the State-proprietor,
The
and the
must theoretically be
rent here being a monopoly-rent
the price of agricultural produce.
an element
in
Government
lets the
(2)
land only in very small plots,
averaging 5 acres each, so that agriculture on a large

scale is impossible, even when a capitalist is ready to
undertake
it.
(3)
The chance
of
enhancement
of the
revenue at every periodical settlement discourages industry and the investment of the ryot's capital in land.
The
ryot,
having no right of property in his holding,
has no inducement to become a devoted agriculturist.
Capital cannot accumulate from the pursuit of
(4)
agriculture, because the bare subsistence

ryots,
and the surplus produce
their tenants.
and
is left
land
of the
is
to the
" swept
But these so-called zamindars have not the power

Bengal zamindars they have no permanent
rights of the
ownership, no guarantee against unfair enhancement of revenue

at the end of 20 years,
and
ment
in
Officer,
is
less
their earthly providence, the Settle-
fear of the
poHce and the
Magistrate than the Bengal zamindar

ryots.
in dealing
District
with
his
Moreover, the small size of their holdings weakens their
defensive power.
perty
is
As Burke
says,
"
The
great masses of pro-
form a natural rampart about the
all their gradations
diffused." {Reflections.)
Its
defensive
power
lesser properties in
is
weakened
as
it is

136
into the coffers of the State."
(5)
[CH.
111.
revenue system
administered by petty Government servants according

to fixed rules,
is
and the
sure to be inelastic,
by the
likely to be ruined
strict
ryots are
enforcement of the
State dues in years of famine, unless
remission
of
promptly ordered by the head of the Govern-
revenue
is
ment.
On
the whole, all Indian writers on the subject
before the recent rise in the price of food-stuffs regard

ryot
the
in
impoverished
raise
these
tracts
class,
as
"a
himself and without resisting
(Gokhale
Speeches,
The
309).
103,
official
helpless
and daily
incapable of education, or
effort to
poviêr in distress."
Dutt 492-495, Ranade, 276,

it, and assert that
apologists deny
economic rent or
the State takes less than half the
'net assets,' leaving the other half to the cultivator in
addition to
Emp.,
in
iv.
the
234.)
bare expenses of subsistence.
The
Ind.
subject will be further discussed
Chapter IX.
Foreign Capital. The introduction of foreign

capital during British rule has
many
made
India the
home
and conveniences which would

have been utterly impossible without it; and the
present economic development of the country and the
wonderful growth of its foreign trade are almost
of
entirely
British
industries
due to European capital and enterprise.

capital
alone invested in
roughly estimated at 700 crores

(i)
The
of
rupees (1909.)
capital of the Indian railways could not
been raised in India.
The
India has been
have
The guaranteed railways were
CH.
FOREIGN CAPITAL.
III.]
137
financed by joint-stock companies formed in England,
and much
of the
money sunk by
the
Government on
the State Railways has been also raised
there
in
the
Without railways the coal of

Raniganj could not have reached Calcutta and
Cawnpur, and large steam factories would have been
form of
sterling loans.
impossible.
originated
(2
&
entirely
Coal-mining and tea-farming
3)
in
European
taking to both of
Indians have of late been largely
Modern machinery was
these.
tion
and transport
of
originally introduced
and the organisalarge numbers of labourers from
by European
into India
capitalists,
their villages to factories
or plantations
a European creation in India.
owned by
exclusively
though
enterprise,
is
entirely
Steamers are almost
Europeans.
In
the
short,
modernisation of India described before has been due,

after the action
capital
and
of
the
initiative.
State,
mainly to European
now
Indian capitalists are
Examples
joining in the
work
of
industries
due to European capital will be given
in
Chapter V.
The
and
political
their effect
India
is
in increasing
numbers.
relations of India
on the balance of
and England
trade,
a dependency of Great Britain.
In conse-
quence of her dependent political position, she has to

of high English officers,
('the
must be European', as Lord Curzon
said,)
employ a large number

corps d'elite
and a strong garrison of British troops, (which numbered 80,581 in 191 1).
The pension
of all these
and
138
[CH.
Eng-
their savings while in service in India are sent to
The English cannot breed and multiply in

They have to send their children above four
land.
India.
years
III.
age to Honne for education
of
remitted
is
young ones
European
England
came
back
sent
India
to
to
to
three-
maintaining the
for
In one year (igio)
there.
soldiers
12,000 wêre
to
a large part of
amounting
the father's income (sometimes

fourths)
above 13,800
from abroad and
England or
British Africa.
Very often these numbers have been exceeded.

has to pay their transport expenses.
the recruiting
and depot charges
annual
reliefs
number
of
in
India
She also pays
England
for
the
white troops sent to India, the
of
which has increased under the modern
short service system.
Then, again, certain classes of Indians have to pay
England a large
amount
of
what may be
called
'boarding charges' and also the price of status.
Under
Government rules, offices of the highest position and
salary in our land are filled in England only.
A
candidate has to be
to
draw
fications
full
he
pay.
is
But
"recruited in
if
England"
graduate selected in
to the
only.
England
with Rs. 500 a month
same chair
[In
he
is
"recruited in India," his salary under-
goes a depreciation of 33 to 50 p. c. The

applies even to men trained in England
starts
if
with the very same quali-
for
but
if
distinction
:
an Oxford
an Indian college
he
is
appointed
he gets Rs. 333 as. 5 pies 4

Bengal the amount is lower still, Rs. 250.]
in India
"
Even
for certain private professions,
of 1774 nobody can plead

our High Courts unless he
an English status
By
exacted in the highest rank.
is
I39
CHARTER ACT OF I774.
III.]
the Charter Act
in the Original Side of

is
barrister.
It is
not
contended that a newly- called barrister knows even

half as
much law
as a newly-passed
no guarantee that an Indian
There
vakil.
barrister
at
will
is
least
acquire a superior knowledge of the English language

the
as
result
of his sojourn in
the English bar
is,
therefore,
England.*
no indication
merely represents a status which
it
Charter Act of
the
British rule in
India.
is
of
call to
merit
necessitated
1774, passed in the
Since
by
infancy of
then nearly a century
and a half have passed, and India has now thousands

the
highest modern
of sons who have
received
home
education at
A Rash
Bihari
Ghosh
but their disability
continues.
Muthuswamy Aiyar cannot
or a
appear before the Original Side, and even in other

courts he
must subside into a junior as soon as a
barrister
joins
practise
England,
*
driven
live
know an
Every Indian
there
who
wishes to
with self-respect and profit
consistently
lavv^
therefore,
is,
him.
by the Charter Act to go

for
three
hidian barrister
who
years,
and
pay
to
an
pleads in Urdu because he
Another Indian
cannot express himself in English.
barrister^
innocent of humour, puzzled the Judge of Patna by invariably
speaking of " the he-cock " when he meant Mr. Heycock.'I. C. S.
third Indian barrister (B. A.
Oxon
after the transitive verb concern.
!)
uses the preposition about
1^0
Each
English Inn 1^0.
barrister represents
10,000 sent out of India, for which
Rs.
[CH.
at
III.
least
we do not
get
our money's worth in the shape of a legal knowledge
As the professional education
unattainable in India.
of
a Vakil does not cost more than Rs. 600, there
barrister instead of
former does not

total
the
a vakil, even
know
practising
barristers
In a single year (1908)
the
to
in
bar in England.
the
The
England on
to
sixty
that
latter.
is
enormous.
Indians were
Early in 19 10, three

left
a single province
Punjab) to "eat their terms" in London.
Nearly
the
we grant
our country
more than
hundred Indians are said to have

(the
if
law than the
less
amount which India has paid
called
is
a great waste of money in turning out a
relatively
all
sterling
the capital of the Indian railways
loan of the
Government
came
and
from
England, and the interest on them has be to sent
Many European companies working and earnmoney in India have their head offices in England,
there.
ing
and
their profits
have to be sent there for the payment
of dividend.
The English law of copyright is in force in India,

and we have to pay the European prices of many
books which we might otherwise have cheaply reprinted
here.
self-governing
country
like
the
United States did not allow copyright to foreigners

till
20 years ago, and volumes of Ruskin selling
England
for
America
for
in
a guinea or more, were reprinted in

half a dollar each.
The continental
CH.
INDIA
III.]
nations
buy
can
DEBTOR COUNTRY.
books
English
I4I
very cheaply in
But India has to pay
Tauchnitz's pirated edition.
as the price of books
nearly half a crore annually
imported from Europe.
The
is
lier
of these political
result
that India
payments or exports must exceed her
The
imports.
about 24
and
its
a year.
economic
is
reaches
a permanent
effects are the follow-
:
{a) India, in the present
industries,
abroad.
and
This
i.e.,
receipts or
now
net excess of our exports
crores of rupees
state of affairs,
ing
and economic causes
in the position of a debtor country
is
parts
The
undeveloped state of her
with raw materials to pay her debt
profit
on agricultural produce
relatively less certain than that
is
smaller
made
generally
more dependent on human

Thus India would have
skill and less on Nature.
been a loser even if her exports had balanced her
in
manufacture,
imports.
(6)
which
is
Manufactured
articles
much
being
raw materials of the same price,

Indian exporters have to pay far more in freight than
European importers into India. Thus the cost price
of an Indian export is increased when it reaches the
smaller in bulk than
consumer
in
a greater degree than
the manufactured foreign
is
the
goods which
with
case
we
import.
This causes a heavy financial loss to our producers
whose market
is
thus comparatively restricted,
more goods go out of India than come to

ships carrying Indian exports
(c)
it,
abroad cannot get
As
the
full
142
cargoes on
their
[CH.
voyage, ajad so the exports
return
amounting
from India have to pay very high rates,
li times the freight paid by our imports

India as a debtor country has to bear
nearly
to
III.
bulk for bulk.

burden,
this
(d)
From
the
national point of view,
raw materials, especially grain, constitute the

means of nourishing the people, and these we
have to part with, whereas if we could have exported
the
very
manufactures (which are mostly luxuries) the nation's

loss
would have been
The money
(e)
less,
represent-
ed by the excess of our exports over our imports goes

out of the country altogether, instead of remaining
here to increase our capital
There
this
is,
Relatively to
poorer, because the

of
an annual drain from India to
therefore,
amount.
European
of
officers,
view
amount
of abstract
no drain and
if
all
the
past,
India
which are paid
this
for
by
of the drain.
theory,
there
rule.
many
But from the point
would have been
money would have remained
had made India
during Mughal
no
this excess
our production by
our capitalists had been Indians and
officers
is
European capital and the labour
of exports, have increased
times the
and nourish our industries.
their
all
here,
our
home, as was the case
CHAPTER
IV.
CONSUMPTION.
The nature and progress of consumption.

Consumption is the ultimate aim of all economic activity
men produce
only in the hope of consuming
either immediately or in future, (which latter
Consumption
saving).
tive
is
of
and unproductive.
two
kinds, viz.,
called
is
produc-
Unproductive consumption
ends only in the destruction of the thing consumed,

while productive consumption cannot strictly be call-
ed consumption at
production of
is
all,
new wealth
productive activity
but
;
it is
for
and not
Consumption by man, or the

wants,
the
is
duced,
i.
e.,
really consumption.
satisfying
wealth was
the
form and then reproduced in a -higher.

benefical
when
only
human
it
causes
at
being pro-
still
was being merely consumed
it
of
stage of the economic process
last
all previous stages
only a means of the
example, sowing seed
in
a lower
Spending
is
a transfer of wealth
from relatively unproductive channels to more productive
The
ones.
on productive
rich
man
exerts a great influence
activity because he can,
his expenditure, decide
which
by regulating
industries should flourish
and which not.

iVs
the result of the wêll-known laws of consump-
tion, the articles
which we use may be
classified thus
144
Out
(i)
and
capacity for food
which
namely
primitive ani7nal wants,
clothing, are the
We
(But our
Articles
(?.)
wish to have things other than the

ones or the most ordinary kinds of
barely necessary
food and clothing,
extravagance in
in satisfying
limited in amount).
is
drink
food,
in point of time.
first
IV.
our craving for distinction are next in
satisfy
importance.
[CH.
INDIA.
i.e.,
we
dress, etc.
desire
(3)
lavish
hospitality,
We desire iâWety even
our animal cravings
same kind
the
of
food palls upon our taste after a time owin^" to monotony,
and we
to eat different dishes in different
like
seasons or holidays.
(4)
Wîth the growth of civilisa-
and mental culture each individual desires greater

house-roofu ^nd privacy for carrying on intellectual
tion
work without
disturbance, as distinct from mere pro-
tection from sun

(5)
We
and
rain,
which
a primitive need.
is
have an ever increasing number of wants
resulting from our activities, physical
and mental.
example, athletic games are pursued,
dramas and art-works are studied
and
for their
as the result of man's over-flowing activity
For
novels,
own
sake,
and these
very soon come to be regarded as necessaiy things,

i.e.,
they
are
felt
as wants.
Such
man that in a healthy

the way for new wants,
is
the progressive
new
nature of
state
prepare
instead of our activi-
ties resulting
the
lised
latter.
man
activities
from our wants as a means of gratifying

In short, though the
are nearly the
wants of the uncivisame as those of animals,
every step in our progress increases the variety of our
CH.
I45
SIMPLICITY OF INDIAN LIFE.
IV.J
wants, and also the variety of our methods of satisfying those wants,
i.e.,
we
desire not only larger quanti-
but better qualities or a greater choice of things.
ties,
{Marshall,
161-164).
i.
The
Indian standard of comfort as determining Indian consumption. Nearly three-fourths of
Indian people are directly or indirectly dependent
the
The Indian peasant
on agriculture.
He
frugal in the world."
hut with walls of
mud
tiled
His wants
straw.
very few, and they are supplied by the local arti-
are
sans and menials
whom
way
the
of
foreign
several
he sometimes pays with a
Religious prejudices also stand
share of the harvest.

in
a thatched or
lives in
plaited
or
"the most
is
many
classes
Indians using
the
of
commodities, such as soap, prepared
food, leather goods other than shoes, &c.
our
warm
climate,
Nature to the
our need of clothing
minimum
The Indian standard
consistent
of comfort
consumption of imported
Thanks to
reduced by
with
extremely limited.
"Why
As a European observer has remarked,

Indians live
answer.
they
It
eat
pleasure
rural
is
is
is
the
question ever forcing
not that they
may
enjoyment
is
itself
enjoy food
some coarse grain
all their
decency.
very low, and the
is
articles is
is
It
is
all
for
that
not for
a pilgrimage."
India, nine-tenths of the population live
the
by
In
till-
age or cattle-keeping, and nearly the whole of their
income
for
is
which
10
spent on the necessaries of

is
naturally inelastic).
life
It is
(the
demand
impossible for
146
them
buy any
to
home-made
luxury,
[CH. IV.
INDIA.
or foreign,
except the cheapest, and that too they can
when brought
to their doors.
twelfth of the people
and
Even
buy only
in our cities one-
dependent on agriculture
are
on the preparation and supply of
two-fifths
Taking India as a whole, only

one person in 26 is engaged in commerce, (or, including dependants, one in 17). This clearly shows to
material substances.
what a large extent our wants are supplied locally,

and how few articles made in distant places are
needed by us. The Indian consumption can increase
only with a
is,
if
standard of comfort, that
the
in
rise
people spend their
the
and
dwellings,
on
and
food
people,
brethren,
spending
same
such a
unlike
rise
to rise to
to
their
the
The
the
classes
life
and
ancestors
life,
social isolation, as
rich
because
in
India,
do not form a caste by

the
of
caste-
their wealth, instead of
a higher standard of
would mean
Europe,
themselves.
ponds
as
style
and merely hoard

it
clothing of larger
few who save anything continue to
the
live in the
better
Among many
quantity and higher quality.

of
on
earnings
average Indian corres-
standard of abject poverty in a rich
European country
like
England.
(Ind. Emp.,
iii.
269).
Indian consumptiDn. An
attempt is made below to arrange the articles of
Indian consumption in the order of decreasing demand,
Classification
of
beginning with the lowest rank of the people and the

most widely used things
:
CH.
INDIAN CONSUMPTION.
IV.]
I.
dishes,
Grain,
salt,
cotton-cloth,
the barest necessaries of
I47
and earthen pots and

life, which all con-
sume.
Also the inevitable jug for every family.
called
lotah
dftdhdh (the
Muslims,
madans
II.
and
among
having a
latter
is
among the
Muham-
spout)
made
usually
It is
Hindus and a hadhna or
the
of brass, the
preferring copper.
Intoxicants and stimulants, especially tobacco
which may almost be placed
in class
I,
as nearly every
one smokes, even the poorest, both male and female.
The common huqqa
or pipe
the
is
symbol of
caste-
brotherhood, and a man's exclusion from the com-
munal pipe is a sign of his being outcasted {huqqa pani

The next intoxicant in popularity is toddy
or palm-juice.
Bhang and opium may be bracketed
together as a bad third.
(In Bombay and Bengal tea
band).
is
rapidly
advancing to a place in
this class).
Oil,
sugar, sweets, kitchen-vegetables, and, in Bengal
and
Madras, fish. Advancing still higher we have a few
metal utensils, {viz., cooking pots, dishes and cups),
the Hindus using brass and the Muhammadans tinned
copper.
Lac bangles for women.
III.
Next come extra articles of apparel such as
coats, umbrellas,
made
wrappers or "German shawls" (really
of jute), shoes
furniture
canvas bags (a great favourite),
(only bedsteads), boxes,
service of metal untensils
tea (in
a more extensive
towns)
ghee,
meat
and other richer food stuffs

silver ornaments
women and chidren cheap priestly ministration.
;
for
148
Better houses
IV.
ments
luxuries
phones
steel trunks
pujahs
[CH. IV,
a few gold orna-
soap and scents
like
pilgrimages
INDIA.
cheap gramo-
on
more
showy-
scale
The
V.
no
luxuries of the upper classes,
which
need-
description.
The above
list
requires
some explanation and
Among the poorer classes in
fication.
len clothing
not worn even in severe winter.
is
quali-
the plains wool-
But
most parts of India outside Bengal, the bodice

essential
Upper
a part of the female dress as the
India,
is
as
In
by all classes
treasured by the poor
again, shoes are put on
above the lowest, but they are

as a luxury,
sari.
in
and on long journeys carried slung from
a pole, the owner going bare-footed, because Nature

will repair
any damage done to our
give us the price of a
worn
in the plains
new
feet
pair of shoes
but will not
Socks are not
even in winter, except by youngmen
who have degenerated by
receiving an English educa-
Outside Bengal even the upper middle classes
tion.
do not put on
socks, except
on ceremonial occasions.
Silver ornaments are not entirely a sacrifice to feminine
vanity
they are the safest means of investment
known
and town-labourers. " The poor man's

bank on her person he hangs his savings."
to villagers
wife
is
his
In all famines before the closing of our mints to the

free
coinage of
silver,
women's ornaments largely came
to the mints for conversion into rupees.
Our country
being tropical, the ostentation dear to the feminine
I49
RISING STANDARD OF LIFE.
IV.]
heart takes the form of ornaments and not that of
new
fashions in dress.
Rising standard of
life,
As the result of
British
rule and contact with Western civilisation, a
the standard of comfort

India,
though the change
is
is
rise in
steadily taking place in
most striking
in
Burma.
Everywhere Indians are building better houses, and

even the peasants of Bengal have begun to wear coats
and use cloth umbrellas. (But outside Bengal, Burma,

and the Punjab, the peasants and rural labourers do
not seem to have been affected by the improvement in
any great degree.) Many servants, petty traders and
artisans of the
on
occasions.
towns
now
take aerated waters and ice
The habit of drinking tea is very

number of its consumers among
rapidly spreading, the
our people probably doubled twice during the last

10 years.
Within our own observation the use of gold
ornaments has extended to classes which formerly wore

silver.
Our ladies
certainly
encumber themselves with
fewer ornaments than their grandmothers, but what

they do wear
19x3,
is
mainly of gold.
two millions
We
imported, in
of umbrellas, besides 32 lakhs of
rupees worth of umbrella fittings from which 8^ millions
more
of umbrellas
were manufactured
here.
The
in-
number and circulation of our newspapers,

monthly magazines in every province,
the large annual output of vernacular books and their
enhanced price as compared with similar works of a
crease in the
the deluge of
decade ago,
all
illustrate
the rise in our standard.
150
Another noticeable feature
is
INDIA.
[CH. IV,
the rapidly increasing
consumption of tailor-made suits. In most towns the

tailors have their hands full of work, especially in
The
winter.
only a few
Hindu
which however,
have gone out of fashion.
costly shawls of old
men
could buy,
friendly dinners, especially in
usually conducted in a style
Bengal, are
now
which formerly marked
(Our import of shoes and
the richest classes only.
boots more than quadrupled from
1900 to 19 14, the
being 7 and 33 lakhs of pairs respectively.
figures
The import
of tobacco,
from 3f to yi million
The
circulation of
mainly cigarettes, leaped up
between 1900 and 1909.

newspapers in Northern India
lbs.
probably doubled between 1906 and 191 5 on account

of the introduction of cash sale in the mufassil towns
(where previously they used to be subscribed for a
year and brought by post individually) and the reduction of price to half
an anna by the Indian Daily News
and the Bengalee and to one anna by all the other

dailies except one.
This low price and the hawking
of the papers at one's doors
have created a
taste for
newspapers throughout our middle class and much of

the lower middle class.
or
The Indian
villager
abstemious.
He
is
thing,
when he has
eyes.
In rural Bengal,
and the
difficulty of
structures
is
not immovably conservative
quite
seen
its
owing
ready to adopt a
usefulness with his
to the frequency of fires
supporting tiled roofs on
timber
new
own
bamboo
being very scarce), the use of
STANDARD
IV.l
RISING,
I5I
HOW.
corrugated iron sheets for roofing has very rapidly
extended during the
During the same
last ten years.
on account of the
period, too, Dietz Junior Lanterns,
white light they yield, have sold by the
superior
million every year
towns
in the
all
over India almost
every man, and in the Bengal villages half the families
have bought one of
come universal in
made of leaves.
The standard
Cloth umbrellas have be-
these.
rural Bengal, replacing the old ones
of
living
is
People clothe
society mainly through the children.
and daughters
their sons
cularly
in
our
being raised in
a more costly style (parti-
in
garments of a European cut and patent
leather boots), feed
them on more varied
and
things,
indulge them in far more luxuries than they them-
own
selves
had been accustomed
Many
parents of the lower middle class stint them-
selves
ones.
order to please or even
in
know
slippers,
of
saries of the next.
grow up
who
The
step.
their
young
goes about in
children
boy
become the
neces-
thus petted,
when
to return to the simple style of
which
passes
away
for
the general standard for the whole society
one
childhood.
tricycle for his little
of one generation
refuse
their forefathers,
pamper
a poor priest
buying boots and a
But the luxuries

they
to in their
This process
is
is
ever,
and
thus raised
going on in almost every
home, and spreading rapidly from tov/n to country.

It
has been found by a careful study of figures in
P2urope
and America,
that, as the
income of a family
152
a smaller percentage of
increases,
INDIA.
[CH. IV.
spent on food,
it is
while the proportional expenditures for clothing and
But the percentage spent on
rent remain the same.
among
our middle
class,
constantly
rises
The new tendency
with the income.

able
amusement
health and
education,
most observ-
is
professional men,
town
and tradesmen, and along the railways though

among the common people the increase of consumption
artisans
is,
naturally, slight
of poverty from
and slow owing to the low
Luxury means the

want.
But
gratification
inclined to do.
the
and conservative
writers
Even the poorest might have a

otherwise his
superfluous,
better than that of a
want was
a superfluous
of
need not be condemned in every case,
it
as our orthodox people
of
state
which they are gradually emerging.
seem
little
would be no
life
Every
beast of burden.
in its origin superfluous, and,
if it
new
had been
then suppressed as a luxury, society would have re-
mained
in
its
primitive
demnable only when

i.e.y
it
Luxury
barbarism.
degenerates into
is
con-
wastefulness,
a disproportion between the amount of social
labour consumed and the degree of individual satisfaction
obtained,
sumer of the
social progress.
The
rise
or
in
other words,
article of luxury does
caste
the con-
{Gide, 673).
in our standard of
comfort must produce
far-reaching consequences in society,

the
when
not contribute to
(i)
Thanks
to
system and the altruistic religions of India,
our poor had so long lived on voluntary alms.
The
EFFECT OF HIGH LIVING.
CH. IV.]
153
igii returned 33 lakhs of professional beggars, or a little over one p. c. of the population. Now
census of
man
that every
himself, he will
have
spend more on
called
upon
less to
spend on charity, and in
to
no very distant future we must have a department
the
fc
is
of poor
maintained by the State on the proceeds
relief
of compulsory taxation.
The people must be
(2)
pre-
pared to work harder than their forefathers, as they
cannot
on the same low income which
live
man must now make
sufficed
himself a
for the latter.
Every
more
wage-earner or he will starve.
Those
two
things,
efficient
who
are not willing to do either of these
will
naturally swell the ranks of criminals.
joint family will be broken
increasingly
difficult
maintain the drones.

rise
with
us,
as
up,
head
for
the
(4)
The age
it
of a
of
(3)
The
becoming
is
household to
marriage must
and we must gradually approach the
European standard
in
which a man marries only when
he has the income necessary for bringing up a family.
As a natural consequence
of this, a certain portion of
the population must live and die
in
celibacy.
(5)
readjustment of our wants and a modification of our

social
to
manners and mode
take place.
every
age
of
private
life,
bound
in
but the impact of European civilisation
on our society will make these changes

revolutionary in character.
of
are
Such changes imperceptibly go on
The
relative
in
our midst
importance
our different luxuries (and even of some neces-
saries) will
be altered, and
many
things valued
by
154
[CH. IV.
INDIA.
our forefathers will be rejected by us altogether.
Our home producers must change the nature of
new
business altogether in order to supply these

as, in
(6)
their old
needs,
many cases, their time-honoured manufactures will

demand whatever in modern India.
cease to have any
A
when
it
houses,
and
standard of comfort
rise in the
teaches the people to

eat
and
elevate their
daily
live
in
life
raise
themselves
before.
We
that
the
in
fortli
style,
greater
in short,
of
when
exertions
and
a higher grade of workers than
to
must, however,
case
more sanitary
by the introduction
refinement and intellectual delights,
they are impelled to put
a blessing only
a more nourishing
in
dress
is
of
take care
many
of
remember
to
our people, both rich
and poor, what looks
like
standard of living
not really the adoption of a
more expensive
life's
is
style,
an improvement in the
but only a rearrangement of
enjoyments, their
total expenditure
remaining the
same as before but being distributed in a different
manner among the various
articles of
consumption.
For example, everywhere around us we

drinking
increasing
disappearing
see
and the consumption
serated waters are displacing
tea-
of ghee
more
pri-
mitive but certainly more substantial luncheons.
Average consumption
in India
and England.
In the case of India the statistics are often
estimates,
and
for several
mere rough
commodities the necessary
The annual consumption in the United Kingdom for 1906 is the

information
is
altogether wanting.
CH.
IV.]
ENGLISH AND INDIAN CONSUMPTION.
average for 1905-7 given in Webb's

191
Statistics,
Statesman
Trade
1,
New
Dictionary of
occasionally supplemented by the
Year Book, 1908 and the Review
of India, 191
the
of the
popu-
United Kingclom.
Meat (igo6)
India, 1911.
117
...
lbs.
Wheat, barley, oats and

maize
157 bushels
Coffee
0*67
Cocoa
Tobacco
I "97
Sugar (import)
88
Salt (for all purposes)...
72
J>
Clothing
67-8
>J
Alcoholic liquors
29
lbs.
"02
C cigarettes
5>
2-3
ed
C manufactured 9*5
24.26
gallons
lbs.
12-5 lbs.
lof yds.
gallon
(including nonpotable spirits)
one-fifteenth
3-10 -9
6-47
(1911)
lbs.
one-nineteenth
Imports of merchandise
Total volume of foreign

trade (1911)
import-
Expenditure on liquor
Tea
of
1.
Average annual consumption per head

lation
^55
14
i6s.
13
5s.
lo^d.
15s.
6d.
lb.
156
Statistics of
(a)
Food
(i) Salt
[CH. IV.
INDIA.
Indian consumption.
articles
The consumption has steadily risen year
by year with the lowering of the tax on salt. In 1902

lbs. only, but the amount
each person in India used 10
was
i2'5 lbs. in 191
and 13*4
in
lbs.
United Kingdom the consumption of

including
in
1906.
what
In
salt per
191
the
head,
was 72
used in manufacture,
is
In
1914.
lbs.
our estimated total consumption
was 1,759,606 tons (out of which 563,984 tons or

This amount, distrinearly one-third was imported).
buted over a population of 315 millions, gives i2"5
lbs. per head.
With some negligible exceptions all
from British India.
the Feudatory States get their salt

(2)
Sugar
To
majority of the Hindus,
sugar
among
It
articles
of
people
vegetarian
food.
is
enters
like
the
only luxury
the
largely into the
composition of confectionery, huge quantities of which

are eaten
ians
by Hindus, Muhammadans, Indian Christ-
and even Eurasians at
and other ceremonies and at
birth, marriage, funeral
social
dinners,
besides
forming the daily luncheon of the professional classes
and
students
in
greatly increased
portation
of
towns.
we can
foreign
doubled in the last

<:wt. in
1900 to
12J
That
infer
sugar,
its
consumption has
from the increased im-
which has
more than
10 years, rising from 5^ million

million
cwt.
in
191
mil. in 191 3, while the export of Indian sugar
small.
Though no
reliable
statistics
and 18
is
very
are available.
CH.
DRINK STATISTICS.
IV.]
I57
\
*'there is
reason to believe that
duces about
million
tons
India
[all]
[raw]
of
now
pro-
cane-sugar."
Adding to this the 412,400 tons of

foreign sugar imported and retained in 191 1, we get
(Noel Paton.)
an average consumption of 24'26
per head (in-
lbs.
cluding both refined sugar and molasses).
manufacture a
the
juice
fair
the
of
amount
it
also
sugar from
of unrefined
date-palm, but
We
may
be set
off
against the export of sugar from India by land, which

I
have not taken into

(b)
Drink
(i)
Tea
my
calculation.
The habit of drinking tea has very rapidly
among our upper and middle classes, and even

among the labourers in the cities (particularly in
Bombay and the Punjab), and also along the railways.
It is almost universal among the hillmen of the Himalayas.
In igii we consumed about one-nineteenth lb,
spread
per head according to the following calculation
Tea produced
...
imported by sea ..
land
worth Rs. 18 lakhs
say
...
...
...
...
...
...
...
268,854,000 lbs.
6,611,000,,
2,428,000
277>893>ooo
Deduct
Exported by
sea
...
Re-exported by
sea and land
...
260,778,000
...
758,000
261,536,000
Total consumption
in India
...
or '052
16,357,000,
ft.
per head.
158
Liquor
(2)
In
India
there
is
INDIA.
[CH. IV.
one liquor-sliop to
every 2,400 persons, while in England the proportion

public-houses to
of
the population
distilled intoxicating liquors in 1902

iv.
is
ten times as
The average annual consumption
great.
viras
of country
{Ind.
Emp.,
257)
Punjab
...
Burma
Bombay
14^
gollon^ per 1000 persons
...
10
,,
...
127
1911.
Import of foreign hquors
...
6,144,417 gallons
...
...
4,083,806
..
...
10,092,139
...
...
20,320,362
Produced by Indian breweries

(malt liquors)
Spirits issued
from
Indian distilleries
Total
or an annual consumption of about
o'o65 gallon) per head,

In the
lation.
i.e.,
^j
of a
gallon (exactly
65 gallons per thousand of the popu-
above computation, the
spirits,
both foreign and
home-distilled, include not only liquors but also methylated
perfumed
spirits
The habit
of drinking is rapidly increasing
the labourers in the

sants
and workmen
classes
of
European
lost
and
which are not drunk.
Bombay
style of
Presidency and the pea-
of the Punjab.
our society those

life
our old aversion
among
Among
the upper
who have adopted
have (with some exceptions)

to
drinking.
But among the
middle class people education has roused social opinion

against the consumption of intoxicants even by classes
and
castes
which have been long using them.

CLOTH CONSUMPTION.
CH. IV.]
(3)
Hemp-drugs
and
opium
classes of Indians (especially of
Certain
59
numerous
a lower rank) consume
these intoxicants, though their use
rare in England.
is
In 1902 our average annual consumption per 1000

the population
was
{Ind.
Emp.,
iv.
244
Hemp-drugs.
Bombay
...
...
U.P.
...
Madras
...
Assam
The import of
weight as
2*3
...
y^
seers
&
Opium.
2'^ seers
...
1-3
...
i'2
,,
i*i
...
8*8
cigarettes in 191 1 lias
of
261)
,/
been estimated from the
(numbers) per head of the population.
The
local
manufacture of cigarettes in Bengal and Bihar (1910) was considered to have been about 3000 millions, or g'^ per head.
(c)
Clothing
In
1911
we
used lof yds. of cloth
per head.
Imported woollen piecegoods
...
Imported cotton piecegoods
...
2,437*89
.-..
1,02028
,,
24*00 mill. yds.
Indian mill piecegoods

retained for
home
consumption
...
3,482*17
Deduct re-export of
imported piecegoods,
worth 169 lakhs of Rs.

or 4 p. c. of the total
import = say,
...
...
97'5i
Total consumption
by 315
The above
mill, persons
list
...
3,384"66
,,
does not take into account the silk cloths,
cotton handkerchiefs and shawls (imported and home-made) and
l6o
woven
the woollen goods
not clothing.)
is
we
If
[CH. IV,
in the country for local
(The woollen fabrics that
which
INDIA.
we
consumption.
export are rugs and carpets and
include the production of our hand-looms^
roughly guessed at 1650 mil. yds. for cotton goods, our
average consumption per head will rise to about 16 yds.
IS.
In
{d)
Gold and
gd.
3i farthing worth of gold
without
treasure
Silver.
taking
account
into
it
was
treasure
was
and
the
on behalf of Government
average of the three years 1909

of
igii
2S. 5Jci.
6d.,
is.
11,
India
absorbed
silver per head,
importation of
if
we
take
the
our consumption
whereas in England in 1908
per head of the population.

India, 1911.
Gold
Silver
(private) imported
...
;f 27*66 mil.
...
7-95
35"6i
Deduct Gold exported

Silver
^^2*48
4*42
6'90
Net absorption by 315 million

persons
...
2871
Other things. The use of umbrellas is extendand though the importation of foreign umbrellas
(e)
ing,
...
has greatly declined during the last decade, a busy

local
manufacture
has sprung up.
In
separate umbrellas
from imported umbrella-fittings

19 13
we imported
19*6 lakhs of
the 32 lakhs of Rupees worth of
MISCELLANEOUS GOODS.
IV.]
l6l
umbrella- fittings imported that year produced someso that our total
was
umbrella for every 30 persons.
In
thing like 85 lakhs of umbrellas

or
lakhs
105
one
1913 books were imported to the value of 49! lakhs of

Rupees, paper and paste-board 150 lakhs, and stationery
70 lakhs,
making
a total of 270 lakhs of Rupees.
we used 81 '37 lakhs worth of

paper produced by our own mills (1910). Our annual
In addition to
consumption
of
We
head.
this
paper
printed
is
75,000 tons, or half a
12,189
8,036 in 1900), while the
books
total
in
of
newspapers
sent through the Indian post-offices increased
millions
from 32
1900 to 56*4 millions in 1913.
in
these a large but
unknown number
per
(against
191 3
copies
lb.
of copies
Besides
is
deliver-
ed by messengers or sent by book packet or railway
The Indian demand
parcel.
for
paper
is
very rapidly
growing, and our mills are utterly unable to meet

Boots
and
shoes
are
it.
being worn, especially by the
young, in increasing numbers: in 1914

lakhs of pairs, against only 7
we imported 33
lakhs in 1900, besides
keeping an army of shoe-makers busy at work in the

different
and
towns of India.
The importation
of
hardware
doubled in value from 1899 to 1907, that

of machinery from 1903 to 1908, and that of tobacco
cutlery
from
23 V
goo to 1907.
/afe/is
of
1911.
II
Our import
Rupees worth
in
of cigarettes xosq
1902
to
51.
horn
lakhs
in
CHAPTER
V.
PRODUCTION.
economics of a mainly agricultural
country as opposed to those of a mainly manu-
The
facturing country.
An agricultural country, if
fiom the Law of Diminishing Return,
I.
tional
it
is
i.e.,
old, suffers
every addi-
dose of labour and capital produces a less proIn India, especially,
portion of goods.
owing to the
ignorance and indebtedness of the ryots, "the exhaustion of the soil
is
fast
proceeding,
becoming more and more
inferior,
cropping
the
per acre, already the lowest in the world,

still
further."
is
(Gokhale's Speeches, p.
fields
declining
178).
But
Department
recent investigations by the Agricultural
have shown that many of the old
is
and the crop-yield
have reached
a low stationary degree of fertility and cannot possibly

deteriorate, while the newly cultivated soils alone are
declining in productivity.
manufacturing country,
on the other hand, has the advantage of the

Increasing Return.
The
price
of
the
Law
of
raw material
forms only a part of the cost of manufactured
articles.
Manufactures are far more susceptible of mechanical
improvements, labour-saving contrivances, and division of labour, than agriculture
facturing
is.
country an increase of
Hence, in a manu-
demand
often lowers
AGRICULTURE
CH. v.]
INDUSTRY.
VS.
163
the proportional cost of production and secures to
the
country the advantages of production on a large scale.
On
it
an old agricultural country an
the contrary, in
of
increase
demand
raises the cost of production,
raises the price of food.
work
by
harder, or eat
sacrificing
{Mill,
p.
or obtain
less,
i.e.,
people, therefore, must

their
usual food
a part of their other customary comforts.
118).
But where the people have an un-
limited supply of virgin

in the
The
demand may
soil,
as in Canada, an increase
actually cheapen agricultural pro-
duce by causing the replacement of hand labour by

machinery.
2.
In agriculture there
on Nature,
e.g.,
fertility
is
much
of soil,
greater dependence
sufficient
absence of hail-storms and floods, &c., than

in manufacture, or in other words,
rainfall,
is
the case
agriculture
is
far
more precarious than industry.

3.
In
a manufacturing country an increase of the
labouring population lowers wages
production in the same proportion.
and cheapens
But in an old
agricultural country an increase of the population

means that more mouths have to be fed and resort
must be had to worse soil. Agriculture, therefore,
becomes less efficient and more costly in proportion
to the extension of the margin of cultivation.
Manufacture requires higher skill and greater
4.
brain-power than agriculture,

forth
to
i.e.,
the former calls
general ability and tends to raise the
workmen
a higher standard of comfort than agriculture,
164
INDIA.
[CH. \\
which keeps the people dull, conservative and without

any means of improving their lot by taking up a
Manufacturing hands are
grade of work.
higher
and
mostly artisans, and therefore form a higher

class
richer
than
than the peasants
common
who
The
labourers.
are hardly better
various branches of
agriculture differ from one another in general character
than the branches of manufacture do.
less
culture
has
enterprising
those
who
The minds
made
little
agriculturists
more or
chief
in
ready to follow new-
improvements
who have
it.
We
trades
But
new
con-
work
of
men
labourers
of drudges while the peasants lead

purity,
in
good
{Marshall^ 737-738).
actually engaged
must, therefore, discard the belief
India that factory
have
associated a
manufacture most of the inventions and
trivances have been the

in
town
less isolated lives.
townsmen and by manufacturers
subsidiary to agriculture."
in
less
agricultural
been made by landlords

deal with
agri-
have always been more staid
than those of townsmen and

paths.... The
towards the
drift
stay behind live

of villagers
But
progress because "the most
freedom and comfort.
common
are a brutalised set
an
The
idyllic
life
of
densest ignorance
and the most unrelieved toil often go with agriculture,

and certain kinds of vice prevail as much in the
country as in towns.
5.
Agricultural capital and labour are immobile,
while manufacture, by compelling the congregation

of labour in one place, makes it easy for workmen to
DISADVANTAGES OF AGRICULTURE.
v.]
[.
-escape the loss
165
from a decaying industry by going over
more profitable one. In manufacture, general

ability and even several kinds of mechanical skill
to a
(except the purely technical) are transferable from one
But the capital locked up
industry to another.
plant
is
dustry
is
often
when
entirely lost,
"
in the
that particular in-
abandoned.
Agriculture cannot be a localised industry,
6.
agriculture
area, or the addition of
more
facture, v^rhere
an increase of
i.e.^
means
of
Not so in manubusiness only means that
increase of business in
increase
fields.
more raw materials are to be brought to the same place

for being worked up and that the same machines are
to run for more hours than before.
High specialisation is possible in manufacture
7.
but not in agriculture, because workers on land are
compelled by differences of season to
raise different
crops instead of confining themselves to one branch

of their trade throughout the year as manufacturers
can do.
From
6 and 7
follows that the economics of pro-
it
duction on a large scale are not quite similar in the

case of agriculture
8.
and manufacture. (Marshall,
In agriculture,
but the opposite
is
less
to be the
efficient
in
(Marshall, p. 743).
is
very
difficult,
the case in manufacture.
even supposing the
workmen
co-operation
p. 738)'.
intelligence
same
in
and industry
Hence,
of the
both cases, labour must be
agriculture
than in manufacture.
66
It is
9.
commonly
[CH. V.
asserted that in an agricultural
country the people are benefited by an increase in

Such a general statement requires
the price of grain.
much
correction
and
modification.
First,
if
the
appreciation of food-grain has been attended by a cor-
responding diminution of the yield, the peasants are
no
better
those
(including
who do
if
Secondly,
than before.
off
employed
money wages
their
it
a loss
the
price
food.
of
Thirdly,
an undiminished crop-
ultimately enjoyed by the landowner, and the
vast majority
from
suffer
are not raised in exact propor-
the benefit of high price with

is
labourers
and pasture)
tillage
in
not receive their wages in kind,
tion to the increase in
yield
all
of
actual cultivators derive no profit
unless they are proprietors
have to pay fixed

in India.
Lastly,
rents,
if
which
is
of
the
land and
not always the case
the other necessaries
and comforts
of life appreciate in proportion to the dear bread,
as
most of them are bound to do in the long run, though

not in the same proportion,
real
wealth
is
even
the
landowner's
not increased to the extent of the
enhanced price of grain.
But where an old money
contract (such as a debt) of a fixed
amount has
discharged, the repayment under the
new
to be
conditions
involves the rural debtor in a smaller sacrifice, because
he has to part with a smaller store of grain to get the
same number
of
Rupees as
as the appreciated grain
Also, in proportion
before.
is
sold in foreign countries,
the wealth of the producing land
is
increased, provided
that
loy
AGRICULTURE BENEFITED BY INDUSTRY.
CH. vTj
imports do not also
its
rise in
In prac-
price.
tice it is often found that the high price of food grains

merely causes an increase in the money currency and
not a proportionate increase in the real wealth of the
The
producing country.
agricultural country
is,
benefit of dear bread to
an
mostly illusive in the
therefore,
The appreciation of manufactures which

not among the prime necessaries of life, does not
long run.
are
the
inflict
same wide-spread hardship on the produc-
ing country as dear bread does on an agricultural
and
land,
in the former case the
increase of the
possibly be contributed
But dear bread
consumers.
possibly even a majority,
man
because every
tion
is
possible
is
in
of expansion in the
the
a consumer of
most
by foreign
sure to afflict
is
of
home
some
population,
Over-produc-
it.
manufactures but not in
agriculture, because there
world
of the
national wealth resulting from the
may
higher price
main portion
is
demand
an almost
infinite
power
for food-stuffs over all the
collectively.
Correlation between agriculture and Industry.
No
agriculture
can be
productive which
really
is
divorced from a neighbouring non-agricultural market,

represented by
and
thriving towns
absence of such near markets,

substitute
is
the
cities.
next
In
the
available
a large export trade to foreign countries

is not very desirable, as it cannot fully
but the latter

take
the place of the former.
{List, 127).
country like India exports food,
it
If
an old
proves that her
l68
industry
in
is
a backward condition,
[CH. V.
because her
capital, and consequently population also, have not

increased sufficiently to make food rise to a higher
{Mill,
price.
cultivator
120).
"The productive power
the
of
and of the labourer in agriculture will
always be greater or smaller according to the degree

in which the exchange of agricultural produce for
manufactures. .can proceed more or
less readily
...A
nation which has already
made
considerable
advances in civilisation, in possession of capital and

in population, will find
facturing power of
its
its
the development
own,
agriculture, than the
infinitely
of
more
beneficial to
most flourishing foreign trade
can be without such manufactures, because

secures
a manu-
it
thereby
against all fluctuations to which
itself
it
may
be exposed by war, by foreign restrictions on trade,
and by commercial
crises,
because
it
thereby saves the
greatest part of the costs of transport, because [at
improvements
its
home]
in transport are called into existence
own manufacturing
industry, while
by
from the same
cause a mass of personal and natural powers hitherto
unemployed
will
be developed, and especially be-
cause the reciprocal exchange between manufacturing

power and agricultural power is so much greater, the
closer the agriculturist and manufacturer are to one
another and the less they are liable to be interrupted
in the
exchange of
of all kinds".
their various products
"A
by accidents
nation which possesses

merely agriculture and merely the most indispensable
{List, 127).
169
INDIAN LABOURERS.
CII. v.]
want
in
of the
and most necessary
first
industries,
is
division of
commercial operations among
tants,
and
powers".
of the
[List,
its
inhabi-
productive
most important half of its

124; see Jones, 51 and 145).
Special conditions of land, labour, and capital

as affecting Indian production.
Land.
In
India
agriculture
of the people, but even in
limited
greatly
(b) the
size
by
is
the
main industry
branch production
this
the ignorance of the peasant,
(a)
lack of agricultural capital, and
Owing
India.
of the ryots
to
many
Indeed,
of the holdings.
of the Irish cottier
is
(c)
the
small
of the evil effects
tenancy are to be met with in

indebtedness and helplessness
the
and the absence
of
modern manuring and
agriculture
the
production per acre has
greatly decreased and
the
soil
scientific
reached
in
many
places has
lowest limit of productivity.
its
The food
supply cannot be quickly increased to meet a
demand.
Moreover,
in
large
tracts
of
new
the country
agriculture depends for the necessary water on rainfall
which
is
uncertain and often insufficient.
In the
first
chapter
we have
considered the physical
conditions and climate of India and their bearings on
production.
Labour.
ing to
Indian labourers vary so greatly
differences
of
race
general remark about them

cations and
stamp
is
exceptions,
accord-
and province that every

is
many qualificommon Indian
subject to
though a
unmistakably evident on their character.
lyo
Our
[CH. V.
INDIA.
artisans are capable of acquiring the greatest skill
and can quickly learn almost any
however new,
art,
The
delicate or foreign to their habits.
peasants are
most industrious and patient, especially in

steadiness, diligence
and
self-reliance.
ferous climate of Bengal
of
But
in
in the pesti-
and Assam they have grown
and fond
rather languid
Bihar,
any equal elsewhere
have hardly
whose ryots
.of
The
repose.
labourers
Bombay and Upper India arestong and hard-workThough dishonest to strangers in the matter of
ing.
cheating at purchases and pilfering stores, our work-
men
our
are remarkably honest as regards money
many thousand postmen and mail
are only one
labourers, very
any
workmen
among
who
the
commonest
few cases of misappropriation occur in
All
year.
two grades above
or
runners,
except a small minority of Indian
are free from the drunkenness
and gambling
habit which disgrace and incapacitate labourers in
Europe.
(Here drinking
traditions
and not
is
the effect of caste
often
Except
of occupation.)
in tasks re-
quiring prolonged rnuscular exertion and concentration of attention, they are very patient
at their accustomed slow rate.
in general
and persevering
But Indian labourers
have two great defects
they are not
re-
and they do not habitually follow any standard

good workmanship. They are constitutionally
liable,
of
negligent and prone
cannot, in the absence
work hard,
to
of
idleness
and
supervision,
to take care of their tools
and
slackness,
and
be trusted to
materials,
and
DEFECTS OF INDIAN LABOUR.
CH. v.]
17
workmanship of which
They may be called dishonest in the
lacking steadiness and reliability and of not
to display the best standard of
they are capable.

sense
of
being
fit
be
to
ness,
of
its
supervision
in the long run, as the cost
(See
very high.
is
Hence, Indian
themselves.
seeming abundance and cheap-
and dear
inefficient
is
to
left
labour, in spite of
Speaking of our common labourers we
Movison^
182).
may say that they
have no desire of accumulation, no ambition to

to
a higher scale of
in their
work
by superior exertion, no pride
life
or generous ambition to beat
by the excellent quality
tions
rise
other na-
of their production, (such
as characterise English labourers).
mark does not, however, apply to

The Indian villagers are good at
This adverse
all of
re-
our artisans.
agriculture of the
primitive kind, but they cannot be easily turned into
factory-hands or miners.
Already the Indian mines
have absorbed the entire available mining labour of

the country.
Our most
easily available class of labour-
ers are landless villagers
unskilled
of
who form
They
workmen.
the lowest rank of
are unsuited to the needs
manufacture without a long practical
Even
the
originality.
Indian
artisans
we
see
the
wood
same
training.
singularly wanting in
In the sculptures of
temples and in our

tion
are
our old caves and
carving and metal decora-
figure
or
design repeated ad
nauseum.
Our climate (except in the uplands in winter)

makes strenuous toil impossible and fosters a love of
172
INDIA.
[CH. V.
But factory- work of the modern type requires
ease.
exertion on a stretch for hours
and hours together

Only a few races
without any slackness or cessation.
of India are capable of this sort of work.
Hence the
Indian mills have great difficulty in getting suitable
workmen and
are compelled to recruit only
certain
tribes
select
(such
as
the
among
peasantry of the
The hot and damp climate of

and populous regions of India, namely
Ratnagiri District).
the most fertile
Bengal and Madras, makes a colony of sturdy labourers

lose
their
strength
a few years, and the labour
in
supply has to be constantly renewed from the colder
and
drier
Thus
parts.
in
Bengal and Madras we
cannot have the factory type of workmen breeding
and multiplying
The weaving mills
locally.
have been greatly hampered by

class of labourers
this lack of
of
Bengal
a suitable
from among the local population.
the Assam tea-planters have to run to

immense expenditure in the recruitment and transport
Similarly,
of indentured labourers
from a distance and from the
waste of coolie-life through uncongeniality of climate.

In short, the great obstacle to the
Indian production
is
improvement
of
the fact of our labourers being
ignorant, unenterprising, immobile, resigned to their

lot,
bound by custom, and fond
labour
the
is
of
repose.
Skilled
very limited in number, in comparison with
strength
of
the population
needs of the country.
shows a lack of
What
reliability
and the
industrial
we
get usually
little of it
and
of conscientious
work-
CH. V.J
LACK OF MANAGERS.
manship which
is
the
despair
175
the
of
managers
of
industries.
Even more scarce is educated labour of the type

We have great difficulrequired in modern business.
ty in getting young assistants who will be methodical,
hard-working and reliable. Such a class has to be
created, as no Indian home or school (excepting a few
under the Brahmo and Christian missionaries) teaches
a child method and discipline. We take things too
easy.
Order or methodical arrangement has been well
called the beginning of all
children
its
own
good things
but Indian
do not learn the principle, "Everything in

place,
and a separate place
for
everything."
The long
discipline of feudalism, drill in the militia,
and above
all the orderliness of life
war,
on board men-of-
have given to Englishmen the best training of
character for industrial success
been unknown to
us.
but
all of these
The youngmen
colleges have neither the training
and
by our
nor the habits of
head
so the
sent forth
have
of a firm here has
business
assistants,
to waste
much time and money before he can discover

few among them and give them the re-
the
gifted
quisite practical training.

Still
more harmful
is
the
capacity of the highest kind.
scarcity
of
business
Indian firms, even with
the absence or illness of the
management
one head paralyses work
and
whole concern,
large capitals, are too personal in their
his death often ruins the
just
as
the fall of the general leads to the flight of an Oriental
174
moment
at the
army even
INDIA.
In an
of victory.
on the other hand, there
business,
[CH. V.
English
a chain of able
is
and a vacant place is quickly filled by promotion. In England a lad enters a business as an
He then
assistant, or even lovêr, as an apprentice.
officers,
rises step
b}?-
step
he becomes the senior partner of
till
the business to whose success he has so long con-
Hence an English fijm
tributed.
is
carried on from
generation to generation in unimpaired efficiency by
an unbroken succession
of fresh chiefs of tried ability
and
But business ow^ners
ripe experience.
seem
to
have a genius
who
managers,
way with a
title
away
in India
their ablest
usually set up a rival shop over the
colourable imitation of their late master's
and trade mark.

leaves
assistant
for driving
the
Senior assistant after senior
business with
his
heart full of
resentment at his further promotion being hopeless,
and at
his
made a
being ever treated like a servant and never

Thus, in India experience and
partner.
are divorced from capital,

greatly diminished.
skill
both
efficiency of
is
After the rupture the old business
new and raw manager, and
continues under a
affairs
and the
quickly get into confusion or decline
same time the new shop
set
its
at the
up by the rebellious expert
away for want of the

no doubt, matters will
new and more modernised gene-
after a brilliant start withers
necessary capital.
right themselves.
In time,
ration of our capitalists will
discover
how
to terms with their managers and experts.
to
come
OUR NEED OF CAPITAL.
CH. V.J
Our
men
awakening has created a
recent industrial
sudden demand
for business managers.
Experienced
numand so our new ventures are run by amateur

managers (such as lawyers, retired public servants and
of this class are not available in sufficient
ber,
others),
who with
the best intentions are unfit to take
the place of trained business men.
many
new
of our
failed.
It is
For
this reason
joint-stock companies have already
only by conducting a small concern with
man
success that a
acquires the capacity to run a big
commodern age a
But, unfortunately for us, in the keen
business.
petition of the industrial world in the
concern must be large and fully equipped
So we have been
gain success.
if it is
driven to launch forth
big companies with large capitals, though
manager
get hardly any
to run even a small firm
to
qualified
by
we can
his experience
Sixty-one per cent, of the
joint-stock companies registered in India have failed.
Capital.
is
weak.
cal
In
India the principle of accumulation
Centuries of misrule and disorder and tropi-
languor have
left
and unwilling
the future
the population careless about

to put
forth
any extraordi-
nary exertion for gaining additional wealth.

also
religions
world and
capital
been
What
India,
and disregard
Hence, there
its joys.
in
left
teach quietism
and
its
is
a great lack of
vast natural resources have
comparatively undeveloped for
little
capital
is
Indian
for the
this
want.
possessed by a few Indians
not invested in productive works.
is
Usury and to a

176
[CH. V,
INDIA.
support of the distributing agency
small extent the
Indian capitalists
of
are the only business
they do-
not like to finance production. People here will not

invest their money except for very high profits. Capital
and well-employed
well-directed
need of India.
is
the chief economic

capital
In proportion as foreign
has
flowed into India our industries have been developed
Happily a
and the country's production increased.

change
years
in
for
the
has
better
Indian capital
is
set in
during the last ten
being attracted to industries
Many
increasing proportions.
daily
joint-stock
companies have been floated, and their capital,
many
forming
raised
crores
in
entirely in India.
Steel Co.,
the
aggregate,
has
been
Notably, the Tata Iron and
which could not be floated
been fully financed here.
It
that the great middle class
now
is
in
London, has
a very hopeful sign
prefer to
invest
their
earnings in industries and banks, instead of buying

the
Public
Debt.
But most of our newly started
small factories and steamer companies are foredoomed
by reason of the insufficiency of their capital.

General prospects of Indian production.
"India needs an increase of industry and of the
to failure
effective
desire
of
change are :-(i)
accumulation; the means of the
better government, security of

moderate taxes, and permanent tenure of
(The first three of these have been gained since
property,
land.
Mill wrote about 80 years ago).
the
public
intelligence, the
(2)
Improvement
of
decay of superstitions.
PROSPECTS OF INDIAN AGRICULTURE.
CH. v.]
kindling
new
duction
of foreign
the
desires in
arts
people.
which
(3)
The
77
intro-
raise the returns deri-
vable from additional capital, and (4)

tion of foreign capital
importa-
the
which places before the people
a stimulating example and tends to create in them
new
wants, increased ambition, and greater thought
for the future."
In
(Milly p. 117).
our agriculture, the production remains scanty
and the drudgery
great, because the capital necessary
adopting labour-saving contrivances
for
But there
cultivators,
is
wanting.
scope for such machinery here, be-
is little
India
cause
is
a country of small holdings, poor
and very cheap
rural
The main
labour.
hope of Indian agricultural improvement

irrigation, (6) selection of seed,
and
(c)
lies in (a)
new
opening
lands in scantily peopled tracts by means of railways.
Manure, though greatly needed,
is
money
know
peasants already
the
too poor to apply
introduced
it.
among
Even
them.
only a question of
scientific
its
use,
but are
manure may be
The Indian peasant

grow better
hopelessly dull or lazy, but eager to
and
to accept
any agricultural improvement
of
is
not
crops
which
he has seen an actual demonstration in his neighbourhood.
He
looks askance only at theories and paper-
knowledge.
Turning
to
our indigenous industries, in the case
of articles of a purely
utilitarian
nature
our handi-
craftsmen are rapidly losing their occupation as the

articles
manufactured
12
in
factories
on modern
lines
178
(either in India or
and
way
in every
abroad) are stronger, more durable

better than those
particular,
market.
As
by the hand
and
and
the
are
for the articles of
for
the
hand
driving our blacksmiths out of the
them
artistic
is
only kept alive by tourists
{Worsley^,.
curio-collectors.
made
interest
cover only a small field
in India, they
demand
made by
European metal manufactures,
by native methods.
in
[CH. V.
But an
industry
with such an
artificial life
cannot be expected to
much
The produce
of handicrafts suffers
longer.
two great
defects,
viz.,
(i)
suddenly increased to meet a

articles
quality.
lack
same standard
quality.
new demand,
neatness,
finish,
from
out-turn cannot be
(2)
and uniformity
the
of
Speaking generally, the greatest weakness of
Indian manufacturers
out-turn
the
last
is
is
their inability to
keep to the
of excellence in production.
Increased
almost always followed by deterioration of
This result
is
sometimes due to dishonesty
but more often to inability to increase the trained

labour supply. Its effect is most irritating to the purchaser and fatal to
the
good name
of Indian
manu-
facturers.*
Manufacturing industries in India labour under

certain disadvantages
*
The
(i)
The immense
British Consul at Constantinople writes,
Indian cotton yarns would be very
and
S. E.
Europe]
the spinning
sample."
cost of setting
is
if
much
larger [in
"The
sale of
the Levant
the Indian manufacturers were reliable, but
irregular
and the goods sent are usually below
CH. v.] DIFFICULTIES OF INDIAN

repairing,
up,
The
MANUFACTURERS.
and replacing machinery
in India.
(2)
Indian labour in spite of
of
inefficiency
.179
its
apparent cheapness, and the cost of concentrating
Hence, even machinery

in
Europe.
(3)
is less
Indian manufacturers cultivate only
the Indian market, w^hich
manufacturers of
it.
productive in India than
comparatively small.
is
The
Europe, on the other hand, study
and India
the vôrld-market,
countries which they supply.
is
only one of the
many
Hence, the loss of the
Indian market would do them only a slight harm,
while
it
would
ruin a
modern industry established
India.
petition with one another
ments and methods by
and improve
have not
efficient
Indian manufacturers
and so their production is less

same business had been started in
this spirit,
than
Europe.
their instru-
sleepless vigilance in order to
cheapen the cost of production.
if
the
{Hunter, 715, Ind. Emp,,
Then, again, the

acts as
in
Manufacturers in Europe live in daily com-
difficulty of
iii.
280.)
reaching the masses
a strong deterrent upon manufacturers in India.
Very few
of
an absence
them employ
of a distributing
travelling agents
agency at
all
there
is
adequate
Hence a manufacturer in India producing commodities which would

have a ready sale among the village population, would
to the vastness of the population.
encounter the greatest difficulty in getting into touch
But the growth of cheap compartly removing this disadvantage.
with his customers.
mumcation
is
(Morison, 183.)
l8o
[CH. V.
Comparative efficiency of labour and cost of

production in the chief industries of India and
other countries.
manufacture.
Cotton
can look
One
"weaver"
Lancashire
looms at a time, against only one
six
after
The wages
loom by an Indian mill-hand.
of
former are almost thrice as high as those of the
hence weaving in India
is
the
latter,
only half as efficient as in
Other classes of our factory labourers are
England.
The Indian
similarly costly relatively to their work.
cotton manufacturer has several advantages over his
English rivals
(a)
The raw material and
the market
manufactured goods are both very close to the
for
Indian producer whose goods escape the double freight
with which Lancashire manufactures selling in India

are saddled.
(6)
Indian unskilled labour
is
cheap,,
abundant, docile, and not (until very recently) liable
But he has many
to strike like English labour.
advantages too
is
(a)
The
dis-
cost of erecting a mill here
three times as great as
in
England.
In India
(6)
capital has to be raised at a higher rate of interest
than in England, (usually
The Indian
-,o
per cent, higher.)
cotton, being mostly short-stapled,
suitable for the finer kinds of cloth
Madras.
Hence the Indian cotton
worn
in
ing
not
Bengal and
mills can produce
successfully only the coarser kinds of cloth,
in China.
is
(c)
which
sell
Fine dhotis for home consumption are be-
woven now
ment, but with
as the result of the Swadeshi

less
efficiency
and greater
move-
cost than
EFFICIENCY OF LABOUR.
CH. v.]
Lancashire,
in
(thread) used
is
and
in
many
(d)
longer in Indian mills than in

is
cannot
it
Indian labour
the mill-hands of Lancashire
if
There
is
a laxity
is
(in the
of half
they were to practise
the ignorance of the Indian labourers,
time
are
Moreover, owing to
(Keir Havdie, Apr., 1908).
strike, the
not
England, the strain upon
nothing like so great.
and freedom about the working arrangements

Indian mills) which would ensure the dismissal
it."
is
''Although the hours of labour
cheap.
the workers
our mills the yarn
of
imported from England, as
be so cheaply spun in India,

really
l8l
when they do
so ill-chosen as to cause great loss to
both the parties and a decline of the industry, whereas

in
England
intelligent
in such
minimum
strikes
leaders
way
as
are
declared
and ended by the
of
highly organised trade-unions,
to
benefit
the
labourers with a
loss to the business.
The following
efficiency of labour
India. (Indian
figures
in
the
illustrate
mills
of
the comparative
Lancashire and
Magazine and Review, Jan. 191 1,
p. 11).
1 82
[CH. V.
INDIA.
Lanca-
India.
shire.
Operatives per looo spindles
loo looms
Annual out-turn
operative,
Annual out-turn
4-2
30
4'4
90
7,736
3,700
37,740
14,000
81
13
..
a^/erage
of yarn,
lbs.
per
...
of cloth per
operative,
yds.
Average monthly wages per operative.

Rs.
Mining.
The
miner employed
and
is
is
England.
human
in
labour).
the
risen
the
Indian
Japan
Agriculture.
it is
taking
in
1904 to 116 tons in
158 tons.
Agricultural
out-turn per acre
other countries
is
average annual production per
from 89 tons
labour in India
efficient so far as the ryot himself
the
Thus
However, a steady improvement
head having
;
England
only one-fifth as efficient as his fellow in
place in India,
1913
^ ton in India, 2I tons in
tons in America (where mechanical coal-cutt-
ing plant aids
miner
average daily output of coal per
is
is
is
concerned.
very
But
very low in comparison with
the out-turn of wheat is 13 bushels

per acre, as compared with 16 bushels in U. S. A., 22
in
Canada, and 32 in Great Britain.
average yield
is
61
lbs.
In cotton our
per acre or only one- third of
that obtained in America.
SUGAR INDUSTRY.
CH. v.]
Sugar.
cane
4
is
The
in
raw sugar per
i'2 tons in India, 2 tons
about
tons
out-turn of
1 83
Cuba, and
The remarkable abundance
Java.
Java sugar crop
in
acre under
is
due to "systematic and
and frequent
of the
scientific
application
cultivation,
the
of fertilisers,
a careful selection of the cane based
rational
on the experience
best
possible
disease".
of
attention
to
new
sugar industry
prevention of cane
the
and the cane
The
fields.
is
chief
is
planted every
defect of the Indian
the sporadic cultivation
small plots of land
hence the
of
cane in
difficulty of transport-
Only huge central
ing the ripe cane to the factory.

factories
coupled with the
sugar estate in Java has generally an area
of 1200 to 1500 acres,
year in
past years,
equipped with the latest and most improved
Small
machinery can turn out sugar most cheaply.

factories with
cheap and simple machinery,
established in India, have

petition with the former.
globe where sugar

factories as
factory
is
no chance
should be
of profit in
com-
Every other quarter of the
grown,
most economical.
there
like those
is
establishing central
To
run such a big
a plentiful supply of canes
near at hand, and to secure this supply in India, for

the present at least, the plantations should be
owned
and controlled by the factories, i.e., a sugar manufacturer here must be a cane-grower also.
Unless such
an arrangement is made, great difficulty will be f^lt
in
concentrating a large quantity of cane at the fac-
tories
and passing the whole quantity through the
184
[CH. V.
within the cane-season of three or four months.
mills
it
(Cane cannot be stored up to be worked leisurely
must be crushed within 24 hours of being cut, if there
;
is
to be
no
loss of available sugar).
vate sugar-cane in
Attempts to
large blocks, of about
culti-
4000 acres
being made in only three places of India,

Assam and Burma.
The inefficiency and high cost of Indian sugarrefining is due to (i) the employment of primitive
wooden presses, which extract only 50 p. c. of the
juice, while the best steel machines of America can
The cheap hand or bullock-worked
extract 96 p. c.
each, are
viz.,
now
C. P.
steel presses
70
which we are now using, bring out about
p. c. of the
process
juice.
of boiling
refining
the
latter
(2)
The cumbrous and
the juice into molasses

into
white sugar.
costly
and then
The
direct
manufacture of sugar from juice
is the most economiany waste or chemical change of the sugar ingredients.

But this process
is unknown in India, and beyond the means of small
cal process,
factories.
and
it
also prevents
(Noel Paton's Notes on Sugar, 32
50).
National Wealth of India.~"H. D. Macleod

said, in his book on Indian Currency, that persons of
the highest authority estimated the hoarded wealth of
India at ;f 30o>ooo,ooc)And a prominent financial

organ says that the hoarding averages 11 millions
sterling yearly."
Aug. igo8).
letter,
(Sir Ernest
The Times,
in
Cable, in the Times,
ly
commenting on the above
remarks that Macleod's estimate related to the
I,
I
AVERAGE INCOME PER HEAD,
CH. V.J
185
hoards of gold alone, and did not take into consideration
enormous sums also hoarded up
the
rupees and silver ornaments by the
in silver
The
Indians.
annual absorption of about 23 million pounds' worth
and
of gold
silver
by India gives some indication
the annual increase of our national wealth.
of
Ibbetson
calculated the total value of the annual agricultural
produce of India to be 349 millions sterling, from

which we must deduct the food of our population of
294 million souls, before we can estimate the net

annual surplus or increase of national wealth. On
the
basis
records,
of
the
India's production
linseed,
crop estimates and
price
official
Noel Paton estimated the aggregate value of

rape,
of
cotton,
jute,
rice,
wheat,
tea,
mustard, sesamum and ground-nut at
336 millions sterling (191
1).
Average production and income per head*

Accepting Ibbetson's
production per head
mated
calculation
is
our
agricultural
Mulhall
Rs. 18 a year.
Rs. 40 as the average farm product per
the agricultural population only, in 1891.

of Statistics^
4th
esti-
head of
(Dictionary
ed., p. 631).
I90I
United Kingdom
British India
Pop. in
milHons
National
income
milHons
in
Income
per head
42
231
584
2-5
86
The
Mr. C.
Mr. F.
figures for the U.
K. are on the authority of
Money and
those for India
Atkinson.
{Morison, 7.)
J.
[CH. V.
on the authority of
Lord Curzon
esti-
an Indian at 2, but all

conjectural.
A later and more
mostly
are
figures
such
elaborate estimate made by Atkinson gives the average income in India as Rs. 39 in 1895, compared with
In Japan the average income has
Rs. 30 in 1875.
mated the average income
of
been estimated at between 2

in
transition of India
and ^.
from an agricultural, to an indus-
by
power manufactures, are due entirely
Foreign capital and enterEuropean initiative.
trial
country and the replacement of handicrafts
steam or
to
8s.
The development of manufacturing industries

India: The work of foreign capital. The
prise
electric
have introduced into our country many industries
and civilised appliances, which would have been

unknown, at least for some generations, but for them.
Production has been greatly
new
The
increased.
undertakings begun by the Government and Euro-
peans give employment to more than three millions

of people.
Our
industrial
development and the work-
ing of our natural resources, begun by Europeans, are
even
now mainly
1911, the
foreign
financed by foreign
capital.
In
companies registered abroad and
working exclusively
in India,
had a capital and deben-
ture of 185 crores of Rs. against the paid-up capital
and debenture of only 78*3

stock companies registered
crores
of
all
the
in India, (191 2)
joint-
many
of
FOREIGN CAPITAL.
.v.]
87
(C/.
which are also built on European capital.
Howard, ch. v.) But the paid-up capital of joint-stock
companies registered in India doubled between igoa
and T913.
Though Indian
work in increasing
praise
the
capital
is
proportions,
now engaging
we cannot too
in
rendered to our industrialism by
service
Their enterprise opened every branch of
foreigners.
modern production and transport in India, bore all

trouble and loss of pioneer work, and practically
monstrated to our richmen
fitably invested in
influence
the
highly
of
modern
foreign
capital
how
the
de-
capital can be pro-
The
industries.
educative
and enterprise on a home-
staying and conservative people like the Indians has
been invaluable.
The
success of the Europeans held
an example before our eyes which we are now hastening to copy.
If
they had not come, we, unlike the
Japanese, could not have visited foreign countries and

learnt
Our
modern
capitalists
industries for introduction into India.
would have continued
to distrust
the
idea of success being possible in the case of machines
and large
factories, just as they at first refused to subs-
cribe to the railway as
Even more
an incredible
beneficial
industrial skill, without
to
fairy tale.
India has been foreign
which native
capital,
how-
ever large, could have found no profitable investment.

In
many
of our large factories,
paper-mills,
capital
is
and
such as cotton-mills,
even modern banks, though the
mainly Indian, the direction
is
mostly in
88
[CH. V.
hands of trained European agents, and in almost

very case the machines are looked after by expert
the
European mechanics.
able to hire trained
skill
difficult to
is
capitalists
over-estimate
have
competition have perfected mechanical

business capacity,
being
in
from Europe, where centuries
work, mental activity, and
industrial
of
It
which Indian
the advantage
constant
knowledge,
and methodical and orderly
habits.
Very often European experts brought over to India
by foreign firms are induced to join Indian firms

a time.
The
cheaper than
In
this
latter, therefore,
if
respect
they had to
get such experts
much
import them directly.
our Indian capitalists enjoy an ad-
vantage similar to that of our feudatory princes,
can
after
hire the best educated Indian officers
who
from British
India without having to pay for educating this class

of
men
in their
own
dominions.
of employing foreign capital
been described in Chapter
We
owe
and
III,
(The disadvantages
skill
in
India have
pages 112 and 113).
and telegraph offices, and

Government (backed by
railways, post
cinchona plantations to
foreign capital).
Jute
mills,
woollen
mills,
paper
gold-mining on scientific lines, breweries,

modern tanneries and leather works, rice mills, saw
mills and rubber plantations (in Burma), silk filatures,
mills,
tile factories,
indigo factories with modern equipment,
and dockyards
peans.
are almost entirely
But tea and
owned by Euro-
coffee plantations, coal-mining,
flour-mills, ice-factories,
sugar factories, and iron and

DISTRIBUTION OF OUR FACTORIES.
CH. v.]
brass foundries are shared
peans
in
factories,
jute
&c.
presses,
the following
aerated- water
In fact, a variety of small
by
while many minor

though originally introduced by Europeans^
owned and conducted entirely by Indians,
are now
among them being
gins,
between Indians and Euro-
varying proportions,
cotton presses and

factories,
oil mills,
conducted
industries
machinery
and requiring small capitals, have

spread over the country, and are now owned and
managed by Indians. In 1914 we had 2936 factories,,
great and small, employing gj lakhs of men,
in
British India.
N.B.
No
factory employing less than 50 persons, no indigo
factory or tea or coffee plantation,
without mechanical power
But
if
we count
loJ-
lakhs in 1912.
distribution of our factories
presses mostly in C. P.
silk
filatures
U. P. and Punjab
saw
mills
: cotton gins and
and Bombay
Bombay, Madras and C.

as well as
the above number.
the factories of all classes in all India, their
labourers totalled
The
and no factory worked
included in
is
P.
in
cotton mills in
jute mills
Bengal
flour
sugar factories in U. P.
and petroleum
refineries in
brass foundries in Bengal
and presses
Burma
mills,
in
rice mills,
;
iron
and
and Bombay.
In 1913 there were 2588 joint-stock companies with
total
paid-up capital of
operation in India.
tures of
are
about 10
invested
in
To
crores.
cotton,
this
74-1
crores
of
Rupees in
must be added deben-
Two-fifths of the share capital

jute,
and other mills
and

I go
and eight per
presses,
The
tramways.
[CH. V.
in private railways
cent,
capital invested
in
quadrupled in the ten years from
1901
to
'"While the railway and tea concerns are
1910.
mainly
financed from abroad, the great bulk of the mill

press
companies are registered in India,"
shares
are
Indians.
not necessarily
but
and
their
exclusively
by
(Cd. 147, p. 68.)
The following
invested
capital
owned
and
coal companies
formation
is
show the
tables
in
India,
all
different
classes
of
as far as in-
(1913),
available.
A.
Exclusively under Europeans
Industries, etc.
1913
Railways
No. of
Capital
employed.
persons
Rs.
employed.
495 craves
6|-
lakhs
Annual production, etc.
34,656 miles open,

45 craves of passengers carried.
Tramways and light

railways
(reg. in Ind,),
Jute mills
7
11-6
2' 16
lakhs
Goldmines
Woollen mills
Paper mills
Breweries
28^
cvoves Rs.
3*4 crores Rs.
lakhs S3-^
71*3
21x3
4053
4600
5'i mil. Ibs-
= 61
60 mil.
= 80
1328
lakhs Rs.
lbs.
lakhs Rs.
3*6 mil. gallons

Ê v.]
OUR FACTORIES
B.
IN
I9I3.
191
Mainly under Europeans,

Capital
No. of
with
persons
debenture,
employed.
Rs.
1913
Coal mines
7*6 cvoves
"45 lakhs
Annual produc'
tion, etc.
i6'2 mil. tons

cvoves Rs.
= 57
Petroleum
refineries
Tea plantations
Banks :
12 Exchange
with
offices
28 cvoves -\-
banks
outside
567
6-6 lakhs
cvoves
277 mil. gallons
= li
cvoves Rs.
307 mil.
lbs.
...
(including)
reserve.)
India.
9,189
. .
Presidency and 15
joint-stock
i6'68 crores.
...
banks
ocated in India,
Rice-husking mills
Saw and
...
timber mills,.
4i
55 lakhs.
Flour mills
72 lakhs.
Sugar
1*4 cvoves.
Iron
factories
and brass foundries
Indigo factories (1915)
...
11,121
...
...
7,870
?
...
22,199
...
17,622
38,500 cwt.

192
Mainly under Indians.
C.
1913
Capital
No. of
with
persons
debenture.
employed.
Cotton mills
21 crores.
Ice factories
29 lakhs.
Cotton gins
&
3 croves
lakh.
<
Jute presses
34.034
Printing presses
27,886
Though we have about 3,000

by
mechanical
Annual production, etc.
244,002
presses.
>
worked
[CH. V.
factories of all kinds
power, their total output
supplies only a small fraction of India's needs.
most every manufactured

tion, the foreign
article of ordinary
imports far exceed the
In al
consump-
home produc
Nor have we made uniform progress in all the

industries started among us.
Our industrial position
at the end of 1907 was thus summed up by Prof. Kale,.
"While we have been making during the past twenty
tion.
years, very gratifying progress in the
cotton and jute,
in
the
manufacture of
working of coal and gold
mines, in tea plantation and in the kerosene industry,
we have been marking time
as regards sugar
refining,
mining, paper making, wool and!
oil
pressing,
silk
manufacturing; and in the matter of glass, leather,
iron
umbrellas, metal manufactures, stationery, carriages.
GROWTH OF COTTON
v.]
'^H. V
etc
we
are almost nowhere."
goods formed 26
p. c. of
In 1914 manufactured
our total exports, while the
proportion of manufactured articles

imports
from
was 77
worth
35^ crores
The import
p. c.
this fact proves the
I93
MILLS.
our
to
total
of machinery rose
1908, and
in 1901 to 7 crores in
growing industrial activity of the
country. Since 1909 there had been a steady decline in

the import of machinery, but the arrivals in 191 3 rose to
7f
We
crores worth.
shall
now examine
the condi-
tion of the chief industries of India and ascertain the
made
progress
Twentieth
since the beginning of the
Century
A.
Cotton Mills, {in all India)
No. of cotton mills

No. of spindles,
in millions
No. of looms
Yarn produced,
Woven
in million lbs.
goods, in million
lbs.
1901
1911
1915
197
253
261
6-5
6-6
41,800
86,200
108,000
560
625
722
116
266
352
16
...
21
i8i
48
49
Capital (as far as known), in

crores of Rs.
...
...
Excise duty levied, in lakhs

Rs.
...
of
...
In 19 1 2, out of the 266 cotton-mills in all India
^ as many
59 in
as
85
were situated in Bombay City and
The Bombay Presidency contains

our spindles and looms. The year
Ahmadabad.
three-fourths
of
1905 was one of phenomenal activity in our cotton

manufacture.
13
Since
then there has been a steady
194
decline
production of yarn
the
in
recovery in
191
But
1).
gone on increasing
first fifteen
home
the
it
the
[CH.
(with a
production
V.
slight
of cloth
has
has more than trebled in the
years of the 20th century.
We
consume at
ninety per cent, of the cloth our mills produce,
only 10 p.
of
INDIA.
c.
total
We
being exported.
import only 6
mill-made yarn used in India.
the Indian mill production of

to our imports as 69 to 100
p.
c.
In 1915
woven cotton goods was

but in igii it was as 47
to 100 (in length.)
The production
estimated in
of
our hand-looms was roughly
igo6 at
1650 million yards, but such
figures are very unreliable.
woven
cloth are
want
The
chiefedefects of hand-
of bleaching
the sun-bleaching process
and
of finishing
followed by our weavers
neither gives a fine feel to the cloth nor preserves its
strength
cloth.
hence our large foreign import of white
"Industries conducted in a small
hand are
of little
use
today,
and
way and by
it is
not wise to
encourage their multiplication.

evitably
Such industries insuccumb as soon as they are brought into
competition with the products of factory labour, and
each mile of railway extension increases the vigour

of such
competition."
Ruskins and
many
(O'Conor.)
few
old-fashioned leaders in
trying to revive our
hand-loom industry
of ordinary clothing
pseudoIndia are
for the supply
but their attempt is bound to

have the same success as an army equipped with bows
and arrows when opposed to troops armed with
CH.
JUTE AND WOOLLEN GOODS.
v.]
I95
magazine riiies and Maxim guns. This artificial

encouragement of an obsolete and doomed industry will
only cause a great loss of national capital and retard
On
our industrial growth.
the other hand, our mills
have made a phenomenal progress

from
1879 to
times,
igo8,
employed 4J times, and the
number
of looms
tively,
while the percentage
and spindles 4 and
grey and bleached goods

years,
there
was a
igoi
in the thirty years
the number of mills increased yl
that of persons
eight
to
1908.
32-
times respec-
our home production of
of
our imports^ doubled in the
But from 1907 to 19 14
depression.
Jute Mills, (British India only).
B.
1901
No. of jute mills
No. of spindles,
No. of looms,
in thousands...
in thousands
Capital (as far as known), in
1911
1915
36
61
70
331
69^)
812
16
35
39
b'gb
H75
...
cvores of Rs.
C Woollen Mills.
*
No. of mills
No. of spindles
No. of looms
lbs.
Capital, in lakhs of Rs.
In
the
1911
22,900
...
I^roduction, in million
1901
6
40,700
594
...
3'9
4*7
1151
10
44'5
271
pre-war days these mills supplied
one-eighth of the Indian
1915
demand ;
less
than
their production in
196
191 1 fetched 51
INDIA.
[CH. V.
lakhs of Rupees, while
we imported
Much hand-
worth from foreign countries
340 lakhs
loom weaving
is
done in several parts of India, but
production consists mostly of
the
coarse blankets,
and some amount
carpets,
and
sheets.
The Indian
rugs,
of shawls or
warm
mills chiefly produce
cloth-
ing for the army and the police.
D.Paper
Mills.
191
1901
No. of mills
Production, in
Capital
(as
1915
...
...
11
wiz7/zo Z6s.
...
467
59'4
68
73
50
49*5
far
as
known), in
lakhs of Rs.
In 1904 the values of paper manufactured in India
and
of that
the imports
imported were alike 61 lakhs
mounted
paper
is
steadily
but in 19 10
home
demand
113 lakhs, while the
to
manufacture rose to 81 lakhs only.

for
on the
The
increase,
public
and the Govern-
ment requirements have been increasing as rapidly.

The existing paper mills in India are old-fashioned
and inefficient. They make paper from rags, supplemented by sabai grass, and have utterly failed to keep
pace with the public demand
so they are being every

is
made from
commodity
especially,
year beaten by Europe, where paper
cheap
wood-pulp.
" our industrial
to a lack of
In
this
and economic prostration
demand but
is
to a lack of supply."
In India the paper-maker
is
due not
(Kale.)
forced to be a rag-dealer,.

OUR COAL PRODUCTION.
CH. v.]
with his
own
collecting agents in the principal towns,
whereas in Europe rag-collecting
and
I97
is
a separate industry,
the rags are carefully sorted by skilled labour
before they are delivered to the mill.
Out
of loo tons
of dirty-white rags received in an Indian mill only
32 tons were finally

In the case of
left
as available for manufacture.
wood-pulp there
quality of the paper
is
is
no such
loss
and the
more uniform.
E.
Coal-mining.
1901
igii
1915
151,000
employed
...
95,000
116,000
Production, in million tons
...
6'6
i2'7i
17
Imported, in mil. tons
...
0*23
0*29
o'i32
Exported, in mil. tons
...
0*52
0*87
o'8
No.
of labourers
"
ings
For the very hard work of driving mining headin
the
coal,
one English miner would be equal
to at least five Bengalis, but in
some
the
of
coal cutting, two Bengalis would do as
lighter
much work
One Pathan does more work in

a given time than two Bengalis (1905). In 1908
as one Englishman.
each Indian labourer employed below the ground

extracted 153 tons of coal per annum,
whereas the
average for the United Kingdom (igoy) was 362 tons,

for Germany 344 tons."
Since then there has
been some improvement in our production. Our out-
and
put per person employed underground in 191

172 tons.
was

igS
[CH. V.
INDIA.
Petroleum.
F.
Production, in million gallons
1901
1911
1915
50
214
282
84.8
47
...
Percentage of foreign kerosene to

the total
India's
consumed
in India
consumption
...
Kerosene
of
doubled in the ten years ending 1908.
27
nearly
oil
On
the average
and 191 1, our annual consumption

was 147 million gallons out of which
of the years igio

of mineral
oils
68 million gallons were imported.
But
in
our
191 5,
consumption (both home produce and import) totalled

Oil refineries have been erected
355 mil. gallons.
Rangoon and
in
oil
the various constituents of the crude
put on the market in the form of kerosene,
are
petrol, lubricating oil, fuel oil,
wax.
There
is
candles,
and
paraffin
a rapidly increasing export trade in
benzine and petrol from Burma, the figures for
19 15
being 25 mil. gallons worth 23 lakhs.

G.
Gold mining.
1901
Output, in
0.^.
Value, in m/7.
...
1911
1915
...
532,303
583,567
616,728
...
1-93
2-23
2*37
On
the average of the 3 years ending in 191 1 we

imported eight times as much gold as we produced.
Tea -plantation.
Area under tea in acres

Quantity produced, in mil.
lion lbs.
Quantity exported, in mil.
lbs.
1901
1911
1915
495,000
574,000
636,200
191-3
268-6
372
179-6
260-7
340
AIM OF TECHNICAL EDUCATION.
CH. v.]
In
1915 India supplied 71
p.
c.
199
of the tea con-
sumed by Great Britain.

The labour employed in the Indian tea-gardens
was 698,300 and the joint-stock capital was 31 crores
of Rupees, besides a vast but unknown amount invested in the gardens under private owners (1915.)
Technical
education
education concerns
itself
effects.
its
Technical
with the details of particular
The old and humbler ideal of technical eduwas to impart manual dexterity and an elementary knowledge of machinery. But an intelligent
lad can quickly learn these things by actual work
trades.
cation
(as in
our railway workshops), without having to
attend schools.
sense
Technical education in
should develop the faculties
the pupil a general
command
it
its
should
higher
(a)
give
over the use of the eyes
and fingers, and (b) impart to him artistic skill and

knowledge and methods of investigation, which are
useful in particular occupations, but which
mere
practical work cannot teach.
Practical instincts are
acquired by spending the youth in a good workshop,
but
in the
higher branches of production such instincts
should be fortified and improved by scientific training.

In
this
higher branch
the
Germans
have
made
wonderful progress, especially in Applied Chemistry,
by reason
among
of
their
association
the
diffusion
of
scientific
knowledge
middle and working classes and the close

of the
highest students of science
practical manufacturers.
with
200
INDIA.
[CH. V.
doubt many lower grades of industry can be

by uneducated workmen,
No
very efficiently carried on
and
case the benefit of high education will
their
in
But even here the indirect increase
not be direct.
of efficiency
becomes more
when educated
labourer
great, as the
is
intelligent, trustworthy,
and inquisitive.
Much of the best natural ability in the nation is born

among the working classes but the whole of it is
;
now
left
undeveloped and so
of
proper education.
want
genius spends his

is
With
the nation,
for
low-born
us a
lowly work, and thus there
in
life
to
lost
a waste of latent ability.
{MarshalU 288
292.)
The
indigenous apprentice system of India.

The Indian child learns his hereditary craft from his
father, or
is
who
appenticed to a master craftsman
is
always a fellow casteman and often a relative of the
The child picks up his knowledge by watching

workmen at their tasks, and soon learns to handle
tools well
next he begins to earn a low wage
pupil.
the
the
from
in
his master,
age and
and
skill,
this is increased
till
with his growth
his training is complete.
This
system of apprenticeship was an excellent means of

technical education
among
the
in
old days
and
very cheap, as the master's workshop

quarter of the
quickly
still
prevails
Indian carpenters, shoe-makers, &c.
come
town
to his
as
is
in
the boy's home,
own house
for
his
It is
the same
and he can
daily
meals.
But the indigenous master's teaching merely reproduces his old-fashioned knowledge and does not tend
TECHNICAL SCHOOLS
CH. v.]
towards progress.
WHY
20I
FAILED.
Hence, foreign imports are rapidly
supplanting the products of Indian hand industries,
as
craftsman
the quality of the impoverished Indian
and
(Ind.
quickly deteriorating.
Atkinson
in
Emp.,
iv.
436, Major
Modern Review, May 1907, Supplement,
30.)
Caste no doubt secures the transmission of hereditary
hut
skill,
it
also (a) hinders the natural grouping
of pupils in technical schools and
the free choice
(6)
of professions according to a boy's natural
.and
caste-elders look askance at
the
(c)
ledge and
new
tools, as
they refuse to be wiser than
But the
modern European methods
ancestors.
their
3iot
a new tool
-superior
efficiency
difficulty
introducing
of
of production into India
The Indian mechanic
unconquerable.
.adopt
aptitude,
new know-
if it is
is
ready to
and proof
fairly cheap
is
of its
has been given before his eyes.
Witness the universal extension of sewing machines
among
and the adoption of leather sewing

machines by an increasing number of our shoe-makers,
(especially by capitalist employers of hired muchis).
Technical Education in India its failure.
our
tailors,
The
is
chief
obstacle
to India's industrial
the divorce between brain and muscle.
development
The intellectual
work with the hand and hanker for a

literary education.
The artisan classes are content
to move in the old grooves, and they dislike even
dislike
-castes
i:hat
bare
which
i:he
minimum
artistic
artistic
skill
of
education
without
be developed.
Hence,
literary
cannot
or mechanical
genius born
among them
202
runs
to
waste.
Sir
INDIA.
[CH. V.
Holland speaks of "the wide
T.
gap between industry and education
in
country^
this
where practical men are uneducated and educated
men
The beginnings
are unpractical."
technical
of
education in India have been marked by uniform

failure for the following reasons
The
instructors.
from some
(a)
teachers are either
Lack
of qualified
young -men
technical (usually engineering)
who have a
very superficial knowledge of handicraft
and no experience
of trade
methods and workshops,
and who therefore attach more importance

fic
than to technical knowledge
masters
who
fresh
institution,,
to scienti-
workmen-
or pure
simply continue the habits of their craft
without any thought of improvement. The Cassanova
"The idea was
system was tried at Lucknow.
to-
induce master artisans to open their workshops in the
Government technical school, work there with their

own men and take in boys as apprentices... The only
master workmen who could be induced to come, came
on a monthly salary which they were quite content
to draw and do nothing else."
(Atkinson.) (b) Lack
of genuine students.
We
have home-staying
instincts,
and hence pupils really wishing to learn a trade prefer

the caste workshop near their homes to the modem
school situated some miles from
amidst unfamiliar surroundings.
their houses and

Through an ambiti-
ous educational ideal, these technical schools,

of
instead
attempting only the practicable and improving the
mechanical
skill of the
common
artisans,
adopted a
CII.
v.]
CONDITIONS OF TECHNICAL EDUCATION.
203,
too literary or theoretical teaching, which repelled the

children of the artisan classes.
gentleman
class
who
The few
pupils of the
joined these schools merely
came
there to receive the literary education without learn-
ing mechanics at
lead a
life
They were not prepared
all.
manual
of
toil.
"has in nineteen cases out
technical education
to
Hence, in this country

of
twenty come to mean the teaching of carpentr}^ and
who have no
smithy work to boys

to
in
intention either
become carpenters or blacksmiths or to engage

any manual occupation whatever." (Buck.) (c) The
absence of a basis of universal primary^ education,

so that our technical schools are at
to
offer
to
their
lessons
chiefly to
to
in
instruction
industry.
schools can
in
of
devoting
science
Before the course
and
themselves
art as applied
the
in
be shortened and made more
must have a foundation

in
compelled
mere rudiments of education
the
instead
pupils,
first
technical
fruitful,
we
of universal popular education
primary schools accompanied by hand and eye
training
and the development
method and mental
alertness.
of habits
of
{Atkinson).
hitherto has been that almost all the
attention,
The
result
lower technical
schools started in India have merely taught surveying
and turned out amins instead of mechanics. They are

technical in name only, and have not even attempted
to teach technique
hence they have had no effect on
;
the industrial development of the country.
The
fact
is
that in Europe factories were opened
204
first,
[CH. V.
Such
and technical schools long afterwards.
-schools arose to supply
men
INDIA.
a real need for trained work-
by the existing
felt
In India the con-
factories.
Many
verse process has been attempted.
public leaders
demand the starting of techinical schools, as

turning out of trained mechanics
into existence.
Now,
it is
clear that people
learn an art for which there
is
the
if
will call industries
no demand
will
not
in the labour
market, and our artisans cannot be induced to go
through the cost and trouble of learning the improved
form of their
European
schools with
crafts in technical
modern
while the consumers are contented
tools,
with the old-fashioned style of work done with primi-
and are not ready
pay the higher price

which alone can make better turned work paying.
For instance, ''if you show the workman how to turn a
i:ive
tools,
to
degchi (cooking pot) out of one piece (of metal), instead

of
ordinary bazar method
the
straps,
he probably could do
because
it
was
He
up copper
does not do
it".
at
Rs.
i-io
it
seer,
seer,
(Atkinson). Hence, there
a long time a lack of earnest students in our
technical schools
of
<ie^c/ii sells
no one would buy
for
of joining
could not be sold say under Rs. 2-8 a
whereas the ordinary

and so
it.
they were joined only by the failures
ordinary schools, and artisan pupils had to be attract-
ed by stipends. But
have been started
now
that
many modem
industries
a ready market
and our technical
in the land, there is
for the services of trained mechanics,
schools are getting genuine students in larger numbers.

IMPROVED CASTE SCHOOLS.
CH. v.]
Again, the keen
European
animates
In
society.
there are
the
*'five
spirit of
20y
self-improvement which
workmen
is
wanting
Manchester School of
thousand night students
in
our
Technology
who
represent
actually trade workmen, willing after a long day's toils
to
attend
night classes of their
own
free will,
and at
own expense, with the idea of bettering their

knowledge of the technicalities of their trades, and
thereby making themselves move efficient wage- earners,'''
their
while the day students, or youths learning an industry

from the beginning, number 400 only. (Atkinson).
But
in India, there
has hitherto been no careers for
the pupils of small primary technical schools,
and they
have usually been of the nature of a sham, as shown

above.
The
future
The most
policy of technical education.
successful plan
technical schools,
viz.,
is
(i)
to
have three
Lower
classes
of
or caste-schools for
improving artisans in their hereditary
crafts
and
teaching them the use of improved European tools
Technological Institutes of a middle standard^
(2)
for training apprentices,
mechanical engineers, mecha-
nical draftsmen, electrical engineers, skilled mechanics

of a
higher order,
and permanent way
inspectors,
and
(3) Polytechnic Colleges for the education of

highly gifted and advanced pupils in art and inven-
tion.
A.
Lower Technical
Schools.
few youngmen
should be chosen and taught the special craft of their
206
caste,
according
but
modem
to
[CH. V.
INDIA.
They
methods.
should then be sent forth as teachers to spread their
new knowledge among
towns, technical schools restricted

guild and teaching
its
of the caste, because a
Such
perfectly
lower
may
schools
who
attract
not be
should not however
a subordinate position.
literary
otherwise the sons of mechanics
discarded,
The
pupils should learn only
and names, work ordinary sums

principles
and work with
care
tools
of
be made the
read
hand
The
use
should
important subjects of instruction.
all
may
cannot read and write,"
mechanics trained
but highly
the
to
in arithmetic,
geometry.
of
sound training in handicrafts
a man who
these
In
education should be almost
and the simplest
Indian
to
stranger will fail
<ind
"x\
may flourish,
man and a member
a teacher's knowledge
into
will not stay.

figures
one caste or
modern, but he should be helped by special
him
entirely
a local
is
instructors trained abroad,
throw
to
distinctive industry
provided that the teacher
pupils.
In large
their caste fellows.
in
Indian
railway workshops are
illiterate
"It is
efficient).
workmen can
be given to
{e.g.^
take
well to remember that

in
a limited amount of
new
knowledge in one generation". Hence the

reading and writing
taught in such industrial
schools
lind
is
quickly forgotten by the pupils,
no use
as
they
work. Such useless

knowledge should be avoided and the time utilised
in teaching more necessary things.
It is a waste of
for
it
in their daily
SUCCESSFUL TECHNICAL INSTITUTES.
CH. v.]
207
energy to attempt the development of higher aesthetic
among
genius or inventiveness
the pupils at such
They should be taught to give up their primitive tools and mediaeval habits, and to learn
modern methods, orderly habits, and the use of improved tools, which would double their efficiency
without making them literate. (See Wallace's paper in
schools.
The Industrial Conference held at Suraty pp.

in
ment and
Emp.,
Ind.
i66
i8o.
Modern Review, May 1907, Supple-
Major Atkinson,
435
iv.
439).
Central Jails and Reformatories in India are excellent seats of
modern technical education
humbler
But unfortunately very few of
type.
of
this
their
inmates on regaining their liberty practise the trades

they learn there. Is it due to their inability to buy
modern tools or to the lack of demand for superior

workmanship ? Mere mechanical skill is being successfully taught in these
institutions
and
also in rail-
workshops under
European supervision. But

no science and are incapable of
adding to what they have been taught. They are
good animated tools and notliing else, and no invention
vvây
here the
can
men
learn
be expected from them.

B.
Of
Schools
Secondary or
we have some
Technical Institute of
middle standard Technical
already,
artisan sections of the Rurki
Colleges.
viz.,
the Victoria Jubilee
Bombay and
the apprentice and

and Sibpur Engineering
They have been very
successful in turning
out exactly the grade of mechanics, draftsmen and

208
overseers for
whom
there
These schools have a
is
useful,
[CH. V.
a great demand now..

modest, aim.
if
They
do not undertake to produce high grade engineers,

with the highest
men
education, and heads of
scientific
departments or foremen for large industrial concerns,

as there
is
no opening at present
for Indians
with such
advanced technical training.
The Schools of Art which are flourishing at Lahore,.

Jaipur, Poona and Bombay, teach the fine arts rather
than mechanics, and they have no influence on the
industrial
development of India, so far as the manu-
facture of articles of everyday use
concerned.
is
Kala-bhavan or Temple of Arts in Baroda
is
The
one of the
biggest and most popular technological institutions,,
and has
special departments for teaching dyeing, ap-
plied chemistry, weaving,
C.
Polytechnic
and mechanical technology.
Colleges.
The
highest stage
is
polytechnic to which the most promising youths of

the country are sent up.
and
fully
It is
only the most advanced
equipped polytechnics that can qualify our
youths for the highest industrial work and invention.
Here the scholars must come with a high general

education and must be distinguished by intellectual
keenness,
they are to
if
teaching imparted.
the
modern
type] require
brain development and
manipulative
skill.
the lower standard]
profit
by
the
advanced
"Manufactures and industries [of
is
a good deal of education,
intelligence, combined with

Here the industrial school [of
of no use... Successful industrial
Atkinson's report.
CH. v.]
209
and commercial competition, and a high standard of

manufacturing production, depend much more upon
adequate training of the leaders and managers
the
of our industries
workmen'
the
and commerce, than upon that of
(Atkinson).
Many
must be corrected.
common
One
delusion
of our writers believe that
technical college can turn out ready-made entrepreneurs
and persons capable
of
of authority
in
position
managing
up a
or taking
an industrial concern.
No
study of theoretical science can impart the requisite
The
qualities of such leaders of industries.
methodical
habits,
energy,
alertness
mind and adaptability which a
business
manager
of character,
of
strength
must have, can be acquired only

actual
work
instruction
in
in
the school of
Even technical
would be premature
a factory or business.
highest grade
of the
at present, as there
is
no opening
for
Indians of the
high grade or "University" type of technical educaemployers preferring Europeans for the higher
tion,
posts
and
on the ground of
reliable.
their being
more practical
*'The higher engineering courses at the
Indian universities will produce a
man who
has
less
chance of success than his technically educated and
more practical but

In
91 2
Lt.
less scientific brother.
collected the views of a

of
labour
about
trained Indians.
that, in
and Mr. T. S. Dawson

large number of employers
employment of technically
Col. Atkinson
the
"The general opinion seems
to be
prompt and regular attendance, steady appli-
2IO
in charge of delicate
is
care
constant
cation to work,
with their hands,
the
state
average Indian
in
most cases
will
not work
that
institutions
technical
[CH. V.
and supervision when
machinery,
unreliable... [Employers]
students from
INDIA.
will not observe factory hours, ask
work and
too high wages for learning their practical

generally think they
Aerain,
are not,
it
know
was found
everything."
" that certain races in India
on the average, naturally fitteci for technical

work with their hands in
work... Though willing to
technical institutions, they are
do so when they enter the
mostly unwilling to
stern reality of the
work-
shop and consider that they need only supervise."

The Parsis, however, form an exception graduates
;
of this race are willing to take
up the humblest work

"
in order to gain their practical experience.

fact well
known
is
to the practical world at large that
a man, however carefully prepared

institution,
It is
utterly useless to
in
a technical
an employer of labour
He must in all
and work up gradually
in time... Students are totally unfit for any position of
authority on leaving their [technical] institute, and
till
he has had practical experience.
cases begin at the lowest stage
must
first
of all be subjected to discipline
and learn
under practical conditions the details of the work
which they eventually hope

India there are]
tutes
in
many
to supervise... [In western
students from technical insti-
highly paid and responsible positions, but
these have been in every case
men who on
leaving
CH. v.]
their
PRACTICAL TRAINING
211
IN MINING.
have recognised the necessity for
institutions
working hard with
hands and gaining their
their
experience in a subordinate position with a low salary

at starting."
Leaving the production of high grade technical
men
to a future "
on a large
when Indian
capital
comes forward
scale to finance industry,... when
by educa-
and heredity the character of Indian engineers

becomes more reliable, full of energy, push and adaptability,..." the above two officers recommend that
tion
engineering education of every grade should be concentrated
when
possible
large colleges where the
in
lower classes can obtain the supervision of a highgrade competent
professional subject
these institutions
tical
ous,
it
is
should be undertaken at each of
"as
work is common,
and the efficiency
possible
subject".
to
more than one
Preferably
staff.
much
of the elementary theoire-
the saving in staff will be obvigreater.
have a
In a large
specialist in
Further, no certificate
or
institution
each important
diploma should
be given unless the student has gone through at least
two
years'
practical
apprenticeship in
some works,
after leaving school.
As for mining, a mine manager is trained in the

same way as a ship's captain, i.e., by actual work in
a subordinate position theoretical knowledge alone
" Unless Indians of the better class begin
is of no use.
;
as
English boys do,
can never be
mine
as
workers underground, they
managers.
Such
officers
are
ECONOMICS OF BRITISH INDIA^
212
[CH. V.
obtained almost wholly by promotion of subordinates

who have had practical apprenticeship in the mines.
The more ambitious and

acquire the necessary
mine labourers
knowledge in the
intelligent
theoretical
evening technical classes on the coal-fields, after their

day's work. Thus mere practical skill is supplement-
ed by
The
science,
in
order to form an ideal manager.
succeeds
converse process rarely
students
of
mining colleges who have not gone through the rigid

discipline of living and working in a mine, cannot
gain an efficient practical training afterwards, unless
they are prepared to work underground like uneducated
miners and acquire that vigilant care,
strict
and punctuality which are indispensable

manager."
in
method
a mine
{Holland).
Factory legislation. India being a semi-tropical

much work is done out of doors or in sheds
without walls. There has, therefore, never been in
country,
Indian factories any such over-crowding, bad ventila-
and undesirable mixing together of the sexesmarked the factory system in England before Peel's
Nor has there been, except occasionally,
reforms.
tion,
as
any severe over-working
of
our adult labourers,
as;
they are physically incapable of working strenuously

for
more than a certain period daily, even when

Even when they are
tempted by overtime payment.
present at the mill for 15 or 16 hours, they render less
than twelve hours' effective labour, as they spend the

rest of their
time in loitering about, taking their food.
INDIAN FACTORIES ACT,
CH. v.]
88 1.
21
smoking, and even bathing in the mill compound.

Children have, no doubt,
longer than
severe
been kept at work
often
they should, but such
enough
to break
down
work has not been

Our coal-
their health.
mines are not deep enough, and our miners are averse
to remaining
underground long.
India has, therefore,
been spared the horrible abuses which were revealed

in
the
English mines by the Parliamentary Commis-
(Cunningham^
sion of 1842.
ii.
ch. 21).
In fact, factory legislation in this country can pro-
perly
move on
following lines
the
(a) Restricting
female labour in order to enable mothers to attend

to their babies.
Limiting child labour to prevent
(6)
the arrest of their healthy growth,

tary conveniences and pure
(c)
Providing sani-
drinking water for the
ensuring the drainage and cleanliness of
mill-hands,
the mill premises, fencing revolving wheels and other
-dangerous machinery, maintaining safeguards against

fires,
&c.
Subjecting all factories to inspection
(d)
by duly authorised
The Indian
1
persons.
Factories Act of 1881, as
amended
89 1, defined a factory as "a premises where not
in
less
than 50 persons ordinarily work for at least 4 months

during the year, and where steam, water, or other
mechanical power
and
coffee
tions of the law.
women was
i-est
is
used."
Indigo factories and tea
plantations are excluded from the opera(a)
The period
limited to
amounting
to
11
1 hours,
of
hours,
(b)
employment
for
with intervals of
Children were defined
214
INDIA.
[CH. V.
and 14 years of age, and their

was limited to 7 hours a day, it being declared illegal to employ any person below 9 years,
or any 'child' in night- work,
(c) Sunday labour was
forbidden (except in a few cases), and intervals of rest
prescribed for men also, but adult male labour was
not otherwise restricted, (d) Machinery was ordered
to be properly fenced,
(e) The Local Governments
were empowered to make rules to regulate water
supply, ventilation, cleanliness, and other sanitary
as persons between 9
labour
matters in mills.
In
191
a fresh Factories Act was passed with
the following
new
provisions
among
others
no person shall be actually

more than 12 hours and no "child" {i.e.,
person between 9 and 14 years of age) for more than
six hours in any one day.
[In other than textile
In
(i)
employed
textile factories
for
factories the hours of children's labour

(ii)
In
textile factories
before 5-30 a.m. or after 7 p.m.

(iii)
In
textile
remain 7 a day.]
no person shall be employed
factories
mechanical or
electrical
power shall not be used for more than 12 hours in

any day. [But rules (ii) and (iii) will not apply to
any factory in which a system of shifts approved by
the inspector
is
in force.]
no woman or child is
employed before 5-30 a.m. or after 7 p.m.
[Women's working hours remain eleven as before.]
In
all factories generally^ (iv)
to be
(v)
No
child shall be
employed unless he has a
FACTORIES ACT, IQII.
CH. v.]
certificate of
age and physical
fitness
215
from a surgeon
appointed by Government, and while at work carries

either the certificate itself or a token giving reference
to such certificate.
(vi)
Managers as well as occupiers of
factories shall
be liable for breaches of the provisions of the Act.
in
in
Women
and children shall not be employed

certain dangerous works specified in section 19, or
rooms where cotton- openers are at work.
(vii)
Provisions have also been

tion,
lighting,
(Chap.
for better ventila-
purity of the atmosphere in working
rooms, supply of pure

vancy.
made
III.
drinking water, and conser-
of the Act.)
CHAPTER VI.
DISTRIBUTION.
Rent as affected by custom,
custom
is
industry.
stronger in
"The conditions
The influence
even in
agriculture
of
of
than in any other
agriculture
England, [the most competitive country in the world]

offer
a strong resistance to the

(Marshall, 743-)
competition."
the
case
to a
much
tector of the
barrier
weak
Among
strongest
lays
is
is
and with
the most powerful pro-
against the strong.
which tyranny
respect."
action of free
greater extent in India
"Custom
beneficial results.
full
The same has been
forced in
Custom is a
some degree to
a weak and timid population, the
down
expedient to relax
the
it
in
law, but he often finds
and every such

become a custom, and
practice
relaxation has a tendency to
it
every custom to become a right in the course of time.
The payments made by the cultivator to the landowner are, in all societies except the most modern
and advanced ones, determined by the usage of the
It is only in modern times and in very
advanced countries, that the conditions of the occupancy of land have been an affair of competition.
country.
In India
the occupier for the time has very
been considered to have a right

while he
fulfils
to
retain
the customary requirements.
commonly
his
holding
The
ryot
I^K
CUSTOMARY RENTS.
VI.]
vi.l
was
not, until
21
about two generations ago, usually
re-
garded as a tenant-at-will or even as a tenant by

virtue
a lease
of
he was thought to be entitled to
retain his land as long as he paid the customary rent.
Even under
arbitrary
the rent
rulers
itself
was not
openly enhanced, but the landlord's exactions were
by adding to the rent certain dues called
increased
abwabs under distinct names and separate pretexts.

one
district
different
items!)
(In
to
make
that
the
that the
fact
his exactions in this indirect
could
he
-customary rent
not,
itself.
India an effective
and the right
The
nised.
abwabs consisted of
The
thirty- three
had
landlord
manner, proves
very shame, change the
for
There was, therefore, once
in
limitation, a real customary rent,
the ryot to
of
British
till
the land
was recog-
Government, wishing to simplify
the process of collection
and save the ryots
from
harassment, has consolidated the various assessments

into one sum, thus
making
or at least a matter of
sway
thus the
of
the rent an arbitrary thing

specific
And
agreement.
custom has been broken.
{Mill,
148-149.)
In most
backward countries
all rights to
property
depend on general understandings rather than

precise
laws and documents.
ship of land
firm,
of
is
vested not in an
which one member
zamindar)
is
the
member (namely
sleeping
the
ryot)
on
Practically the owner-
individual but in a
(viz.,
the
partner,
is
the
State or the
and
another
working partner.
2l8
[CH. VI.
INDIA.
"The payment made by the working partner

economic rent at
proceeds which
firm binds
him
all,
to
but
is
In
pay."
not
that part of the gross

constitution
(unwritten)
the
is
so
far
of the
unalterable
as
custom or law regulates these payments, Ricardo's

theory of rent
is
not applicable to them.
{Marshall^
724, also Jones.)
Custom alone influenced ancient Indian land-tenure,

and its sway is still undisputed in the most stationary
and sparsely peopled parts of the country. Before
tenant were
the relations between landlord and
law-makers,
the
Anglo-Indian
rigidly
defined by
conditions of partnership betwen the two were expressed in terms which were seldom capable of
exact definition and measurement. The landlord's
share included, besides rent,
dues,
tolls,
and
obtained under each of

time,
to
another.
these
The nominal
minor imposts were
"custom rounded
protected
the
his
part to
off
the
remained the same,
rent
increased or decreased
edges of change" and
The moral
ryot.
the landlord usually
on
labour services,
from place to place, and from one landlord
to
still
certain
and the amount which he

these heads varied from time
presents,
sense of all around
protested against
make a sudden
these extra customary
dues.
In
any attempt
or violent increase in
Mughal
history
we
sometimes read of jagirdavs and revenue collectors

both temporary men being harsh and exacting to
the
ryots,
and
of the
Emperor dismissing or censuring
2ig
CUSTOMARY RENTS CHANGED.
VI.]
Abwabs abolished by one Mughal Emperor
them.
were often collected by the
provincial
governors
against his knowledge and had to be forbidden again
by a
later
Emperor.
The
petuate them.
had a
such cesses
Indeed,
persistent tendency to recur,
and custom tended
per-
to
consolidation of the peasant's pay-
ments into one money sum is a blessing k) him.

Often the money-rent remained fixed for very long
periods together
custom and public opinion gave
;
the tenant a kind of partnership in the

parts of Bengal where there has been
of population
only
the
customary share of the pro-
ducer's surplus from the land,
zamindar
is
but
term,
his
i.e.,
payment
to
the
not really rent in Ricardo's sense of the
simply
partners of a firm.
How custom
in its
those
In
and the police are strong and honest,
ryot pays
the
soil.
no great change
profits
shared between the
two
{Marshall, 727-730).
is
broken.
Custom
working than appears at
first
is
more
sight.
plastic
Customs
imperceptibly grow and dwindle again, to meet the
changing needs of successive generations.
Even
in
modern England money -rents do not invariably follow

the changes in the real letting-value of land, and, whenever they do follow, the change
ciously effected.
who
is
tacitly
and uncons-
For example, an English landlord
has a steady tenant will do
many
things that are
not stipulated for in the lease in order to retain him

this
case
while his money rent remains stationary,
his real
rent
decreases.
in
In
India war, famine
and
220
have depopulated even rich
pes'tilence
[CH. VI.
tracts,
and have
been followed by a competition for tenants

the landlords
to
who had
to offer very
re-people the land.
favourable terms
come from a
induce cultivators to
among
distance
and
way Santal peasant colomany parts of North Bengal).
(In this
nies are being settled in
At every such epoch the continuity of the former custom, as regards rent, was deliberately broken for the
{Marshall^ 73o)-
ryot's benefit.
From an
opposite cause the customary rent
now-a-days deliberately
With
benefit.
tension
of
the
set aside
increase
of
markets for food
for land has rapidly increased,
generally
become a matter
is
being
for the landlord's
population and exgrains,
and
demand
the
since i860 rent has
of contract, except so far as
customary rates are respected in the case of privileged

tenants under Rent Laws,
ment
ryots
ment.
The
and
in the case of
Govern-
by the settlement
rules limiting enhance-
when not
thus restrained by law,
landlord,
can safely defy custom. Thirdly, Anglo-Indian

tion
the
legisla-
has broken the force of custom, as described in

first
paragraph of
this chapter.
In short, the incidence of rent depends
action
of
legislation.
three
forces, viz.^
on the inter-
custom, competition, and
In the early days of British
rule
custom
was everywhere paramount, and even now the influence

oi competition is slight as between one district and
another, and a rise of prices is not immediately
followed by a general rise in rent. But as among the
same village, competition
the
of
ryots
221
THE STATE AS LANDLORD.
CH. VI.]
often ver>-
is
keen, especially in the teeming plains of Northern India.
The
rent legislation of India, as. Mr.
Emp.,
(Ind,
out,
iii.
Maclagan points
from a basis of
"starts
454),
custom and seeks to confine the influence of competiwithin reasonable limits" by maintaining the
tion
customary rights of tenants against landlords.

is
therefore
Indian
still,
^Custom
a large extent the foundation
to
of
Competition, however, strongly operates
rents.''
determining
in
rent
the
of
and
building-sites
of
vegetable farms near big towns.
Rent
lordism.
the
India
in
State
Over
the
is
as
affected
by
State-land-
four-fifths of the area of British India
sole landlord,
and the actual
culti-
vators are liable to enhancement of rent (called land-
revenue) every twenty or thirty years.
Here the State
has a monopoly of land, and competition

landlords (the basis of Ricardo's theory)
as there
is
only one landlord.
is
among
impossible,
monopolist landlord
can exact rent even from the worst land under

vation.
The
rent
is
assessed on the
cluded in a grant, and
ment
{viz.,
economic
and
whole
culti-
tract
in-
for the full period of the settle-
20 or 30 years), and does not vary, like
rent,
with the actual produce of the
field
the net profit of the cultivator from year to year.
The State-demand is, therefore, (i) of the nature of

monopoly rent, which is an element in the price of
Moreover, like monopoly rent
agricultural produce.
elsewhere,
(2)
it
may
not always be a tax on rents

222
proper
{i.e.,
[CH. VI.
on the superior tenant's net gain) but
may
encroach (and according to Ranade does frequently

encroach) upon the
The disadvantages
profits
and wages of the peasants.
State-landlordism in India are
of
the following in addition to the above

It
3.
two
often neglects local custom, because a settle-
ment by subordinate officials carrying out general

rules and obeying a central authority, is apt to be too
systematic and too machine -like.
4. Absence of elasticity in the demand and of
personal relations with the tenants, which are very
important factors in a backward and mainly agricultural country.
5.
The
State being impersonal
an ever fluctuating body, there
enhancement of
undue
bettering the peasants'

viz.,
is
and
being
and no provision for

except an extraneous force,
rent
lot,
public opinion in a far-off island.
chie's
its officers
no safeguard against
Mr. Machono-
showed how the Guzrat peasantry were

great suffering and loss through the local
stupid literalness and zeal in collection, in
inquiry
put to
officers'
spite of the benevolent general orders of the
head of
the Government.
At
first
the English
land-revenue 90 p.
gradually
its
about 50
p.
no
*
c.
Government used to take as

of the economic rent.
But
share has been reduced in practice to

c.
of the net assets.
[There
statutory limitation of the State
Saharanpur rule
'
is
however,
demand, and the
of halving the net assets has
been
CH.
NATURE OF INDIAN LAND-REVENUE.
VI.]
expressly repudiated in
Bombay and was conceded
down
for revenue settlement, the
net assets of a field (or a
of the
should be
less)
left
remaining 50
little
more or a
historically speaking,
is,
p. c.
little
as a substantial net rent to be
enjoyed by the middleman or farmer.

" the net rent
to
According to the theory
the C. P. as lately as 191 2.]

laid
223
of part of the profits of land by the
In such cases
a relinquishment
Government
land-owners, whereas in most countries
to the
the
land-
an assignment from the rent made by the

land-owners to the Government." {Indian Empire,
revenue
iii.
is
448.)
In
the
temporarily settled
parts
of
the
India,
immediate cultivators have not gained perpetuity of

The Government manages the
tenure at a fixed rent.
land like a good
Irish
it up to
what they will
itself what they can
landlord, not putting
competition, nor asking the cultivators
promise to pay, but determining for
The revenue
{Mill, 199J.
afford to pay.
is
adjusted
to the probable surplus produce of the land, after
deducting the cultivator's necessaries and his

"
place.
Thus
as between
place, the land revenue
But
man and man
in the
tricts
of equal
fertility... its
different districts
same
of the nature of economic rent.
since unequal charges will be levied in
between
rent.
is
little
customary standard of the
luxuries, according to the
is
method
two
dis-
of adjustment as
rather that of a tax, than a
For, taxes are apportioned to the net income
which actually
is
earned,
and
rents to
that which

224
would be earned by an individual
INDIA.
of
[CH. VI.
normal
ability."
(Marshal^ 730.)
The Famine Commission
of 1900 calculated that
the proportion of land revenue to the average value of
was
the gross produce then
in the C. P. 4 p.
c.
Punjab 7
Deccan 7
p.
c,
p. c.
Guzrat 20
p. c.
Madras 10
p. c.
(See HunteVy 520, Ind. Emp.^
(including water-rates.)
iv.
216. For the other side
But such estimates
see Dutt, 462, 499, Gokhale, 370).
are
somewhat
conjectural,
and are based upon the
supposition that the crop will be a normal one, which

is
seldom the case.
The Muhammadan government
theoretically claimed as land-revenue one-third of the
actual
gross produce
in a particular year,
As
levied extra cesses or abwahs.
for the
but often
Punjab
in
1908, Sir James Wilson calculates that the true inci-
dence of the land revenue in wheat land, measured

in wheat,
is
p. c. of the gross
produce, and that in
the case of all the lands of the province, after

to the crops the
income from the
adding
livestock, firewood^
timber and other products of the uncultivated areas
belonging to villages,
assessment
is
"the
present
land-revenue
well below one-sixteenth of the annual
value of the present gross produce of the land."
Rent in
India
as
affected
Zamindary Settlement. In
by Permanent
the permanently settled
INCREASE IN ZAMINDARS' INCOME.
CH. VI.]
parts
of
power
India
of
zamindar has theoretically
the
the
extracting
in the case
certain
of
225
economic
full
rent,
of privileged
classes
the
except
tenants.
power of enhancing rent has been greatly

diminished by various laws, e.g., the Acts of 1859,
Even before the passing of these
1885, and 1907.
But
his
laws zamindars did not rack-rent their tenants as a
was not always determined by
general rule, and rent
a heartless competition among starving peasants, as
is
Custom and personal

the case with
As Mill
relations softened the zamindar's tyranny.
wrote in 1848, the ryots are in a condition somewhat
the Irish cottiers.
like that of the cottiers, but different in
many
respects.
*'The payments of the ryots have seldom been regulat-
The
ed by competition.
rule
common
hood" was usually followed.

renting has greatly
have explained
(Mi/Z, 197.)
But rack-
increased since that time, as
we
before.
The income
27
to a neighbour-
the
of
zamindars increased
about
times in the course of the century following the
Permanent Settlement.
made
was
Government left to them only 10
the economic rent at the time. But now, owing
("1793)
p. c. of
When
that settlement
the
to the increase of the population, extension of cultivation,
and
rise
in
the
value of crops, the zamindars'
share amounts to 75 p. c. of the rent collected from

{Ind. Emp., iii. 448).
the peasants.
And as the total
amount now paid by

of 1793, the
the ryots
is
3*6 times the
amount
income of the zamindars as a body has
226
[CH. VI.
X 3*6 or 27 times. But the ryots have not

been squeezed to the same extent the incidence of
rent per cultivated higha has not increased 27 times
increased 7*5
or even 3*6 times in
every field during the period
a large portion of the increase in the total amount

of rent is accounted for by the reclamation of waste
The money
land.
have no doubt been enhanc-
rents
ed but not probably out of proportion to the

in
price
the
zamindars
is
he was in
not more
1793
taxed
severely
only his holding
surveyed and he
has
extra gains from
the
rise
Hence, the ryot under the
crops.
of
lost
the
is
now
more
than
strictly
chance of making
groves and
fish
ponds in
his
neighbourhood which were formerly neglected and
un assessed.
On
other hand, all classes of ryots except the
the
tenants-at-will are distinctly richer, because the
Laws
practically
priating any
prevent the zamindars from appro-
new unearned increment and exacting
the full economic rent, as

costly for the latter to
ment
loses
the
in
is
law
enjoyed
it is
extremely
make out a
courts.
by the
difficult
Where
and
case for enhance-
What the zamindar thus

ryot, who therefore pays
under the name of rent only "a share of the

the firm."
Rent
profit of
the zamindar cannot exact the
full
economic rent by litigation or force and the soil is

fertile, there is every inducement to sublet the tenancy,
and
there
prietors
are
various grades of
intermediary pro-
between the supreme landlord
who
pays
RENT UNDER 2AMINDARS.
CH. VI.]
227
revenue to the Government and the peasant
who
actually cultivates the held.
Rent in India as affected by land-tenure legisand rent laws. Most of the old families
with whom the Permanent Settlement was made,
lation
soon afterwards
their
lost
pay the revenue on the
estates as they could not
Under the Revenue
fixed date.
Law
("Sunset law") their estates were sold by

and a new race of zamindars was introduced who wêre bound to their tenants by no here-
Sale
auction,
ditary relations or old family traditions
utmost
profit
Many
of
lessly
in
out of their
sympathy
of
and generosity, and who often wished
to
make
the
newly purchased property.
them rack-rented their peasants as the

population increased and with it the demand for land.
In many estates large numbers of ryots wêre hopedefault
to
their
landlords,
so that even in
prosperous years they could not enjoy the benefit of

the
full
enough
else
harvest.
The zamindar
left
to
them
just
to maintain their lives, but took every thing
away
in
be cleared.
which could never

he did not sell them up for default
payment
Still
of arrears
as was formerly the inexorable rule of Government in

the mahalwari
and ryotwari
tracts.
How the laws of 1859, ^^^5 ^^^ 1907 have safeguarded the ryot's rights and protected him from
arbitrary
enhancement
of
rent,
has been described
on pages 123-126.
Rent as affected by the pressure of population
228
on the
soil.
the
to
the
pressure
India, the
rents
In
INDIA.
[CH. VI.
most thickly peopled parts of
of population
maximum
point,
(6)
has
and
of fields into very small holdings,
enhanced
(a)
led to the division

(c)
fostered
in-
and the consequent decreasing reand labour.

In a country where agriculture is the sole occupation of the people, increasing numbers produce an
cultivation
tensive
turn to fresh doses of capital
increasing tendency towards the partition of the culti-
vating units.
petty
North Bihar
proprietor,"
population
the effect
similar
in
*'
the
Muzaffarpur
country of the
the
density
of
937 per square mile and in Saran 853 :

of this overcrowding is that in these and
is
districts
of
Bihar,
peasant's holding
is less
the Punjab
Madras 8
is
it
is
average size of
the
than half an acre, whereas in
acres
and
in the ryotwari parts of
acres.
In Europe increase of population has been
panied by a lowering of price and

agricultural improvements
rents,
accomowing to (a)
which have cheapened the
cost of production, (6) increased yield per acre through

scientific
manuring and
provement
of the
means
of transport,
grain can be cheaply imported.

of these counteracting agencies
the
and (c) imby which foreign
selection of seeds,
In India the
first
two
do not operate, and
third has been ruinous to the
home consumer.
our population in the 19th
century has been followed by a tremendous rise in the
price of food and a great increase of money-rents,
Hence the increase
of
CH.
POPULATION AND RENT.
VI.]
though theoretically
prices are
An
extent to which higher
''the
by themselves capable
relatively slight."
(P/ersow,
229
is
126).
i.
increase of population
of increasing rents
is
not necessarily follow-
ed by a proportionate increase
of rent.
In the ryot-
wari parts of Madras the population increased by 61
between 1853 and 1890, but the cultivated area

increased by 75 p. c. and the total Government land
p. c.
revenue by 31
p.
c.
under cultivation are

assessed at a
The new lands brought
less
productive and have been
much lower
revenue for the
an acre
only.
rate,
and hence the average
total cultivated
area
in 1853 to Re. 1-14 in 1890.
fell
from Rs. 2-8
{Hunter.)

23C'
The average incidence per
settled parts
Bengal
Bihar
[CH. VI.
cultivated acre
of land revenue.
(I9I2)
Permanently
INDIA.
of cash rents.
Rs.
As.
Rs.
As.
& Orissa
Benares Divn.
Temporarily settled parts
U. P. (A{?ra)
13
Oudh
J5
Punjab
"
Madras (inch
irrig.)
Sind
Bombay
C. P.
9
TO
Berar
Assam
I r
Lower Burma
...
13
Upper Burma
...
13
(Ind. limp.,
iii-
In the
revenue represents
The
453)
permanently settled area of Bengal the land
incidence
less
than 25 p. c. of the rental.

revenue per head of the
of land
population in British India was
Re.
1-4
in
1913,
CHARACTERISTICS OF INDIAN WAGES.
CH. VI.]
23
& Mat. Progr,, 50th No., p. 27.) The Bengal

Government in a letter of June 1901 estimated the
(Moral
proportion of the rent charged by the zamindars to the

gross produce thus
Nadia and Midnapur

Backarganj,
districts
&8p.
NoakhaU and Tippera
24 Perganas
Rajshahi
13
HughH, Gaya, Cuttack

Birbhum
MuzafEarpur
...
15
usually
Europe he
(Dm,462)
India the
on his own account
vôrks
usually
is
man working
a hired
But there are some labourers
employer.
especially in the towns,
as
wage -earners
of
wages
who occupy
in Europe.
in
an
in India,
same position
Payment
among
agricultural
Usually a farm-labourer
India.
in
the
for
(Morisojiy 4.)
kind widely prevails
in
labourers
16
In
...
Characteristics of Indian wages.

labourer
9
lO
gets
from his master free meals and lodgings and a certain

fixed
portion
piece of cloth
or
He
grain.
of
a small
gift
(increasing in Bengal) a cash

to
the
free
meals.
Village
occasionally gets a
In
too.
wage
is
some cases
paid in addition
and domestic
artisans
Cash wages are paid only

and near towns, and by large
servants are paid in kind.

in industrial villages, in
employers of labour in industries.

467).
"By
far the
most important
agricultural
India]
is
monly
practised,
either
class of
Payment
Emp.^
(Ind.
in
iii.
labour [in
kind
is
com-
for the entire wages, or as
232
INDIA.
[CH. VI.
supplement to cash wages, and the supplements vary

according to the season and the nature of the employ-
The
ment.
regularity
of
employment
also
varies
nowhere conHence the statistics

of Indian agricultural labour and domestic service
(Prices and Wages in India, Ed.
are not reliable.
and employment
greatly,
is
practically
tinuous throughout the year."
But
191 2, p. 177.)
like the Punjab,
the old order
is
in
rapidly
developing provinces
and along important railway lines,

disappearing, and cash and competi-
wages are rapidly displacing other kinds of payment for labour. An interesting wages survey carried
tion
out in the Punjab villages at the end of 1909 showed

that purely cash rates obtain
villages,
in
49 p. c. of these
cash rates with supplementary allowances
kind in 48
p.
in
c, and purely grain rates in 3
p.
c.
only.
The
of the
rate of wages varies greatly in different parts

same province, according to the relative im-
portance
of
agriculture
density of population.
agriculture
is
dense
is
the chief occupation
perous (as in
the population
wages are low and remain

But where the peasantry are prosEast Bengal) or where the popu-
fertile
has been lowered by malaria and plague (as
in Central
wages
and
(as in Bihar), the
so for generations.
lation
and manufacture and the

In all parts of India where
Bengal and Bombay respectively), high
prevail.
(Ind.
Emp.,
period (especially after
iii.
464).
In the British
i860) large public
works,
LABOUR SHORTAGE.
CH. VI.]
233
canals and railways, mills, factories and mines have

raised the
demand
for labour
and with
it
the
wages
of certain classes.
In Bihar
wages are
rising through extensive inland
emigration to Bengal and Assam, and through heavy
plague mortality in recent years.

rise of
of
All over India the
wages has been accelerated and the shortage

labour supply relatively to the
the
demand has
become very acute since the beginning of the 20th

The chief causes of the shortage are (a)
extensions of railways and canals on a larger scale
century.
than before,
(b)
our
new
industrial outburst, leading
to a rapid increase of factories,
mills, plantations
and
over
and (c) the depopulation caused

Upper India and Bombay by bubonic plague, which
mines,
all
-carried off nearly 8 millions of persons in the 14 years
ending with 191
1.
"In some parts of the Punjab and
the United Provinces the mortality has been so severe

-as
to
level
disorganise the labour market and to affect the

of
prices."
No., p. 112.)
47th
(Moral and Mat. Progr.,
Malaria caused a million deaths in the
U. P. in 1908, and the same disease so severely affected

the Punjab also, that ripe grain had to waste in
want of reapers.
Recent rise in real wages. Mr.
Datta, a very able and experienced
the
fields for
Krishna Lai
officer
of the
Finance Department, conducted an inquiry (1910-13)
and submitted a valuinformation on a variety of
into the rise of prices in India
able report full of useful
34
He
connected subjects.
of
wages published
and Wages
"A
in
points out
how
[CH. VI.
the statistics
annual blue-book Prices
the
in
INDIA.
India do not give reliable information.
syce or horse-keeper is
taken as representative of
a domestic servant, but the class represented
A common
unimportant.
mason,
blacksmith are taken as types
and one
though
rate of
their
The group,
wages
is
is
very
and
carpenter
of 'skilled labourers'
published for all of them^
remuneration
is
actually far from equal.
'unskilled labour',
is
represented by only
an able-bodied agricultural labourer, which expression

itself is
No
but too vague.
discrimination has also
been made between the rates of wages prevailing

in rural
and urban
areas... The statistics are
cases wholly unreliable."
many
in
(Datta, p. i8.)
For the purpose of securing wage and price

tics
that
would
fluctuations,
into 20
serve
as
"homogeneous
studied
statis-
of
the
he has divided India (excluding Burma)

circles",
forming four additional

is
a reliable index
apart,
as
it
with the 4 great ports
Each
circles.
has
of these circles
practically
economic conditions throughout
its
parts
the
same
and may be
regarded as a self-contained unit of economic inquiry.

(Pp.
3-8).
wages
He
of each
has also very properly studied the

trade
separately instead of grouping
them under such general names

artisans," "unskilled labour" &c.
For
together a variety of
as
"skilled
the purposes of a fair comparison the annual
average
of the five years 1890-94 has been taken as the "basic

:H.
RECENT RISE
VI.]
"This
;>eriod".
a typical or normal period, un-
is
unseasonal rainfall.
As the
(P. 14).
of his very
result
nquiries, he
comes
detailed
and accurate
to the following conclusions
Wage-earners
A.
)f
235
by such exceptional circumstances as famine
iffected
jr
WAGES.
IN
of all
classes
and
in all parts
India have secured an increase in wages (during the
1890- 19 12), commensurate
period
servants
in
wage-earners
the
viz.,
jute
employed
rise
in
domestic
are
and other urban areas
cities
and
'circles"
ndustries,
with the
The only exceptions
:he cost of living.
a few
in
in
certain
Bengal, the cotton
mills of
kvorks
Bombay, Madras and Gujrat, and railway

in Southern India and Eastern Punjab. Taking
[ndia
as
nills of
a whole, the classes that have secured a
rise in their
wages are arranged below
real
iescending order of the rates of increase

'ahourers
:ities
employed
highest rise
khand, moderate
in
(i)
the
in
General
urban areas other than large
in
Punjab, IL P. and Bundel-
in E.
Bihar and N. and E.
Bengal,
very slight in N. Madras.

("ii)
Village
artisans,
Bundelkhand and Bihar

(iii)
in
13 p.
c. in
(iv)
W.
the
only 6 p.
Agricultural labourers
Punjab, E. U.
E.
in
esp.
;
P.,
c.
rise of
W.
P.,
Madras.
above 50
and Chota Nagpur
p. c.
only
Madras.
Artisans employed in urban areas other than
large cities, esp. in the Punjab, U. P.
pur
Punjab, U.
in
very slightly in Gujrat.
and Chota Nag-
236
General labourers employed in
(v)
Punjab, Bihar and C. P.
very
[CH. VI
INDIA.
in th(
cities^ esp.
Madras anc
little in
Assam.
City artisans, esp. in the Punjab, U. P. anc
(vi)
C. P.
very
little in
The
B.
real
Gujrat, Madras
wages
and Calcutta.
servants have
domestic
of
remained stationary or very slightly risen, the onl>

rise being in the cities of N. Madras, U. P., C. P.,
Berar and Bihar, and none in Calcutta, Bengal
01
Assam.
On
C.
the real
the v^'hole there has been very
wages
While othei
and unskilled) have
of industrial workers.
classes of labourers (both skilled
been more than compensated for the

a
rise in their
wages,
increase
in
wages
rise of prices bj
the men employed in
and on railways have only

prices,
little rise ir
in
industries
a few places secured at
commensurate with the
rise
liigher prices.
Among
nominal wages have
the jute-mill hands while the

risen
by 43
p.
c.
during these
22 years, the real wages have risen only 6
p. c.
were lower in 1912 than what they were
in
In the cotton mills, the rise in real
1910.
been 48
in
p. c. in
Calcutta, 30 p.
c.
Bombay, Madras and Gujrat,
India being only 6 p.

industry.)
In railway
P.,
C. P., Bihar
c.
in C. P.,
and
1900-
wages has
with a
the average for
fall
all
(as in the case of the jute
works the rate of
real
wages
W.
Punjab,
and Calcutta showing an
increase.
for India generally has
U.
in
but have everywhere else been hard hit by the
been stationary,
CH.
WAR AND WAGES.
VI.]
237
and E. Punjab, Sind, Gujrat, the Deccan and Madras

showing an actual
decline.
(Pp. 180-182, 186.)
The war has not improved
the condition of the
Indian labourer, because he has to pay
much
higher
prices for several commodities, while his nominal
wages
have
remained
practically
average wages of 19 14 were only 2

those of
stationary
p. c.
the
higher than
19 1 3, (the only rise being in woollen mills)
and there being no rise in 1915 (except in tea), though

there was a boom in the jute, wool and paper manufactures and in coal-mining in 1915.
>38
INDIA.
Comparative movements of wages, 1890- 1912,

the average of 1890-94 being
figures for real
taken as 100, and
wages being printed
the
in italics.
1895
1900
1905
1910
1912
105
102
119
113
W2
727
106
104
126
121
]f3
135
Ws
106
103
123
118
142
119
165
737
181
real.
105
122
777
]fs
163
129
174
128
nom.
real.
105
100
115
707
126
103
141
777
14b
707
nom.
102
real.
97
108
99
"9J
136
108
i3
707
Rur. wages, K. Beng., nom.
102
107
124
real.
776'
143
113
157
127
177
126
nom.
102
real.
98
119
772
128
104
149
124
73J
132
133
171
747
222
169
250
7?
103
102
116
110
128
105
140
770
146
770
106
108
116
100
106
102
709
70J
707
General average of
our for India,
all lab-
nom.
real.
nom.
Rural labour,
real.
Urban labour, 3 classes, nom.

real.
I^rge
nom.
cities
Industries, 11 classes,
Railways,
Bihar
E.
Punjab
nom.
real.
General average, Cal. nom.

real.
Calcutta Jute mills,

cotton mills,
real.
Bombay
Bengal mines,
Chota Nagpur mines
166
171
753
167
767
98
101
112
111
730
121
123
204
202
224
207
CHANGES
CH. VI.]
Movements
of
IN
MONEY WAGES.
nominal wages.
In
]'j
Northern
India the mone}^ wages of masons, blacksmiths and

carpenters doubled in the generation following the
Mutiny.
In the thirty years from 1873 to 1903, in

Bengal the monthly wages of an agricultural labourer
rose
by 39
of a syce
p. c,
mason carpenter
rise of
The
15 p.
2 to 3 p.
c.
in
470.)
Since
most
places.
In the
c.
in
Madras, 7
in
c.
c, of
an artisan
{i.e.,
the average price of food-grains).
artisan classes secured
Bengal, 65 p.
p.
or blacksmith) by 47 p. c, (against a
in
p. c.
39
by 32
an increase
Assam, 50
p. c. in
p,
in the
c.
{Ind.
1903 there has been a
Emp.,
rise of
in
Punjab,
Burma, and a decline
Oudh and Bombay
Punjab the wages
c.
of 47 p.
iii.
of
469-
wages
in
of unskilled agricultural
labourers generally doubled in the 20 years ending

with 1909, " the advance being specially rapid in the
The wages of village artisans and
last five years."
ploughmen
also
twenty years.
practically
doubled
in
the
same
{Moral and Mat. Progr., 47th No.,
p. 118.)
As regards labour in the textile
factories^ the
Royal Commission on Labour, 1892, found that wages

had remained ahiiost stationary during the preceding
years, owing to the labourers having started with
monopoly wages " at the commencement of the
period.
The Collector of Customs, Bombay, wrote in
1892 The mill hands are recruited from labourers,
small cultivators, handloom weavers, and petty crafts-
30
"
240
men,
whom may
all of
safely be said to
earnings from 30 to 200
their
[CH. VI.
have increased
by taking to mill
p. c.
handloom weavers brought down

by rail from Lucknow, Cawnpur and Delhi have found
work
the shoals of
occupation in
Bombay
mills at rates three times their
Wages
previous handloom earnings.

of the U. P.,
period,
to rise slowly but steadily
had begun
Since then in
year 1892.
been
or
little
no
and
rise,
ranging from 20 to 40
p.
many
c.
to
rise
wages
of
and
in
the
chief obstacle
fact that Indian
low standard
labourers generally are satisfied with a

of comfort
salaries
and are unwilling
much
accept
to
wages
the engineering
The
is
by the
branches there has
in others increase of
department even higher.

Condition of wage-earners.
greater
in the factories
remaining stationary for a long
after
higher
on condition of doing labour of a new or
uncongenial nature or serving in a distant province.
Hence the
of getting
difficulty
labour in our tea-gardens,

spite of their offering
marked
collieries,
and
supply of
factories,
in
high wages and regularity of
in
wages
in
many
have also ruled high. The former

of the latter,
sufficient
During recent years there has been a
employment.
rise
occupations; prices
is
not a consequence
but rather of the increased demand for
labour which our recent industrial and commercial
expansion has created.
High
prices
do not always
mean high money wages.
Indeed, in times of scarcity
wages are reduced, as the
failure of rain stops agricul-
CH.
SCARCITY AND WAGES.
VI.]
operations
tural
24
and throws rural labourers out of
work, while the scarcity increases the number of the

people compelled to labour for their food.
of scarcity
food
and famine
not accompanied by a
is
is
below the ordinary or
frequently
customary rate and... is
1898, p. 363.)
wages
subsistence
riot
labourer with dependants to support."

of
of
wages of
wages offered
rise in the
labour; on the contrary... the rate of
and accepted
"In times
in India the rise in the price
But where a
for
{Famine Com.
rise of prices is
accom-
panied by agricultural prosperity, the labour supply
and wages also
because,
owing
to the
high prices secured by their produce,
many
small
decreases
cultivators
who
rise,
in ordinary years
had
supplement
to
income by acting as day-labourers,
their
longer necessary to
do so
their
find it
no
land alone yields
them a sufficient living now. This

become very noticeable since 1906.
latter fact
{Ind.
Emp.y
has
iii.
469.)
The Famine Commission

(i) in
of calamity
effects
(2) In
way
resist
the
Bihar the class of agricultural labourers (includ-
who supplement
the profits
of
small holdings by working for wages) had in no

benefited by the rise in the price
Their wage
produce.
is
at
ordinary prices.
16
of
agricultural
barely sufficient to supply
food to the labourer and his family

sell
1898 reported that
season had largely increased.
of
ing petty agriculturists

their
of
Bengal the powers of the people to
when food
grains
Hence they have no more.
242
power
resisting
Bihar
the
in
a famine
CH. VI.
than formerly.
[But
agricultural labourers have improved their
lot in recent times,

p. c.
now
INDIA.
their
real
wages
higher than in 1890.]
191 2
being
The resources
of the
(3)
27
peasantry in the Madras Deccan, the
in
Bombay Deccan,
and the Southern Maratha country, had not improved

during the preceding 20 years. The same is the case,
many
with
the
resources
this
exceptions,
cultivating
classes
and power
in"
the C. P. (4)
In the U. P.
showed greater command
of resistance during famines,
of
but
improvement was not materially shared by the

There was no improvement among
labouring classes.
and cultivators of the country

south of the Jumna (esp. Bundelkhand, South Allahabad, and Hardoi).
(5) In the Punjab the labouring
the small proprietors
classes
were generally well
largely protected
for all
India
prices,
there
by
was
irrigation.
"Of
late
off,
as
The
agriculture
owing
years,
to
their
rule,
During the recent famine these
have shown greater power of
The skilled
number 96
artisans,
lakhs],
classes,
as
famine.
resisting
excepting the
weavers
[who
have also greatly improved their
incomes and their style of living."

363).
classes,
standard of comfort and expenditure has
also risen.
high
has been a considerable increase in the
incomes of the land-holding and cultivating
and
was
general conclusion
(Report,
pp. 361-
Since 1905 even unskilled labourers have been
earning higher wages.
There are only three blemishes in
Bombay
factory
LABOUR SUPPLY INADEQUATE.
CH. VI.]
labour,
for
viz., (i)
several mills keep the
over two months,
and
workers,
the
(2)
who
wages
in arrears
housing of the
residuum of mill-hands,
(3) the floating
usually 25,000 persons,
evil
243
get irregular
no em-
or
ployment and wander from factory to factory

haunt the taverns.
(Royal
Foreign Reports, Vol.
11. ,
The condition
rise
of
prices
Commission on
1893.)
of labourers in igo8, after the sharp
since
1905,
upwards with the demand

in
Punjab, the C.
decline in
W.
P.,
wages
tural labour in
thus described in the
is
Moral and Mat. Progr. 45th No.

the supply
or
Labour,
High wages tending
for labour still in excess of
Bengal, Darjiling tea-gardens, the
Madras, Sind and Bombay, (with a

in E. Bengal)
Ahmadabad,
shortage of agricul-
the U. P.,
Bombay, and
Madras, of coolies in Madras and Sind, and of skilled

labour in
W. Bengal
industries.
Even
in
19 10,
in
spite of lower food prices, the high wage-level of 1907-8
was generally maintained and

continued to exceed the
the
supply
demand
all
for
labour
over
India.
^'Wages show no sign of returning to the level customary a few years ago, but are still tending to rise"
(U.
P.).
"Customary
rates have given place to comand the [Punjab] labourers move freely
more remunerative employment." {Moral
petition wages,
in search of
Mat, Progr., 47th No. p. 118). The increase in the

real wages of the agricultural population, especially
<&
the small cultivators,
is
proved by the fact that they
are clearing themselves of debt very markedly in the

244
INDIA.
[CH. VI.
Punjab and to a lesser extent in Bengal and Madras.

"Food, clothing, houses, and utensils all show an
improvement." (Punjab, 1909).
Prices.
Before
the extension of railways,
many
provinces were isolated from the outside world, and
hence prices varied greatly from province to province
and even from
same province.
same place were
district to district in the
The annual
fluctuations even in the
very wide.
But railways are tending to
all
level prices
over India, while the action of big speculators
(who have now begun
to influence the Indian market)
tends to limit the range of the annual oscillations of

price.
About i860
account of
there
began a great
rise in prices
(i) the large influx of silver into the
for the railways
and public works undertaken
on
country
after the
Mutiny, (2) the rapid growth of India's export trade
and new industrial
activity,
and
(3)
the high price
war in America.
If we start from the year 1875 and take the prices
ruling between 1871 and 1875 as our standard and
fetched by Indian cotton during the
consider the average of every 5 years, we find that the

general average of the prices of seven kinds of grain^
viz.^ rice,
wheat, jawar^ hajra, ragi, gram and barley,
rose
fell
by 25
p. c. in
1876-80,
to the old level in 1881-85,
rose
by 21
p. c. in 1886-90,
rose
by 35
by 64
p. c. in 1891-95,
rose
p. c. in
1896-1900,
CH.
FOOD GRAINS
VI.]
WHY DEARER.
by 37
by 91
p. c. in
igoi-1905,
rose
p. c. in
1906-10,
rose
by 93
p. c. in
1911-14.
rose
245
more than reDuring most of these periods there have

been famines in some province or other, which raised
Thus
the rise of 1876- 1880 has been
tained since.
the prices of food grains to a very high level through-
out India.
except rice
But between 1881 and 1890 all the crops

were good, and hence the average price of
was low during the first half of the decade.

But from 1886 onwards, prices rose rapidly, though
grain
the export of grain
was not
larger than before
only a few provinces were visited by scarcity.

reason of the
silver
1900
rise
was probably
and
The
the heavy import of
and the increase of the currency. From 1891

we had prolonged drought and famine
different parts of India.
strong Indian
demand
to
in
for
was accompanied by large exports, while there

was an unprecedented exportation of wheat owing to
rice
the failure of crops in Europe.
These circumstances
raised Indian prices to the highest
known
point, (the
famine-level of previous generations,) and all parts of
India have been affected by the

Prices (especially of rice
for four years after 1900.
increase of price.
and wheat) declined steadily

But in 1905 began a sharp
and rapid rise, which was accentuated in 1906- 1908

by the wide-spread failure of crops in N. India, and
the famine-level of 1897 was exceeded.
Successive
good harvests lowered prices generally in 1909 and
246
still
further in 1910
but a strong demand from China

In
arrested the fall in the price of rice.
autumn crops
mount,
this
rainfall,
and the price
movement being
demand.
export
191
and western India
in northern
from defective
[CH. VI.
suffered
began to
of rice
accelerated by a strong
and Wages,
{Prices
the
In
191 2.)
ed.
19 1 2 the monsoons partly failed in Bihar and Gujrat,
and
prices sharply rose in
both provinces, especially

prices
of
grain
mounted again, and reached a maximum
in
19 14,
after
September.
with a sharp
RICE
After
fall in
191
the
19 16.
remains extremely dear, because
port has greatly increased, while
its
(i) its ex-
production has
not extended in the same proportion
(2)
the high
price of jute has led to rice-fields being devoted to
its
and the area under rice

Bengal and Bihar, the chief pro-
cultivation in Eastern Bengal
being contracted
(3)
ducers of rice, have passed during the present century
through several seasons of flood and drought

habit of eating rice
is
spreading to
many
80
In normal years,
p. c.
Burma can
and India proper only
(4) the
races of India
which formerly consumed other kinds of

now eaten by five times as many persons
wheat.
grain.
It is
in India as
spare for export
2 p. c. of the rice
which
they grow, the remainder being required for internal

consumption. " It seems that India proper is gradually
ceasing to be an exporter of rice and approaching the
stage
when
it
regularly from
will
have
Burma and
to
obtain supplies of
other countries.
It
it
should

WHEAT EXPORT.
INDIAN
CH. VI.j
247
be no wonder, then, that the prices of rice in India

should be rising higher and higher."
"
The demand
for Indian rice in foreign countries
always fairly large and the prices in India depend

more on the Indian supply than upon fluctuations in
is
the foreign demand."
The
to
{Datta, 36, 11 2- 114.)
cultivation of
seasons India
is
WHEAT
demand
meet a strong
in
has greatly increased

Europe.
In normal
able to spare about 15 p.
c.
of its
During a wheat famine in

India, the consumers of this grain eat rice or some
other grain, but hardly any foreign wheat is imported,
because (unlike rice which can be imported from
yield of
wheat
Burma
close at hand), the only countries
"
for export.
send wheat to
vis.,
us,
which can
Russia, U. S. A., &c.
are
" In famine years, therefore, the rise in
very distant.
the price of wheat
is
proportionately higher than the
rise in the price of rice."
Indian wheat does not compete with foreign wheat
Europe as a normal food supply, but is required

there only when the foreign supplies to Europe are
in
Hence the export
insufficient.
to
Europe
is
of
wheat from India
subject to violent fluctuations resulting
from variations in the out-turn of those foreign countries which normally supply Europe, and not from the
"The European decondition of the Indian crop.
mand
therefore,
on the price
"
The
exercises a very important influence
of Indian
price of
wheat."
wheat
in India has
been rising in
248
[CH. VI.
INDIA.
The
recent years, in spite of an increased production.
demand
internal
for
wheat
is
increasing and, with the
growing prosperity of the country, wheat
replacing
is
the cheaper grains in the dietary of certain classes " in

{Datta, 36, 114- 116.)
India.
The
by
is
price of Indian cotton
governed
is
the world's crop than that of India
now more
itself,
as India
the second largest grower of this fibre in the world.
Jute
a monopoly of India, and
is
its
price in the
world- markets ought to depend mainly on the out-turn
But the area under
in India.
in
different
because
when
jute,
and
price of jute has,
vice
low and rice is

place more land under
versa.
dear, the
rice
than
Hence, since 1903, the
on the whole, depended more on the
demand
world's
the prices realised,
jute prices are
Indian cultivator will
under
this fibre varies greatly
years according to
for
it
than on the Indian supply.
(Datta, 121-123.)
The
price
of
hides
and
skins
in
India
is
solely
governed by the prices ruling in the world-markets, as

India
is
supplying them at an
increasing rate, the
value of our exports of this commodity having risen
from 100
There
in
is
in 1890-4 to 164 in igo6 and 159 in 1911.

a greatly increased supply of hides and skins
famine years (with a lowering of prices in India),
followed by a decrease in supply in subsequent years

as a reaction from
before.
the exceptional loss of cattle-life
FOOD
&
NON-FOOD CROPS.
Area
Area
Export
British
under
under
of rice
India
rice
jute
249
Area
under
Area
under
Export
wheat
cotton
wheat
of
mil. acres mil. acres mil. cwt. mil. acres mil. acres mil. cwt.
1901
70
2-2
34
i8-6
10-3
7*3
1902
71.6
2'I
47'4
i9"6
ii'i
10-3
1903
69-6
2-5
45
23-6
11-9
25*9
1904
73'5
2-9
49'4
23-5
13
43
1905
73'4
3'i
43
22-4
13
187
1906
73*5
3*5
387
25'i
137
16
1907
75'9
3'9
38-2
i8-4
13-9
176
1908
72-8
2-85
30-2
21-2
12*9
2*1
1909
787
2*75
39'2
227
13-1
21
1910
78-5
2*93
48
24-4
14-4
25'3
1911
76-6
3*1
52-4
25
i4'5
27-2
1912
787
2*97
55'2
23-8
14-1
33'2
1913
75*4
2-9
49
22*6
15-8
24
all India all India
1914
1915
76-1
...
3'35
31-2
32
24"5
2-37
273
30
17*9
13
<
!5o
coin
<M
en
Tf Tj-tOlO
C^
t>.u-)
lOvO
roco
rh rh
-t-
vO -û-> Tf
00
en
INDIA.
[CH. VI.
I>H
cnmcn
en
01
00
en
01
en
Tt-HH
Tl-
en
UO
U-)
01
01
00
01
01
01
01
en
M
O
COCO ThTh
^
^
v)
lOOO
in
to
IT) u-)
en
vo
Tt-ThThTh
01
COM H.
Th în
en
u->
8^
00 00
rn en en
en
en
c>i 01
vO 00
en
en
cx)
en
01
01
CO vO
00
en
i-t
01
UOOO
CO
to 01
en en
en
en
01
01
0<
01
-0
-^
l-l
01
01
01
en CO
t}-
t^c
CI
c<
00
CO
in
w cnm
01
c^
ôi
in
C^vD
en
0<
01
0*
vO c^
l-l
M
(
l.= o
M
en CO
'-^
rn
en
en
*o<
*en
01
*M
01
01
a,
t/5
^.
(11
p,
pC.y o o
"
00
t-
Tt-
Th r^
^00 Vo
r-
v'
il^^-^
00
^fOTh
^ ThUO
0> -^
00 en en
.cC
-S^
ft;
--i
^ 2
o3
tJ
2.
.
03
03
bX3
<
cud.*
PQ
DfScJ
It
ou
251
COMPARATIVE PRICE STATISTICS.
Index numbers of prices during the 20th century,

the prices
of
1873 being taken as 100.
Index No. for 28

Year.
Index No. for 1

articles
imported.
articles
sumed
India or
conin
ex-
Index No. for 7

food-grains
(retail prices.)
ported.
1901
96
116
157
1902
86
"3
141
1903
88
103
126
1904
93
104
117
1905
96
116
147
1906
105
139
179
1907
116
145
180
1908
106
151
231
1909
99
133
195
1910
109
127
168
1911
113
136
161
1912
117
145
189
1913
117
154
199
1914
114
160
222
1915
Taking
the
average of 1890-94 as 100, the movements in
the
Fluctuations of prices in India.

252
[CH. VI.
Indian prices of different groups of articles have been

in the
following proportion
Cereal
food Sugar.
grains.
Cotton
manu- Metals
factures.
Hides
Building
materials
and
skins.
General
average
of 13
groups.
I89I
99
100
96
98
99
95
98
1892
no
98
95
100
99
96
103
1894
95
lOI
102
104
102
109
100
1897
148
lOI
98
105
109
109
121
1900
134
104
108
137
116
115
122
1904
97
96
121
113
125
141
106
1908
168
106
121
121
136
150
143
19II
126
109
145
119
146
159
134
1912
143
III
^37
128
149
172
141
"The
steadily
The
general piice-level has gone on increasing
throughout the
largest
increase
whole
period,
1890- 191 2.
has occurred in the last eight

RANGE OF PRICE INCREASE.
CH. VI.]
years"
(i.e.,
253
Taking " smoothed " averages

preceded by four and followed by
1905-12).
(ij/^:.,
years,
for five
one), the increase in the prices of all
commodities taken
together (above the basic period, 1890-94) has been

as follows
The
8p.
1895-99
...
1900-04
...
12
1905-09
...
31
1910-12
...
36
c.
1905- 1909 were an "era of famine

prices without famine" except for a crop failure in N.
five years
India during
more recent times prices have

return to the old levels.
Taking
But
908.
shown no tendency
to
in
the average of 19 10- 12, the increase in prices above
those of the basic period was,
and raw
jute 58 p.
c.
hides 65
p.
c, raw cotton
each, oil-seeds 49 p. c, building
materials 45 p. c, food-grains 30 p. c, cotton cloth

31 p. c, and metals 22 p. c.
The
increase
upwards
in
in
Karachi,
has ranged from 40 p.

Bundelkhand, Berar, Sind,
prices
c.
S.
N & W.
Agra Provinces, Punjab, and

Deccan
and between 35 and 39 p. c. in Bihar, C. P.>
N & E. Madras, Bengal, Chota Nagpur, Gujrat and
E, Agra Provinces.
The average increase for all
Madras,
India since 1890
is
38
p. c. {Datta, 29-47).
Causes of the Rise of Prices in India.
Mr.
Krishna Lai Datta in his interesting Report on

subject (Calcutta, 19 14) attributes the rise to
of
causes,
viz.^
world-factors
two
this
sets
and causes peculiar to
ECpNOMICS OF BRITISH
254
India.
The
world-factors
of gold,
(ii)
development of
are,
INDIA.
(i)
in
increased supply
credit, {in) destruction
wealth due to recent wars, and
armaments
[CH. VI.
increase
{iv)
and
European countries
of
in
consequent
devotion of more money and labour to non-productive

work and military training.
The causes peculiar to India are the following,
(Burma excluded)
(i) Shortage in the production of food-stuffs compared with the increased demand* (a) ''Production has
not kept pace with the growth of population in recent
years." (h) Substitution of non-food for food crops,
e.^.,
during 1894- 191 1, while the population increased by
by i"9
and jute together by 34 p. c, and the
food-grains from India increased by 21 p. c.
4'2 p.c, the production of food-grains increased
p.c, that of cotton
export of
during
1900-1911.
Deficient
(c)
unseasonable
or
wide-spread famines in 1891, 1896, 1899 and

with local failures in other years the cumulative
rainfall,
1908,
which must have been very
effect of
rejects the theory that the
declining in fertility
owing
and shows how virgin
soil
productivity in
to a level at which
Datta, 68-73.]
up
[Mr.
Datta
to uninterrupted tillage,
attains
years, but in 5
it
great.
Indian soil has been steadily
to
its
maximum
more years
declines
maintains steady for centuries.
Inferiority of the
new
lands taken
for cultivation.
(2)
outside
demand in India and the

The purchasing powers of certain
greatly increased
world.
CH.
VI.]
classes
(such as jute, cotton and
increased
extent.
CAUSES OF HIGH PRICES.
in
the
255
wheat growers) have
20th century to an extraordinary
The town-population, with
more
its
habits of spending, has rapidly expanded.
growth of the general prosperity
the
the standard of living
with
it
the
demand
liberal
Owing
to
of the country,
has markedly improved, and
for internal
consumption.
(3) Extensive export, due to (a) increase in
com-
munication between India and foreign countries and

within India
itself, (6)
decrease in the cost of transport
railway fares and maritime freights), bringing
(i.e.,
India closer to the world-markets.

(4) Increased
credit in India,
circulating
cumulative.)
of the
monetary and banking
facilities
and
and an increase in the volume of the

(The effect of new coinage is
medium.
In
18
the
years
before the
closing
mints to the free coinage of silver the yearly
average net coinage of Rupees was 7*51 crores and

the hoarding, exportation, melting or waste otherwise
was
5 crores, leaving
to the currency.
an actual addition of 2*51
crores
In the 18 years following the closure
of the mints, 5*66 crores of Rupees have been annually
coined on an average, but only 2*37 crores have been

wasted, leaving a net addition of 3*29
total circulating
medium (Rupees and
crores.
The
currency notes)
increased by 64 p.c. between 1890 and 191 2, but this

increase has not been
ness.
more than the
increase in busi-
(Dattaj 51-96, 127-129, 188.)
Mr. Datta concludes that the
rise of prices is likely
256
[CH. VI.
In the world-markets,
to be permanent in India.
" prices are almost sure to continue to rise in the next
decade or two, probably on the average of 2
annum."
(P. 135).
p.c.
per
This rate will be greatly exceed-
ed in consequence of the present war.
The above
Mr. K.
by
ed
local causes of high prices were assignL.
Datta in his Report published in
1914 but it is interesting to observe that all of them

were given on pp. 213-219 of the 2nd edition of this
book, published in March, 191 1. It is, therefore, un;
necessary to reproduce
my own
words
in this edition,
which
except the following paragraphs
give
new
illustrations.
"On all sides we see that cultivation is extending,
and
in the older provinces resort is
lands,
i.e. J
by bad
being had to worse
lands naturally less fertile or more affected
seasons.
In rural Bengal
and Bihar
this land-
hunger of the increasing population has taken an

acute form
hollows are being
filled
up and even the
beds and banks of old and dried-up tanks are being
This resort to worse
ploughed.
soils
has diminished
the proportion of return from land, and the additional
food supply
is
being raised at a greater
same time many people
Nagpur) have begun to eat
and wheat.
cost.
(especially in Bihar
At the
and Chota
rice in the place of millets
This increase in the
home consumption,
coupled with an undiminished export must raise prices.

2.
silver
The
in
closing of the mints to the free coining of
1893
artificially
raised the value of rupees

CH.
INFLATED CURRENCY,
VI.]
above uncoined
WHY
257
Hence, after that date the
silver.
tempted to come
rupees hoarded in India have bên
into circulation, thereby counteracting the restriction
This
of the coinage.
is
evidenced by the fact that,
though the Government has been long withdrawing

from circulation the rupees of William IV. and those
of
the
year
1840,
these rupees in
were hoarded
ly
we
still
get in the bazar
went
of
a fresh condition, showing that they
for
a long time and have been so recent-
brought into use as not to be worn at
fact
many
This
all.
to counteract the effect of the closing of the
mints in restricting our silver currency.

Before 1893 rupees were freely melted back into
3.
silver for
making ornaments,
especially in the villages
and smaller towns, and thus about 3 crores

were annually withdrawn from the currency.
that the rupee
melting has ceased.
after
our actual currency and has
To
1893
its effect
is
an addition to
causes assigned by Mr. Gokhale,

add the following three
Owing
am
to the development of industries,
money has been thrown

the last decade.
into the Indian
increased of late.
much
market during
Both the combination and move-
of indigenous capital in the country
Competition
has greatly enhanced wages

17
this
in raising prices.
these
inclined to
it,
Our currency is now unautomatic.
Every new rupee coined
ment
But now
a token coin containing only two-
is
the silver bullion that can be bought for
thirds
I.
of rupees
among
have greatly
the
new
firms
wage-earners (and some
258
men
professional
money
in
too)
now have a
hands.
their
has markedly declined.
now make
them
in
it
[CH. VI.
INDIA.
greater quantity
of
At the same time hoarding

Our upper and middle classes
a point to invest their savings, or deposit
banks which has the same effect. We conchange in our society. It
stantly see instances of this

is
how
surprising
little
At the same time that investowing to the spread of
keep in their hands.
ment
cash even well-to-do people
replacing hoarding,
is
industrialism, capital
is
in quicker circulation
than
ever before, which has the effect of multiplying
its
Financially India has become one country
volume.
instead of being a group of mutually distrustful

isolated provinces.
An immense amount
of
and
Indian
capital has been subscribed to the joint-stock
com-
panies started during the last ten years.

2.
There
is
a greater readiness on the part of the
people to spend their money.
The standard
of
comfort
has immensely risen (especially in the vast middle

class),
and even the peasants and town labourers are
not untouched by the change.
The
old instinct of
hoarding, born of centuries of public disorder and lack

of careers, the old abstemiousness taught
religion,
have recently given place to
good things
of
life.
by an ascetic
a love of the
Indeed, certain classes are dis-
playing a reckless and improvident fondness for enjoy-
ment, preferring temporary stimulation or exhilaration

to the nourishment of the
the home.
body or
.the sanitation of
Thus, while the productive investment of
WAGES
CH. VI.]
&
PRICES INTERACT.
259
savings has greatly increased, that part of the invested

is spent in wages quickly gets into
by leaving the hands of the wage-earners.
big
I think that in Calcutta, Bombay and other
centres and at large public works, wages were raised
which
capital
circulation
first,
demand
through increased
and this rise

on the part
of wages, coupled
of the wage-earners,
where custom
produced a
still
influences
by the
extent, the labourers were partly influenced
news
increase of
of
appealed to the
their
The
wages
and
in the big centres,
rise of prices there
own wages
3.
rise of
and inland
wages to some
In smaller towns
prices as the consequence.

places,
for efficient labour,
with greater lavishness
as a plea for raising
too.
"internal drainage"
of
the country has
been completed by the construction of branch and

connecting
often
The
railways.
great
lines
are
mere
connecting the big towns and ports, and
arteries,
passing through sparsely inhabited country in
order to
make a
short cut.
But
in the last
lo or
15
years the net-work of railways has covered every part

of the country.
a,
man may
There
prices throughout India
duce
left
is
no isolated nook
left where
Hence the general rise of
nowhere is the surplus pro-
live cheaply.
;
standing to lower local prices.
Potatoes
are supplied to the military station of Darjiling from
Chapra and Arrah

During the Eastern Bengal floods
the river-side villages of

Bihar.
Dacca merchants imported
rice
from Patna.
in far-off
of
1905,
There
is
260
now a
INDIA.
wider movement even of indigenous traders,
communication
partly from the increased facilities of
and
[CH. VI.
and
partly from the extension of horizon
loss
of
conservatism which time and education have effected."
The economic
prices of Indian
who
those classes
classes
effects of
only
if
high prices. Enhanced
produce can naturally benefit only

raise
the
the produce,
and even such
commodities other than home
produce which they consume appreciate in a
To
degree.
prices
effect
all other classes of
must be an
may be
evil
in
the
lesser
community high
themselves, though their
counteracted by other economic factors,
such as increase of industry and commercial enterprise
and extension of public works and building, which

lead to an enhanced demand for labour and higher
wages. Our wage-earners have benefited in recent
times only in proportion as the development of the
country has been not agricultural, but manufacturing.

Therefore, Morison's view that dear bread
to India as
basis.
It
is
beneficial
an agricultural country, has a very slender

again,
is,
in themselves
difficult
to
see
how
can benefit the trading
high prices
classes,
as
is
Moral and Material Progress^ 49th No.)

124, because the cost-price and cost of living have
asserted in the
p.
also increased with the sale-price.

ity of the agriculturists
leads,
The greater prosper-
no doubt,
to
a larger
turnover of business throughout the country.

If
prices
countries
had
and not in foreign

economic consequences of it would
risen in India only
also, the
26
BENEFITED BX HIGH PRICES
CH. VI.]
have been
Contraction of exports from India and
(a)
stimulation of imports into

better prices
balance of
here.
in the
it
This would
have turned the

and caused a crisis in
trade against India,
a debtor country
hope of securing
like
ours,
(b)
The gold
in
India
would have been drained away to foreign countries

supplying goods to us but buying
The Indian
(c)
in
much
of production
cost
sympathy with the enhanced
less
from
would have
cost
of
us.
risen
living,
till
Indian industries would have ceased to find a market

abroad.
these
x'Vll
would have been temporary
as our prices have risen along
effects
with world-prices,
have not suffered any of these
but
we
evils.
How different classes in India have been affected by high prices. The
are
(a)
Landoivners
classes that
have benefited
the permanently settled
(except
zamindars and the taluqdars of Oudh, who cannot

enhance rents easily or rapidly), (b) Peasants holding land directly from the State for long periods (in
the
mahalwari and ryotwari
land has risen with the

ture,
where,
(c)
The
labouring classes
wages having
tracts).
The
price
of
rise in the profits of agricul-
risen
are better off every-
much more than
the cost
shown
above].
The only exceptions to such improvement
are domestic servants in large cities and other urban
areas in a few circles and wage-earners in certain
of living, [through non-agricultural causes,
as
industries, such as the jute mills of Bengal, the cotton-

262
Bombay
mills of
works
VL
Gujrat and Madras, and railway
and
in S. India
The
[CH.
classes that
E. Punjab.
have been adversely affected by
the rise are
Permanent
(0 Zamindars and taluqdars under the
who cannot
settlement,
or quickly,
securities.
(ii)
(Hi)
prices with the
raise their tenants' rent easily
Holders of
Producers
increase
Government and other
who cannot
in
the
cost
charge higher
of production.
(iv) Lawyers, doctors and other professional classes

whose income depends on customary fees, (v) Government servants and men in private service with fixed
salaries,
Persons dependent upon fixed pensions^
(vi)
or allowances,
industries
(such
huskers)
who
products
and
(viii)
{vii)
Persons engaged in small hand
as
indigenous weavers and paddy-
are unable to
therefore
compete with machine-
cannot
raise
their
prices.
Priestly castes, scions of old families, &c.
who
have been unable to accommodate themselves to the

changing order of things, and can neither raise their
income nor descend to a lower standard of
living.
W. and S. Bengal, Bihar, Chota

Nagpur and Bundelkhand. (Datta, 184-186.)
Condition of agriculturists. In Assam their
(ix) Agriculturists in
material condition has been improved, as the income
from the
sale
of
their surplus
at a greater rate than the

(viz., oil, salt,
they buy.
produce has increased
price
sugar, cotton cloth,
But
in
W. and
S.
of
fire-
the
commodities
wood
Bengal,
&c.) which
as
well as
GENERAL RESULT OF HIGH PRICES
CH. VI.]
263
Chota Nagpur and Bundelkhand, their cost,

of living has increased more than their income and
Bihar,
now
they are
U.
N.
Punjab,
P.,
after
worse
off
than before 1890.
W.
F.
In the
and
Province
Sind,
undergoing much suffering by reason of bad
seasons up to 1905, they have subsequently

their lot a
good
lesser extent.
Also in Bombay, but to a
deal.
In Berar
the better began
in
improved
and C.
1900.
the era of famine prices
P.
change
this
for
In the five years 1905-9,
without famine, cultivators
W. and S. Bengal, Bihar,

and
Bundelkhand)
largely benefited
Nagpur
Chota
by the rise in prices. {Datta^ 183-184.)
Mr. Datta sums up the result thus
The material
in all parts of India (except
welfare of the country as a whole has increased re-
markably, especially during the 15 years 1898- 191 2.

There have been a considerable increase in the annual
income of India and a general

in
diffusion
consequence of an increase in the
culture,
the
development of the
resources
country, and the growth of enterprise on

the
community
with much
as a
less of
whole.
of
wealth
profits of agri-
India has
the
now
of
part
the
of
to part
her produce than formerly to meet
her foreign obligations.
CHAPTER
VII.
PROFITS.
Profits of manufacture.
Profits
include
three
elements
(a) interest
on
capital,
(6)
insurance against risk, and
(c)
wages
Where
business
neuy)y
is
of superintendence.
the capital
and the
difference
the capitalist and

business
is
is
borrowed, the manager of the
called the undertaker (in French entrepye-
between the
the
paid to
interest
earned from the
gross profit
enjoyed by the entrepreneur.
and petty
manufactures, the labourer often works on his own
account, i.e., he supplies the requisite labour and
In India, especially
capital
But
and
also
in large tows,
in
the haiîcrafts
undertakes the risks of production.
even before the
rise
of the British
power, there was a class of middlemen or capitalists,
who advanced money

their
of articles
large
to
the
manufactured to
stores
of
sucli
purchased
craftsmen,
goods or made them repay the loan

their
in the
form
collected
order,
goods and either sold them
locally or exported them.
These
capitalists did not
themselves employ and superintend labour
still,
in
one sense they directed the industry and undertook

the risks of the
business.
Few were
the
men
wlio
2^5
BUSINESS MANAGERS' PROFITS
CH. VII.]
maintained
factories,
own
under their
employed labourers
paying them salaries by the
directly
i.e.,
roofs,
day.
In British India
we have a
of
vast development
But in very
by the manufacborrowed or raised by
manufactures on the factory system.
few of them
turer himself
is
the capital supplied
most often
the issue of shares
in
it is
a joint-stock company.
In
such cases the interest (or dividend, as the case may

be), has to be deducted from the earnings before we
He
get the undertaker's profit.
often gets a
commis-
sion in addition to his regular salary.
The
efficiency of
the class of
an industry
men who
differs
according to
the entrepreneurs,
are
their
education, ability, keenness in discovering more eco-
nomical methods, in grading wôrkmen according to

their exact individual capacities,
and
in studying the
These
demand
of
qualities
were wanting in the Indian producers of
far-oE
markets.
{Morison, p.
5.)
old.
Hence, the only industry which could earn good profits
was
the
things,
manufacture of objects of art and allied
modern India
in
the entrepreneur
educated and more wide-awake.
works on borrowed
capital, or
is
the
is
more
But as he usually
managing agent
of a joint-stock concern, his interest in the business

less
than
if
his
undertaking.
own capital had been

Want of commercial
risked
in
is
the
morality and
experience, or at least ignorance of business methods,
on the part
of
most managers, has been the ruin of
266
many an
INDIA.
Indian joint-stock company.
[CH. VII.
will be
It
long time before our investors become wiser in conse-
quence of their
The
losses.
usual rate of interest being
much
higher in
India than in England, profits have to be higher here.
Otherwise, Indian capitalists cannot be tempted to
moaey
invest their
in manufacture.
The
evil
ag-
is
gravated by the fact that our improvident zamindars
and
ryots alike are constantly raising loans
being the safest form of investment,
manufacture
In
the
and land
competes with
for the capital available in India.
old-fashioned Indian manufactures all the
went
profits usually
of the
it
modern
to the
same
party.
But
in
most
industries established in India, the three
elements of profit are enjoyed by two distinct sets of
people
the
are taken
wages
of
interest
by the
and the insurance* against
capitalists or
managers who
in
find
and the
entrepreneurs
or
the case of the larger concerns are
mostly Europeans, though
we
share-holders
superintendence by the
risk
among
the share-holders
an increasing proportion of Indians.
Oft the whole, the profits of Indian manufacture

have not hitherto been so high and regular as those
of
usury.
Hence
manufactures
have
received
* The insurance of the plant and premises against fire cannot cover the real risks of the business, which have to be borne
by the capitaHsts.
middlemen buy harvests.
:h. vii.]
omparatively
little
267
encouragement among
us,
while
banks are thriving in large numbers.
The
profits of the
middleman
as agricultural
money-lender and as commercial agent, In
money
India the Bania not only lends
but
also
in the
on a small scale as a speculator and
acts
middleman
His loan
in grain.
repaid by the ryots
is
form of grain, and so he first secures his
and then, by storing the grain and
selling
months afterwards, he earns the usual

There
profit
and
where
its
the
price in
export
keen,
this
sharply felt even within a
week
of
Our improvident
being over.
of
lasts till the
learnt
to
months
difference
the harvest
disburden them-
within the shortest
next harvest.
few
years.
for the better
The
ryots
has set in during
of the
Punjab have
hold back their wheat for months after
harvest in the hope of realising better prices.
they refused to
sell
"The
and the Sindh
greater competition
also tended to reduce the
profits
and a larger proportion
of the
the pocket of the peasant farmer.
more common now than
In 19 10
crops so long as to cause
their
serious loss to the Karachi port
way.
many
trade.
then comes the Bania's chance, which
Happily a change
last
ryots
surplus produce
their
possible time
the
it
on
bazar,
is
afterwards
selves
interest,
an immense difference between the price
is
of grain at harvest
is
rural
to the peasants,
it
among
of
the
rail-
traders has
middleman,
market price reaches

Indeed,
it
is
much
used to be for the peasant
268
to bring his
own produce
INDIA.
[CH. VI
to market,... instead of allov
ing the village shopkeeper to take
it
at a price fixe
by himself." (Wilson, p. 13.)

The ryot, by immemorial custom, clears his deb
to the Bania (or Mahajan, as he is called in Bengal)
by payment in kind at a slightly higher rate than tht
more or
less
(Sometimes the rate o
prices then ruling in the bazar.
repayment
fixed in
is
two
es
is
advance money
(such
vessels,
in
trade profit.
(or
raw
The Bania
Sometimes
silk
stuff,
rarely financ
wholesale dealer
materials) to petty handicrafts
as manufacturers
&c.),
of
cloth,
and take
Here the former
payment.
interest,
tht
agricultural produce at a higher price betweei
harvests,
any manufacture.
men
tim<
His further gain on the sale of
pure interest.
stored
advance by contract at the
This part of the Bania's profit
of taking the loan.)
but their further profit
is
shoes,
meta
the finished articl
class
enjoy a clea
conditional upon
th'
subsequent sale of their goods at a higher price thai

the cost of production.
Chance, therefore, enters
largely into the composition of their profits than
case with
the
mon
is tht
Bania or agricultural money-lender
In other respects these wholesale dealers stand on th^
same economic footing as the Banias.

Brokers, or middlemen strictly so called, ply theii
business in jute, grain, and a few other articles.
Theii
work mainly consists in buying from Banias or from
tolerably large farmers the produce at harvest and
despatching
it
to centres of manufacture or ports
oi
H.
BROKERS FOR EXPORTERS.
VII.]
They run very
nbarkation.
ire of the sale of their
risk,
as they are
purchases and have previously
with manufacturers or big exporters at
Detracted
'alcutta,
little
269
Bombay, Rangoon
or Madras, for the deli-
ery of a certain quantity at a fixed time.

iiey
are sure of a market
irice
which they can
[1
juH:e
suffer loss,
money
riie
that they have not to
is
to the producers
though they cannot
Mania's risk,
speculate
as happens in
brokers.
Their second advantage

idvance
Hence
the limits of the
Where they
safely pay.
advance, they sometimes
he case of
and know
they do not run the
make
his high profit,
rich exporters at the great sea-ports of India are
n constant telegraphic connection with the world's

narkets and
also
command
vast resources.
herefore, naturally enjoy all the profits
n prices outside India.
It
The}-,
due to a
rise
takes years for the Indian
and to take advantage

by raising his prices. These rich exporters are
mly a few in each province and so, at present, they
)roducer to learn of such a rise
)f
it
mjoy the advantages of monopolists. Where they

3uy and export, there cannot be the same active
:ompetition for Indian produce as
Durchasers are a large
>ides,
when
number of petty
the intending
exporters.
Be-
the enormous resources of the former enable
them to crush out

dictate (to
producers.
:ompeting
their smaller Indian rivals
some extent)
If,
however,
their
own
we had
for our produce,
and
to
terms to the Indian
7nany rich exporters
the result pointed out
by
270
INDIA.
[CH. VI]
book would no doubt have taken place

He says, "Such [large] firms are likely to pay highei
(i) their certainty o]
prices in India for two reasons
a market and knowledge of the price obtainable [in
Europe and America] enables them to work on a
smaller margin of profit and to buy more grain at
higher prices than if their business were more speculative.
(2) The large scale on which they do business
also enables them to work at a lower rate of profit per
maund. The advantage which such exporters derive
critic of this
from their sources of information and large capital

therefore involves benefit to Indian producers also."
Probably
this
state of
things has been
reached in the case of Punjab wheat.
already
" In all the
large grain markets of the Punjab, there are agents of
exporting firms
who
study the world's prices of wheat,
and buy whenever they think export will be

able."
among
{Wilson, p. 19.)
"The
profit-
greater competition
traders has also tended to reduce the profits of
the middleman,
and a larger proportion
of the
market
price reaches the pocket of the peasant farmer." (P. 13).
In the latter passage Wilson, however, speaks of the

price in Indian markets.
CHAPTER VIII.
EXCHANGE.
The development
In the
of Indian oversea trade*

Christian
four centuries of the
first
era,
South
India had a monopoly of pepper (Sanskrit pippali),

pearls
and beryls
a very extensive
with
Rome
also
mainly
aquamarine gem) and did
(or the
and
lucrative trade in these articles
Our other exports were
through Egypt.
great value
of
articles
in small bulk,
such as various kinds of precious stones,
which "held
the foremost place" in the Roman market, "there

being none preferred to the Indian kind," and spices,
indigo,
cane-sugar ("honey collected in reeds," as
Pliny calls
silks,
it),
some amount
in
the
last
two being used
muslin and other

of lac
exchange gold,
and
iron
Europe a
In the
Pliny,
to
little less
for
as medicines,
cotton fabrics,
and
She took
swords.
copper and ironware, and
silver,
cloth (probably woollen).

India, according
fine
first
century A. D.,
annually absorbed from
than half a million sterling worth
amount of Roman
mind that Pliny's
of treasure, chiefly silver with a fair
gold coins.
But we must
bear in
India included Ceylon, which was the principal place

of
exchange
for
the
Eastern trade in
those
days.
(SchofE's PeriphiSy 286-289, McCrindle's Ancient India
as described in Classical
Natural History,
Romans under
xii.
Literature,
18 (41) and
the Empire^ ch. 68).
102-135,
vi. 26,
Pliny's
Merivale's
-^7-
INDIA.
[CH. VIII.
For nearly three hundred years after tlie establishment of European commercial houses here in the i6th
India continued to export manufactures
century,
In the middle of the 17th century
mainly.
she
sup-
plied to Europe diamonds, pearls, white cotton cloth,
muslin, chintz, silk fabrics,

pets,
large
opium, &c.,) dyes (indigo,
and
brocades,
especially
car-
quantities of spices, drugs (such as borax,
saltpetre
sugar,
&c.,)
lac,
tobacco,
only raw material of large quan-
(the
the
famous
Damascus blades came from the kingdom
of Gol-
Even the
tity).
konda.
We
steel
employed
in
took in exchange woollen fabrics, "scarlet"
(Arabic saqarlat, a favourite of the Mughal
cloth
emperors), metal works, &c., (^Tavemier,

ii.
ch.
12
Storia
do Mogor,
ii.
418).
tr.
by
Ball,
But the rapid
development of European industries with the help of

steam reversed
this state of things in the
nineteenth century.
cesses in
tion
Improvements
middle of the
in industrial pro-
Europe greatly reduced the cost of produc-
there
while the opening of the Suez Canal
lowered freights and shortened the period of transit
between India and Europe.

lines of railway has
The opening
of the trunk
connected our sea-ports with the
interior of the country,
and made
manufactures to reach
far-off
it
easy for European
Indian villages, while
grain and other bulky goods can be
now
cheaply
brought down to the ports to be drained out of the
Thus from about i860 India has become a

mere exporter of raw materials and a huge consumer
country.

CH.
VOLUME OF FOREIGN TRADE.
VIII.]
273
of foreign manufactures.
About 1885 the tide just
to turn
thanks to the jute and cotton mills,
our export of manufactures has begun to increase, as
also our import of raw materials, at a progressive rate.
began
The following figures show the growth of Indians

sea-borne foreign trade, including gold and silver
and the stores and treasure imported and exported by
Government, in crores of Rs.
:
Imports Exports
Annual average
Rs.
crores
Rs.
crores
Excess
of our
exports
over our
imports.
crores
for the decade
ending
1844
...
972
1373
1854
...
H'05
18-75
47
56-61
11-82
16-95
1874
...
4479
>i
1884
...
57'54
74*49
19-4
1894
...
83-26
1 02 -66
y,
1904
...
1057
130-96
25-26
I9IO
...
146-51
173-15
26-64
i73'47
217-09
43-62
only
1910
"
1911
i97'52
238-37
40-85
1912
228-46
25685
28-39
"
1913
..
23475
256*09
21-34
1914
166-74
187-46
20*72
"
1915
149-46
207-71
58-25
18

274
INDIA.
[CH. VIII.
Taking the average of the three years 191 1 -13, our

import was 220*24 crores, export 250*44 crores, and
In addition to
excess of export 30*2 crores per annum.
the above
we have a
which
foreign trade
by
value
land, the
only 4 to 5 p. c. of our sea-borne trade.

About 3*5 p. c. of our imports is re-exported by sea.
of
is
Analysis of India's imports by sea, 1913

Merchandise
...
Gold and
silver
...
Total
...
191*31 crores
43*44
Rs.
of.
23475
was imported by
Government and the remainder by private persons.
The chief items making up our imports of private
out of which
i4'88 crores worth
merchandise were
Crores of Rs.
1911
1912
1913
Cotton goods
49-56
6o-8
66"29
Metals
14-2
15-49
22
comprising
Copper
2-68
and steel
Machinery and mill-work
Railway materials and stores
Hardware & cutlery ...
Instruments and apparatus
Iron
10
4-36
2-37
11-47
5-85
4-11
16
8-26
10
4*43
6.4
3-12
3-41
3-94
J "3
1-48
1-82
Clothing (other than cotton) &c.
Woollen goods
Silk (raw
& manufd.)
Apparel
Boots
&
shoes
3*4
3-05
3-85
371
478
4*37
1*54
r6i
171
o*55
0-66
079
CH.
INDIA S IMPORTS.
VIII.j
275
Crores of Rs.
1912
1911
Railway materials
Articles of food
Sugar
1913
2*54
(Govt.)
and drink.
...
11-93
14-27
i4'95
1*93
2*34
2-47
1-65
1-82
1-87
173
Provisions
Liquors
.,.
Spices
...
'54
1-63
Salt
...
0-84
0-85
0-87
0-66
0-69
0-75
4-42
4*4
2*59
Tobacco
Oils
Other things
Glass-ware
& earthenware
& stationery
2*09
2*3
Paper, paste-board
172
2-28
Books
0-45
0-42
0-49
2*3
2*26
2'4
...
& colours
Chemicals & medicines
Dyes
2-i8
2-19
Matches
0-87
0-98
0-89
Coal
0-51
ri6
ro6
0-89
-08
1-07
...
Pearl and precious stones
Of the
total
foreign
was from beet and

oils
that reached
fourths
consisted
sugar
we
took, only 9 p.
the rest from cane.
us from foreign
of
kerosene.
c.
Of the mineral
countries
three-
(69 million gallons
against 109 mil. gal. from Burma.)
Leaving out Government transactions and treasure

imported by private persons, out of our total imports
of merchandise in 191 3,
Cotton goods formed

Metals
(in value)
...
...
37
Sugar
Mineral
oils
Railway materials
2-5
p. c.

276
INDIA.
[CH. VIII,
Analysis of Indians exports by sea, 1913

Indian merchandise
Foreign
Gold and
...
...
re-exported
silver
...
244-23 cvores of Rs.
...
4*68
...
7*08
Total
256*12
Government exports have not been included in the

above, as they were of negligible amount, only 13
lakhs worth in
The
all.
chief items
merchandise were
making up our exports
of private
Crores of Rs.
1911
1912
I913,
Raw materials
Cotton
29-4
28-33
41
Jute
22-5
27
30-82
256
26*9
22*7
Hides (raw)
I3'9
11-76
11-72
Wool
2-58
2-63
2'5
0-45
0*41
0*24
Rice
29
32.55
26-6
Wheat
1414
18-77
14-38
8-26
8-98
4-16
Seeds
(for oil)
...
Silk (raw)
Articles of food
and drink
Other grains and pulses
...
Tea
12-94 13-29
Coffee
1*34
1-56
1-37
0-47
o-6i
Provisions
ro8
0-48
0-54
Fodder, bran and cattle food
171
1-13
077
28-2
Fruits
and vegetables
14*97
'53
Manufactures
Jute goods
Cotton goods
Oils
...
16
22-8
977
12-2
12*12
I '59
0.85
0-98
CH.
INDIA S EXPORTS.
VIII.]
277
Crores of Rs.
1911
1912
1913
Lac
2-1
1-96
Indigo
0'37
0-22
0*2I
13*08
3*42
Other things
Opium
'22
Dyeing and tanning materials (excluding indigo)
075
0-88
0*83
Metals
1-64
077
0-64
Coal
Manures
077
0-88
o'69
'16
0*96
o'94
Of our
Raw
...
total exports of merchandise in 19 13
and unmanufactured
materials
articles
formed
Articles of food
(in
value)
50-1
and drink
26-5
Indian manufactures
Raw cotton
22-4
17
Rice
II
Jute
12-5
Tea
Hides and skins
6
...
...
...
47
p.c
278
Our
[CH. VIII
INDIA.
trade relations with other countries,
(19I3)
Percentage
of our
Percentage
of our
Percentages
of our
imports.
exports.
total trade.
64
23
40
Germany
10
United States
2-6
6-2
China
2'3
17
2-6
9-2
6-4
15
4-8
2-3
3-8
Java
5'8
0-8
2-9
Austro- Hungary
23
3'3
Straits Settlements
1*9
2-8
2*4
England
...
...
Japan
France
. .
Belgium
..
The
Indian balance of trade.
years 191
dise
1-
During
the
five
15 our average annual exports of merchan-
(both Government
and private) exceeded our

But during
imports by 64 cvoves of rupees a year.
same period we annually absorbed 30' 17 cvoves

worth of tveasuve on an average. Hence the net excess of our exports was 33^ cvoves a year
this amount,
which is 15 p. c. of the avevage total of our exports (229
the
cvoves
worth),
is
or in other words
annually dvained out
we now
of the countvy^
get no visible return for the

CH.
BALANCE OF INDIAN TRADE.
VIII.]
goods of
this
we
value which
279
export every year.
The
balance of trade, in the true sense of the term,

against India to this extent,
one-sixth
This
is
more than she
is
c, she parts with about
i.
gets from the outside world.
the natural consequence partly of India being
a debtor country and partly of her political position,
shown on pages 137- 141. (See Ind. Emp.,

270, Hunter, 661, and Gokhale's Speeches, 1 08-1 11.)
part of the excess consists of the interest on the
as has been
iii.
foreign capital invested in
Indian (private) railways
and steamer companies, indigo factories, tea-gardens,

mines and other industries.
(See p. 188.)
Another part is made up of the annual savings of
European merchants, lawyers, doctors and officials
serving in India.
But the major portion consists of
mills,
Government expenditure annually incurred in

England on behalf of India, which is called the Home
Charges. Two-thirds of our Public Debt are held in
England and the interest has to be paid there.
the
The Home Charges. For
the five years ending
amounted to 2 9*7 7 crores of rupees

a year on an average, and in 1909 and 191 o they
amounted to 27*6 crores and 27*9 crores respectively.
The expenditure in 19 13 was thus made up;
191 3 these charges
I.
Railway Revenue Account

for
{i.e.,
annuities
buying up the shares of railway
companies, interest on the debt for State

Rs.
railway capital, price of materials, &c.)

also interest
on iVnâtJow
capital,
...
13*67
crores
28o
INDIA.
[CH. VIII.
Rs.
2.
Pensions and furlough allowances
8*4 crores
Military
4*52
Civil
3-88
Interest on Indian Public
(other than railway
England
in
Army
and
irrigation) held
...
...
England
expenses in
Payments
Debt
(see p. 1^8)
3"22
...
2*24
Exchequer
the British
to
...
for British forces serving in
India
i'37
0*46
Transport of troops
Other charges
Payments
0'206
...
warships
for
0*209
the Indian Seas

Stores purchased for India
Military
and marine
Civil, P.
W. D.,
2*25
...
1*42^
telegraph
iph,
stationery &c.
...
Civil expenditure in
>
0*82^
England
0*65
Secretary of State's establishment,

postage, rates, taxes, coal, &c.,
also miscellaneous
... 37 lakhs
Post and telegraph connections
with India
...
8f lakhs
Charges on account of other

civil
departments in
India, &c....
...
g\ lakhs
Total
...
30*46 crores,
\Cd. 8157, p. 70-71 :\
From
about 63
and
5),
the above
it
p. c. of the
represent a
will be seen that 19*14 crores or
Home
Charges
payment
for
{viz.^
which
items
i,
we have

REASON OF HOME CHARGES.
CH. VIII.]
already got our money's worth.
281
This portion of the
expenditure could have been avoided only

public and railway loans had
and English-made
factured
in
stores
India,
(Even a
buys
in
free
replaced by things
The
else).
our
manu-
country like Japan largely
Europe, because the
some cases articles of the
anywhere
all
both of which suppositions are
impossible.
stores
if
been raised in India
same
articles,
and in
had
quality, cannot be
Secretary of State periodically
urges the Indian Government to buy stores in India as

far as possible without
crease
of cost.
we add
the military
total.
But,
so
with the most
any
sacrifice of quality
The army swallows up 22
or
in-
p. c. (or, if
and marine stores, 27 p. c.) of the

long as the sepoys cannot be trusted
weapons
command, and the Indian public cannot be armed for
home
defence,
efficient
the
British
or positions of
troops
are
necessary for
safeguarding India from invasion, and their pay and
pension represents the insurance premium
annually provide for peace and security.

ever, a
Home
heavy burden.
we must
howThe Special Committee on
Charges reported in 1889
It is,
The cost of supplying recruits to India is [now]

more than double what it was [just before the Mutiny],
and, owing to the short service system, the number on
whom the capitation vote is paid is increased.... The
average cost per recruit sent to India (excluding his
clothing and equipment, but including depot-charges
for training
and
hospital, charges for deserters, &c.)
282
w^s
4.0 8s. in 1886. ...The transport of
army
the
of
INDIA.
[CH. VIII.
an adult unit
or from India cost ;f 10 13s. in 1886.
to
The short service system, by causing

army in India to be relieved once in
the whole British

three instead of in
10 or 12 years, has greatly increased the cost of transport.
{Cd. 327, pp. 95,121,122.) In igo8, over 29,000
soldiers
were conveyed to and from India, and the

transport
of
cost
was
half a
(Cd.
crove of rupees.
5345, pp. 220 and 70).
The
pension and furlough allowances absorb
civil
3 '88 crorcs.
This amount can be reduced only by the
extended employment of Indians in the public service.
and moral objections are raised
Political
by
the
authorities to the entire replacement of imported public
servants
by the children
of the soil.
As
for the
salary
and other expenses of the Secretary of State and his

Office in London, the amount is paid by India, whereas in the case of the Colonial Office it is borne by the
British Treasury.
our total
Home
Economic
It,
effects
Whatever the nature

analysed above, the
is
however, forms only
1*2 p. c. of
Charges. (Cf. Alston, 108).
the
of
of their
Home
Charges.
component elements as
effect of the
Home
Charges
now
to compel India every year to part with above 30
croves of rupees
worth of goods
The economic consequences
in excess of her imports.
of this state of things
been described in pages 141-142.

iv.
807
194, Dutt, 536, 604, 605,

;
have
(See also Ind. Emp,,
and Gokhale's
Speeches,
and, for the Secretary of State's recommendations
CH.
INDIA A DEBTOR COUNTRY.
VIII.]
amount, the Parliamentary Return on
for reducing the
East India
of the
Home
Home
283
That part
Charges, Cd. 327 of 1893).
Charges which
buying out
spent in
is
the English shareholders of Indian railways
a means-
is
and cannot be
interest
on our sterling
Similarly, the
called a drain.
debt is the inevitable price of the money which we reof
the nationalisation
railways,
of
when
ceived in the past, and
it
debt
European countries like Russia
is
held in India.
will cease
all
our public
and the United States also have to pay interest to their

foreign creditors, and in this respect India is not
singular.
But being connected with the monetary
system of Europe they do not
suffer
any
through
loss
exchange, while India, before 1893, had to bear the

entire loss caused
by the depreciation
Europe.
on
interest
currency
out 44
is
with a
their debts
of manufactures than
stuffs.
of her
bound to make payments in

Secondly, Russia and the United States pay
because she as debtor
in
p. c.
India
raw materials and 31

Howard,
(Cf. Alston, 101-109,
How
much larger proportion

who has to send
does,
p. c. in
food
ch. iv).
India pays her debt to England.
Every
year the Secretary of State for India has to spend
20 million pounds sterling

half,
in
England on our be-
which must be paid to him out of the revenue

At the same time merchants in England
of India.
have to send money

for export.
To avoid
the Secretary
of
India
to
this
State
in
to
buy our produce
double transport of money,,
Council
sells
in
London
284
[CH. VIII.
bills" (or telegraphic trans-
documents called "Council

fers) for
INDIA.
which the English merchants pay
gold, while the agents of these

for rupees at the
Government
him
to
merchants cash the
treasuries in
in
bills
and
India,
buy our raw materials, grain, &c. with the money.

When, owing to famine or war, the Indian treasuries
are short of money and can pay only a portion of the
Home
Charges in cash, the Secretary of State
amount only and
bills to that
raises the
sells
balance need-
expenses by contracting a debt in England.

Sometimes certain sums due to India are paid in Eng-
-ed for his
land,
and the Secretary's drawings on India are
Very often trade requires more
duced to that extent.

Council
bills
re-
than are necessary for the Secretary's ex-
penses in England.
In such cases he
draws
bills
for
the surplus amount, but they are paid in India out of
the Paper Currency or

their
Gold Standard Reserve, while
paid in London,
price,
mitted to India in silver bullion to
the
Reserve.
Thus
fill
up the gap in
Secretary of State
the
is
the
working between England
greatest exchange banker
and
afterwards trans-
is
For example, in 1905 he sold bills for 31

while he required only 3 millions net, {viz.y
India.
millions,
17! millions for the

raised
by loan
Home
Charges,
in England.)
less
In 1908 his drawings
debt totalled 25^ millions, while the
were i8j millions only.
on Jan.
20,
1913, held
14^ millions
Home
Lord Lamington,
that
the
in
Secretary
and
Charges
a speech
of
State
should not draw on Indian revenues beyond his actual
CH.
INDIAN PUBLIC DEBT.
VIII.]
requirements, as
in India.
(C/.
The system
by means
of
grain,
their
it
hampers the employment of capital
Howard, Ch.
of India's
III.)
payment
a long chain
jute,
285
the
or cotton
to
England operates
Indian peasants
sell
to exporters in order to
pay the Government revenue and taxes, {Ind. Emp.y

these rupees to
iii. 271), the Government parts v^rith
the exporters whose London representatives have paid
the equivalent of this
who
money
to the Secretary of State
spends the amount in England.
Those who look
only at the two ends of the chain say that every year
send out of our country food-stuffs and raw mate-
we
worth more than Rs. 30
rials
w^hich
is
cvoves,
not paid in India but
is
the price
of
spent in England
though on behalf of India. They call it a drain. But

as has been already shown, the price of these foodstuffs
and raw materials would have remained in
India and nourished our industries

lic
debt had
of interest), all our officers
and
if
only
been locally raised (at the
all the stores
that a
all
our pub-
same low rate
had made India their home

modern government needs
could have been manufactured here.
The Indian Public Debt, March, 1914 411 cfores Rs.

Sterhng Debt held in England
Rupee Debt held
in India
;*I77
...
millions 265*6
...
145 "6
411*2
Analysis of the public debt
Railway debt
...
..
Irrigation debt
...
...
.-5c)
333

286
INDIA.
[CH. VIII.
(Both these are capital employed productively)

...
Ordinary or unproductive debt ...
i8'3 crores Rs.
Initial expenditure on New Delhi
...
85 lakhs.
The above method

businesslike
of stating the accounts
un-
is
The item productive
and misleading.
or
"public works debt" does not represent debt actually

incurred for public works, but only that portion of the
national debt which equals "the total capital expenditure
which has been incurred by the State on public
works, together with the
companies
amount advanced
for capital expenditure,"
of the national debt
which
is
set
i.e.,
to railway
that portion
by productive
amount (not the
off
investment of an equivalent initial
present worth of our railways after deducting

ciation).
It
must be here borne
our railway lines yield no profit

strategic railways),
commercial
return.
are not
intended to yield any
The term "Ordinary debt"
applied to the remainder
is
of our total debt after deduct-
ing the "public works debt" for the year.

is
depre-
mind that some of

and some others, (the
in
The
result
"In any year in which, owing to the use
curious.
of surplus revenue or deposits for the construction
public works,
the
capital
of
expenditure of the year
exceeds the amount of debt incurred in the year, the

effect of this
decrease
to
Debt,"
i.e.,
paid
off,
system of classification
is
to
cause a
be shown in the amount of the Ordinary

a part of the latter debt
while
it
is
represented as
really remains undiminished,
and
the productive investment of the State merely increases
by the use
of surplus revenue for capital purposes.
CH.
HISTORY OF OUR COINAGE.
VIII.]
The
287
history of Indian currency.
Muhammadan
invasion and for some
Before
gold was the chief currency of India for
Copper was used
transactions.
and
villagers
citizens
of
The
silver
much
and
small towns used shells
less
Tanka was
it,
all large
for small change,
(cowries) in the bargains of their daily
coined, though to a
the
time after
life.
Silver
was
extent than gold.
coined by Altamsh,
first
Sultan of Delhi, in 1233 A.D., and

the standard of Northern India.
Shah,
1542, the coin acquired
grains)
and the name
it
gradually became
In the reign of Slier

its
present weight (180
The
of Rupee.
ratio
between
gold and silver coins varied from time to time, though
both were freely coined by the Mughal emperors.
made
Calculations were
in rupees,
though gold was
used in making presents or paying tribute.

India, being comparatively free from the
retained
influence,
it
was ordered
the gold currency
to be displaced
Muhammadan
till
by the E.
Southern
I.
1818,
when
Company's
silver coinage.
In
1766 the East India
Company
tried to establish
bimetallism or a fixed legal ratio between gold and

silver
rupees.
Its
gold mohiivs were at
But the
new mohurs
first
valued at 14
sicca
1769 were declared
of
equivalent to 16 sicca rupees, though the market price

of gold
was
less.
The confused
state of our
currency
may
be judged from the fact that in 1773 êre were

circulating in various parts of India 139 kinds 01 gv^...
mokuvii, 61 kinds of gold huns or
South Indian coins
288
(called
pagodas by
Europeans),
556 kinds of
rupees, besides 214 kinds of foreign
East India
Company
the confusion
in
issued
in
silver
Then
the
by recognising as the principal standard
year of the reign of Shah
minted
coins.
introduced some order amidst
dominions a copy of the
its
[CH. Vill.
INDIA.
Calcutta,
Alam
sicca rupee of the

II.
19th
(1778) which
it
while three other rupees were
by the Company
provinces and had a
in the
local circulation.
In 1835 the silver rupee
tender all over India,
drawn.
Government
the
was declared
the
sole
legal
other rupees being with-
gave up bimetallism,
finally
accepted siver mono-metallism, and instead of legally

fixing the value of gold coins, left
purchasers.
Gold
mohurs
and
it
to the choice of
silver
rupees (each
containing 180 grains, of which one-twelfth
is
alloy)
were henceforth coined, bearing the face of the British

rupee was
sovereign,
and
monetary
standard of India,
this
mohurs (valued Rs.
silver
15),
made the only

new gold
while the
though no longer legal tender,
were to be coined and issued on demand (for ceremonial purposes). In 1841, officers in charge of public
treasuries
were authorised freely to receive these gold
mohurs at their face value in payment of Government

dues.
{Ind. Emp.,
ii.
136, 143
Datta^ 257.)
Currency Legislation. In January 1853, Lord

Dalhousie, alarmed by the fall in the price of gold
owing to the gold discoveries in Australia and California, suddenly closed our treasuries to the acceptance
VANISHING RUPEE.
CH. VIII.]
289
1864 British sovereigns were authorised to be received in Indian treasuries at Rs. lo
of
In
gold coins.
(which rate was raised to Rs. 10-8 in 1868).
each,
had no effect, as silver began to fall rapidly in

price and most Continental States demonetised silver
India's trade with Australia and Euroin 1872-74.
pean countries having a gold standard was greatly
But
it
hampered by the
rupee.
The
exchange value of the
the
fall in
financial
burden of the Indian Govern-
ment, which had to pay sixteen millions in sterling in
England for the Home Charges, greatly increased as

more and more rupees had to be paid to buy the same
number of sovereigns. For instance,
in 1872
one rupee was worth
1876
IS.
1887
1892
IS.
2'g8d.
IS. I'id.
which the exchange
The
6U-
IS. 4*89<i.
1894
after
iid.
IS. 8l'd.
1885
in 1899, at
is.
which
rose gradually
till
it
rapid fall in the value
of
rupee " greatly distressed Anglo-Indian

to remit
reached
^d.
is.
has remained fairly steady since then.
it
money Home, and
'*
the vanishing
officers
having
unsettled our foreign trade
by introducing uncertainty as to the standard of value.

The Government was driven to levy new taxes to
find
money
for
the
Home
penny which the rupee

the people to the
falls,
amount
meet the charges payable

19
Charges, because " every
of
in
necessitates taxation
on
one million pounds to
London."
But there
is
290
limit to the fresh taxes that
and
INDIA.
[CH. VIII.
can be imposed on India,
Government was in danger of turning bankThe last hope of establishing bimetallism by
the
rupt.
international agreement failed
in
when
1892,
the
Brussels Monetary Conference broke up in discord.

Then a parliamentary committee under Lord Hers-
England and took the evidence
chell sat in
of experts
on the Indian currency {Code 7060). By the Currency

of 1893, (a) from June 1893, the Indian mints
Act
were closed to the
free
coinage of silver for private
was
remedy
any shortage of the circulating medium (b) gold, both
sovereigns and bullion, was to be received by the
persons but Government
to coin rupees to
;
Indian mints and rupees given in exchange at the

rate of "i
= Rs.
received in
fixed
but gold was not yet

persons
payment
rate.
in
(c)
made
legal
sovereigns were to be
of Government dues at
same
the
This legislation was clearly meant for a
transition stage.
increase
15,
private
to
tender
Its
objects were
(i)
to
stop further
the volume of the silver currency,
(ii)
to
induce gold to flow into the country from abroad and

discourage the import of
liarise
the
was
and
(iii)
to fami-
Indians with the use of the sovereign as
currency without forcing

rupees
silver,
it
on them.
absolutely stopped for
The coining
six years
exchange rose very slowly, and reached
is. 4^.,
of
but
the
official rate, as late as 1899.
Meantime a strong body of European traders and

tea-planters demanded a return to the free coinage of
CH.
VIII.]
silver,
GOLD CURRENCY INTRODUCED.
on the grounds that
(a)
fall
29
in
exchange
increases export from India, stimulates production,
gives India
more rupees
standard countries,
duce
for gold,
for her
tea-planters
(b)
who
but pay their coolies in
proportion as the exchange
rises
rupees for a sovereign than before,

regulation of the
But the new
laws of economics.
evident success
many
exchage
rate of
sell their
in
and they get fewer

and (c) any State
opposed to the
is
legislation
of the evils anticipated
was an
from
it
who
1892 had opposed the closing of the mints were
now
opposed to
as strongly
their
being re-opened to
the free coining of silver, because such a course
be
pro-
silver, suffer
did not actually happen, and most of the experts

in
and
produce sold in gold-
" disastrous."
would
Another parliamentary committee,
under Sir Henry Fowler, took expert evidence in 1898

{Code 9037 and 9222) on the problems of Indian currency.
By
the Act of 1899,
legal tender for the
unlimited extent, and

the
(i)
public,
(ii)
sovereigns were
made
along with rupees, to an
the coining of sovereigns at
Indian mints, which would be legal tender all
over the empire, was sanctioned.
{Ind.
Emp.,
iv.
518.)
Thus the way has been prepared for introducing gold

mono-metallism, and the next step, as recommended
by MacLeod, would be to cautiously and slowly restrict the amount of rupees as legal tender, in proportion as " India
is
saturated with gold,"
for silver tender
land silver
is
is
till
the limit of
reached, as in Egypt.
legal tender
up
to
only.)
(In
Eng-
As
silver
292
is
INDIA.
unlimited legal tender here,
still
[CH. VIII.
we have not
yel
established pure mono-metallism, but are maintaining
a " limping standard " like that of France, Holland,
and to some extent
of
Germany, " that
to say, open-
is
ing the mints to the free coinage of gold and at the
same time allowing the existing rupees
to continue
as legal tender " without demonetising them. (Schmidt,

in
Code 7060
now
p. 76.)
II.
Only one metal,
viz,,
gold,
The Gold Exchange

say, of the
Bank
Standard,
Mr. A. M. Lind-
of Bengal, published a
scheme
gold exchange standard without a gold currency.

cording to
coins
that
is
our standard in international transactions.
(i.e.,
is
it,
for
Ac-
a large amount of notes or cheap token
rupees) will remain in circulation in India,
to say, our internal currency will
But Government
wîll offer in
remain
silver.
London rupee drafts for

i.v\
^^d. per
Rs. 15,000 each paj-able in India at

rupee,
and
in
Bombay and
1000 payable
in
London
Calcutta sterling drafts for

at
is.
3fd. per rupee.
By
scheme rupees will be changed into Government

sterling drafts and not into gold coins, so that there
this
no chance of gold being withdrawn from

Europe to India or being absorbed by the people
India will have a gold standard for foreign payments
For the conversion into gold a fund of ten
only.
will be
millions sterling
of
India,
is
to be
deposited in
borrowed by the Government

the Bank of England, and
managed by a non-official body to ensure public con" The expense of convertibility

fidence;
to
the

GOLD EXCHANGE STANDARD.
CH. VIII.}
293
Government might be diminished by forcing the

Natives, by means of a prohibitive duty on silver, to
revert to the old practice of melting rupees for the
manufacture of
ornaments,"
silver
be forced to melt the
mittee
1898,
was
silver bullion
when
Mr. Lindsay's proposal,
1892 and again when

in
appreciated rupees
artificially
and prevented from buying cheap
made
they are to
i.e.,
first
published in
before the Fowler
rejected,
Com-
as Government and
economic advisers held that a gold standard
its
Government
now
has
a local currency of
internal
actually
into Mr.
We now have two currencies,

silver
and notes
and a gold currency
use,
drifted
unconsciously and by the process
Lindsay's scheme,
of currency development.
viz.,
is
But the Indian
inseparable from a gold currency.
foreign purposes only.
In
for
purely
for international or
other words,
we have
adopted the gold standard for exchange only,
as
advocated by Mr. Lindsay.

This
is
principles.
century
anomalous nor opposed to economic
neither
As was
ago,
it
is
first
pointed out by Ricardo a
wasteful to have an intrinsically
valuable circulating medium, and the ideal currency

is
one in which notes (or cheques) and cheap token
coins form the internal currency, but

vertible
into
gold
(the
are
international
made conmedium of
exchange) at a fixed rate for foreign payments only.
As Mr.
J.
M.
Exchange Standard
Keynes has shown, "The Gold

[of
India]
is
not, in the currency
294
world of today, anomalous
the prevailing
[CH. VIII.
main stream of
ten years it has become
it is
currency evolution. .In the last
INDIA.
in the
monetary system of
Asia... It
is
also
closely related to the prevailing tendencies in Europe.
Gold
is
an international, but
not
sl
local
currency"
even in England (where cheques form the internal
medium
of exchange).
(Pp. 29, 36.)
gold currency
is
not a necessary condition of the gold standard.
It
is
an economic truth "that so long as gold
is
available for payments of international indebtedness at
an approximately constant rate

currency,
whether
it
it
is
in
terms of national
a matter of comparative indifference
actually
forms the
national
currency."
(p- 30).
How exchange between India and the world^s

money-market is maintained. We have already
shown (page 283) how India has in normal years to
pay 20 millions sterling to England, and also how our
exports exceed our imports by about the same amount,

the Indian Government has to make payment of
amount in England, and European merchants in
The Secretary of State sells, for gold payable
India.
i.e.y
the
in
London, Council
(which are sent by post, or

which are sent by telegraph^,
which (at the rate of about is. ^d.
bills
Telegraphic transfers,
the
rupee price of
per rupee)
is
paid in India out of the Government
Treasury from the year's revenue, or out of the Paper
Currency Reserve or Gold Standard Reservê, as the

case might be.
This
is
the
normal
state
of things.
CH.
VIII.]
But
in
&
COUNCIL
STERLING BILLS.
295
famine years or during a monetary
Europe, very
Secretary
money
little
State has
of
sent to
India,
as
crisis in
while the
England
spend in
to
money
of Indian
millions
is
exchange then becomes very adverse to India

Council
Secretary of State stops offering his
20
The
other years.
in
bills
the
in
no demand for them), and adopts

the converse process i.e., the Government sells, in India,
Sterling bills or Weverse councils' payable in London
(at the rate of about is. ^d. per rupee) and they are
London
(there being
cashed out of the English branch of the Gold Standard

while the rupees paid for them are placed
Reserve,
in the Indian
branch of
the
time our mints stop coining
Reserve
new
at
rupees, as
same
no longer
the
required on account of the balance of trade being
against
1908 eight millions worth
In
India.
value of our local currency (the rupee)
The Gold Standard

now
coined rupee being
quantity of pure silver
profit of
interest
now
Reserve
very
its
much
contains,
is
maintained.
history.
Its
on
total
the
we
Government makes
the
it
puts
calculate from the silver prices
profit
from
silver
coinage, plus
invested portion of the profit,
thirty millions
(19 1 6)
ment meets
(if
The
dearer than the
about 42 in every 100 new rupees
into circulation,
of 191 2).
it
of
Thus the exchange or gold
Sterling bills were sold.
demands
of
is
As Governforeign trade by giving

sterling.
rupees in India in exchange for gold tendered in
London
(i.e.,
Council
Bills) at the rate of
i = Rs.
15,
296
INDIA.
[CH. VIII.
when the balance of trade is adverse

and money has to be sent from this country
SO conversely,
to
India
Government ought
to England, our
be able to pay
to
gold in London for rupees tendered in India (Sterling

bills
Reversed council
or
Otherwise,
destroyed,
bills')
the
at
same
rate.
gold parity of the rupee would be
the
exchange would
fall
below the legitimate
and the Gold Exchange Standard established

by Government would cease to be effective and selflimit,
Whenever
regulating.
is
so
low that
is
it
the gold
gold currency
to export sovereigns
profitable
from India to England,
below
gold price of the rupee
the
i.e.,
export point,
exchange in India
the result
falls
that the
is
drained out of our country, and the
is
Government of India ought to make its gold in

London available for foreign remittances, as the
Fowler Committee of 1898 recommended, otherwise
our country would become bankrupt in
or international currency (which
For
Reserve
of
was created
new
external
gold).
purpose, a fund styled the Gold Standard
this
inactivity
is
its
since
in
1900,
when,
after
six
years'
the closing of the mints, the coinage
rupees began again on a large scale.
was decided
that
It
the net profits of coinage should
not be spent as revenue but formed into this Reserve
and held
In
in
England
1906 the
silver
form of
sterling securities.
branch of the
Gold Standard
India and consists
in the
Reserve was created.

of rupees,
(maximum
It is
limit
held in
crores),
so
that
when
CH.
GOLD STANDARD RESERVE.
VIII.]
a sudden demand for rupees

of the export trade, the
from
arises
297
through the needs
Government may
issue rupees
Reserve, while the sterling equivalent of
this
amount is added to the London portion of the

Thus any dangerous depletion of the Paper
Reserve.
Currency Reserve and temporary shortage of rupees
the
in India
In
is
avoided.
1907
was decided
it
This was done for two years only, and
then forbidden
the sterling assets of the Reserve
till
There being
should exceed 25 millions.
new coinage from 1908
to 191
1,
there
little or no
was no addi-
tion to the Reserve during these four years.

it
was decided
to
hold a portion of
England not exceeding

during the monetary
had had
loss in
in
this
In
1912
fund in the
a "very liquid" or cash gold Reserve in
form of
State
the net
half
coinage in the capital expenditure on
profit of future
railways.
invest
to
5 millions sterling, because,
crisis
of 1908
order to cash the
accordance
the
to sell his securities in
with
Sterling
Secretary
of
a hurry and at a
bills.
In
the recommendations of
19 14,
the
Chamberlain Commission, the silver branch of the

Gold Standard Reserve was abolished, by being
converted into gold.
19
mil.
25i
281
The Reserve
totalled
on 31 March 1912,
31 March 1914,
30 Sep., 1916. (30 mil. on 31 Dec.)

298
On
(In
30 Sep.
9 16
it
was thus held
England) Book credit
[CH. VIII.
INDIA.
...
o'S
...
Cash at short notice
Temporary loans to the Home
4*2
...
...
Securities
...
...
16*4
Gold...
...
...
Temporary loans
to
Treasury
...
...
Treasury balance ...
mil.
".
23-5
{In India)
balances
4
28-5
Indian Paper currency.
In India gold and
Government did not accept any legal

give gold for rupees, but
15.
obli'gation
ta
has freely issued
it
millions of sovereigns to the public at the

in
silver
= Rs.
are both legal tender at the fixed rate of
fixed
many
rate
order to teach the people the habit of using gold
as currency
and
to keep a large
amount
of gold
course of circulation in the country as a
giving greater stability to international
When
our export trade
is
brisk there
is
means
in
of
exchange.
an enhanced
demand for rupees, and gold is offered to the Government in exchange for them. But when trade is slack,
the rupees return to the treasuries as people (especially
import merchants) require sovereigns.
and out-flow
largely
of
This in-flow
gold and silver coins takes place
through the channel of the Paper Currency
Reserve, or the fund kept
for
cashing currency notes
CH.
PAPER CURRENCY RESERVE.
VIII.]
on demand, and
When
Reserve.
in part
there
is
299
through the Gold Standard

a trade demand for rupees,
and
the rupees go out of the paper currency reserve
gold comes
to the trade centres as there
rupees return
use for
while in periods of dull trade the
in,
them
demand gold
in
to
making
make
when
the stock of
the former case
In
buys
gold
is
greatly
and coins new^
silver
Conversely, in the latter case,
rupees.
of
Home, and gold
rupees in this fund
Government
reduced.
no more
merchants
the
purchases,
remittances
goes out of this reserve fund.
is
when
the
stock
Government draws on the

Gold Standard Reserve described
exhausted.
is
sovereigns in
the
above.
Under law Government

against
its
only 20 crores
rities,
of
rities of
is
note issue equal
bound
to
to hold a reserve
their
full value,
which not more than 4 crores can be secuand 16 crores might
the English Government,
be securities of the Indian Government.

191
1.)
and
of the reserve can be invested in secu-
Notes up to Rs.
100 are
now
(Act VII. of
"universal"
or can be cashed all over India, while notes of higher
denominations are legal

currency "circles"
issued.
On
crores,
{Ind.
Emp.,
tender
or provinces
iv.
only
in
within
the
which they are

& Mat. Pro.)
518-522, Moral
March 19 14 our total note issue was 66

out of which 50 crores were in active circulation
31
or in the
hands of the public
{i.e.,
excluding the notes;
held in Government Treasuries and the Presidency
[CH. VIII.
300
The
Banks).
total
held on that date
Paper Currency Reserve was thus
Sterhng securities
in
crores
lO
...
India
...
22'4
...
20-5
Silver
Rs
...
England
Rupee
Gold
...
...
66-11
Mr. Keynes estimates that the public circulation of
Rupees on 31 March 191 2 was 175

120 crores in igoo.
in the
against only
crores^
(These figures exclude the Rupees
Paper Currency Reserve and the Government
Balances.)
It
Future development of our paper currency.

will be seen from what has been written above
that the
distinction
between
the
Gold Standard
Reserve and the Paper Currency Reserve has practically

disappeared, and that no useful purpose
is
served by
keeping the two funds separate, as they play the same

"
part in the working of our currency system.

bullion reserve [of the Indian Paper Currency,
in
England,]
is
no longer held
of securing ability
solely with the object
to meet the
obligation
notes in legal tender on demand.

for holding gold
of
by means
of
The
lodged
It is
now
cash
to
utilised
which the Secretary
State can support exchange in times of depression
and maintain at par the gold value of the rupee,. .and

hence can be hardly distinguished from the resources
.
of the Gold Standard Reserve proper." (Keynes, 51).
CH.
3OI
INCREASE OF CREDIT MONEY.
VIII.]
The example of other civilised countries shows (as

Keynes has demonstrated) that the increased use of
notes (or cheques) and replacement of metallic money
by them
in the case of large
payments,
is
along " the
Hence the use of
stream of monetary evolution."
paper money (and not of sovereigns) should be en-
couraged by the Government as our ultimate currency
But the Indian system of paper currency
ideal.
from that of most note-using countries in

"the Indian currency
is
differs
this
that
internally absolutely inelastic,"
money can be expanded only by dean equivalent amount of metallic money in
our paper
i.e.,
positing
the Reserve, so that the total currency remains exactly

the same.
We
have no credit device
for
expanding
the volume of currency (rupees plus paper) temporarily

to
meet the temporary demands of
trade, as our people
do not use cheques, and notes cannot be issued with-
money basis, whereas in note-using countries

Central Bank can under law circulate at such
out a
the
full
times more notes without a corresponding increase

its
metallic reserves.
(Keynes, 56-67.)
in
He, therefore,
advocates the establishment of a State Bank for India,
may
in order that our note-issue
the function of banking, and

total
circulating
medium
be associated with
by the use
of credit our
(rupees plus paper)
may
be
expanded at need, and our dependence on the London

money market even for short term loans (which compels
us
to
pay a very high
rate of interest to cover
the cost of remittance both ways),
may
be got rid

302
of.
[CH. VIII.
wider use of paper money and not the
the
In
INDIA.
adoption of a gold currency
lies
the monetary salva-
tion of India.
Royal Commission on Indian Finance and

Currency.
In 1913 a Commission, with Mr.
J.
Austen
Chamberlain as Chairman, was appointed to inquire

into the location
ment
of
and management
of Indian
Govern-
balances, the maintenance of the exchange value
rupee through the Gold Standard and Paper
the
Currency Reserves, and the financial organisation and

procedure of the India Office.
The Commission
in its
Report {Code 7236 of 19 14) arrived at the following

conclusions
of the last 15 years shows that

Gold (Exchange) Standard has been firmly secured
(i)
the
"The
(in India)
history
without the supposed essential condition of
the maintenance of a gold currency in active circulation (in the country).
The measures already adopted
by the Indian Government
for the
maintenance of the
exchange value of the rupee worked well in the
crisis
of 1907-8."
(ii)
" It
would not be
to India's
advantage to en-
courage an increased use of gold in the internal

culation
cir-
the currency most generally suitable for the
internal needs of India consists of rupees
and
notes.
The use of notes should be encouraged by Government."

(iii)
A mint for
the coinage of gold
(in
India)
is
not needed for the purposes of currency or exchange

but there
is
no objection
to
its
establishment.
CH.
No
(iv)
limit can be fixed to the accumulation of
Gold Standard Reserve, but
the
3O3
PROPOSED CURRENCY REFORM.
VIII.]
the profits
all
on
coinage should be credited exclusively to this Reserve,
and a much
it
larger portion
ultimately
one-half,
The whole
should be held in actual gold.
Reserve should be located in London, and
of
of
its
the
Indian
or rupee branch should be abolished.
The Paper Currency system of India should be

made more elastic. The fiduciary portion of the note
(v)
should be increased at once from 14 crores to 20
issue
was done in 191 5], and thereafter fixed at

a maximum of the amount of notes held by Government in the Reserve Treasuries plus one-third of the
note circulation, and the Government should be empowered to make temporary investments or loans from
troves, [this
the
portion within this
fiduciary
alternative
(which
last
to
is
investment
maximum
permanent
in
now
the only thing
as
an
securities,
allowed).
The
500-rupee note should be universalised.

(vi)
The Government
of
India should
make a
regular practice of granting loans to the Presidency
Banks from
rity.
their surplus balances in India against secu-
In deciding
upon the location
of surplus balances
(whether in India or in London), the authorities should

carefully consider the possibility of utilising surplus
balances for loans in India.
annual rupee loan
much
in
as possible, (and
The amount
of
the
India should be increased as

India's
dependence on the
London money market correspondingly diminished).
304
(viij
The Financial committee
[CH. VIII.
of the Secretary
always contain at least
State's Council should
member with
INDIA.
of
one
experience of Indian non- official banking
and commerce.
(viii)
On
question of the establishment of a
the
State or Central Bank, the
Home
Mr. Keynes and

it,
w^hile Sir S. B.
Broacha, on behalf of the vested
interests of the Presidency
ment
Commission was divided
financiers generally supported
Banks secured the postpone-
any finding on the question.

Is a gold currency suited to India? In the
of
light of the experience gained during the last 15 years
working of our present currency system and

the recent thorough examination of the subject by
Mr. Keynes in his book and by the Chamberlain
in the
Commission
Report,
arguments on the
old questions whether India can use a gold currency
in
their
and whether the closing

cally sound measure,
interest.
nomic
of the mints
now
was an economi-
possess a
merely academic
For the benefit of students of Indian eco-
history,
summary
the
shall,
therefore,
here give a brief
them, referring the reader to the 3rd.

edition, pages 267-278 for a fuller treatment.
of
The opponents
of a gold currency urge that (i) in
India the vast mass of the people
make
transactions
and cannot possibly use gold coins,

so that an immense amount of coined silver must
for very small sums,
be kept in circulation to supply their needs.

Indians have a passion for hoarding, and
(2)
if
The
gold
is
CH.
GOLD CURRENCY OBJECTED
VIII.]
made
easily accessible to
TO.
305
them by the introduction
sovereigns as currency, they will replace
of
rupee
their
hoards by sovereigns, so that while gold will quickly

disappear the market will be flooded with rupees.
The Indians now
(3)
large
use paper
money
precious but handy currency like gold

in
in
making
payments, but they distrust notes, and
if
placed with-
they will use gold coins instead, and
reach,
their
is
the gold will not be
an addition to the volume of
active currency of daily use, but merely replace notes,
which
is
no gain but rather a retrogression from the
ideal currency system.

(4)
The
into gold
to
the
(Lindsay).
convertibility
of
existing
coined silver
on demand must be a condition antecedent
introduction
gold mono-metallism.
of
Government would be ruined by the

took to convert
crores of rupees
into
cost
if it
under-
And
gold.
But
yet
if Government does not guarantee free conversion,

the legal ratio between silver and gold coins in India
cannot be maintained.
(5)
India has to pay several millions in gold every
year as interest on her sterling obligations

invested in India,
foreign capital
and the
when withdrawn
during a monetary or political scare, goes out in the
form of gold.
Hence, during such a scare or even a
period of monetary stringency, the country would be

rapidly denuded of gold, and the gold standard
break
down.
port from India.
20
rise
in
would
exchange discourages ex-
Hence, the
artificial
appreciation
3o6
INDIA.
[CH. VHI.
the rupee decreases the balance of trade in favour
of
and reduces the flow of gold from abroad

on which MacLeod and other gold mono-metallists
(See MacLeod's Theory of Cvedit,
build their plans.
of India,
Ch.
vii.)
There
much force in several of the above

The ease with which we can now get
often leads to the making of ladies' ornais
objections.
sovereigns
ments from sovereigns instead of gold-bar as formerly,

because a sovereign is a coin of a certain known
and
purity and price
easily
ascertainable
weight,
whereas bar-gold can be assayed only by an expert,
and
This makes no difference in
price fluctuates.
its
the total
amount of gold in the country, but constantvolume of gold currency in the country
ly reduces the
and causes a pecuniary
loss to
Government. Sovereigns
cannot be a popular currency of daily use
in
our
country, because a sovereign represents Rs. 15, which

is
too large and inconvenient a unit for the needs of
Gold coins can come into popular

The examples of
some extent) Egypt have, however,
ordinary Indians.
use
only in small 5-rupee pieces.
Turkey and
shown
ports,
(to
that a
gold currency for the big towns, sea-
and foreign trade
an internal
silver
is
perfectly
compatible with
currency for the villages and far
inland places.
As
for
the
rupee hoards kept by the Indians, the
larger ones will probably be replaced
convenient and
less
by gold as more
likely to fall in intrinsic value
CH.
GOLD COINS DO NOT CIRCULATE.
VIII.]
307
but the smaller hoards, which are far more numerous,

will be
kept in the familiar and universally usable
form of rupees.
Moreover,
it is
a mistake to suppose
that hoards are for ever withdrawn from circulation
money is often drawn out and used in time of

need or when a safe investment presents itself at hand.
Inquiries made by Government in igii showed
the
that in the Punjab and
Bombay sovereigns
are
freely
accepted by the peasants as the price of their crops
and remain in active circulation as currency. The

same is the case, though to a much smaller extent, in
and Madras. But in the large provinces of
Bengal, Burma, C. P. and Assam, the use of gold as
Keynes rightly observes, " In
currency is negligible.
Bengal [and Burma] the slow progress made by gold
the U. P.
[in
active circulation]
is
to be explained
accustomed to the use of notes, even

hoarding.... The rapidity with
popularised in the Punjab
fact
for the purpose of
which gold
is
by the
much more
that the people of these provinces are
is
becoming
probably due in very
great part to the fact that notes have never become

acclimatised there."
by reason
unsuitable,
(P.
94.)
*'
The
sovereign
is
of its high value, for so poor a
country as India... The greater part of the Indian
must continue
circulation
in
any case to
consist of
for comparatively large
payments that
the sovereign may gradually come into use, and for
these it is essentially a rival to the note," which is
rupees... It
is
undesirable.
(Pp.
74,
92-94.)
This
is
exactly the
308
[CH. VIIL
view of Lindsay, following Ricardo, and very sound.

For remittance and carriage, however, sovereigns can
Our note
never rival notes.

6i p.
c.
demand
the
circulation increased
by
during the decade ending in 1908, and the

for
paper money
extension
is
daily growing greater with
our manufacture and
of
commerce,
though we are still immeasurably behind the condition

England where credit (or paper money) forms
of
99
I
p. c. of the
value of
p. c.
As
shown
for the fourth objection,
that
convert
its
no Government
is
can
fairly
MacLeod has
clearly
under an obligation to
subsidiary token coinage into gold to an
unlimited extent on demand.
is
and cash only
all transactions
demand
is
What
the Indian public
that, before gold
mono-metallism
adopted internally, they should have a long notice
and every opportunity
of converting into gold
portion of their rupees which exceeds the
the
amount
required for the purposes of a subsidiary and restricted

legal tender in daily
The answer
life.
to the fifth
argument
is
that, as India
pays interest on her foreign debt in the form of surplus
no gold need go out of the country

purpose in normal years. But when a gold
exports of produce,
for this
currency has been adopted for India, the rupee will no

longer be a silver coin,
exchange or
of silver,
but
fall
it
fixed portion of
subject
in value
will be
gold.
to
fluctuations
of
with the over-production
a token coin, representing a
Our notes and rupees
will
"
H.
EFFECT OF TOKEN RUPEES.
VIII.]
" act
precisely as
made
convertible
if
309^
they were bits of gold, by being
payment
gold for foreign
into
{Lindsay).
In such a settled state of things, prices in
India, even
though calculated in rupees, will be really
gold prices, and the disadvantage stated in the
an
objection, about
arrest of the fall of
fifth
exchange
in-
evitably leading to diminished export from India, will
As O'Conor says
no longer operate.
exchange
of a fall in
directly there
is
is
fall of
*'
The advantage
entirely temporary, because
exchange, prices are adjusted
and the cultivator gets very little of it. It is

either the merchant in England or the merchant in
India (i. e., the middleman) who gets the benefit from
the fall of exchange occurring during the time the
(to it)
transaction is in progress."
{Cd. 9037, p. 51.)
With
a fixed exchange, transactions between England and
India will follow a normal course, and such abnormal
or transitional profits will not be made.

In
summing up
mind that
India's
the whole case,
bear in
monetary isolation can no longer be
For good or
maintained.
we must
evil,
she has been joined to
the trade of the world, especially of the British

pire.
Her
silver currency
of weakness to her in
price of silver.
served her,
is
and the nations
cannot stand
it is
view of the rapid
Em-
a source
fall in
the
Bimetallism, which could have pre-
only possible by universal agreement,

of
Europe have refused to adopt
it.
Therefore, India must assimilate her currency to that

of
England and the
rest of the civilised
world.
3IO
INDIA.
[CH. VIII.
Objections to the closing of the mints to the

silver. (i) The change has, no
free coinage of
ties,
Government
of its
exchange
difficul-
but millions of Indian peasants
who had
invested
doubt,
relieved
ornaments have, at one stroke
their savings in silver
of the official pen, suffered a depreciation of
one-third in the nominal value of their
more than
only capital,
because their ornaments can no longer be coined into

rupees of the same weight,
bullion,
at 42
p.
but have to be sold as
below the price of coined
c.
In the famine of 1877 three
and one-third
silver.
crores
of
rupees worth of silver ornaments were sent to the
This remedy was with-
Indian mints to be coined.
drawn from
The holders
the Indian peasants in 1893.
of ornaments have
now
lost
more than one -third of
pawning them.
(2) The unnatural and immense difference in value
between coined and uncoined silver powerfully entheir credit in
courages the counterfeiting of rupees.
One hundred
rupees contain 91.6 tolas of pure silver, which at the
market rate
of
cost only Rs. 58
coined there
(3)
The
is
(about 27 pence per ounce),
bullion
;
so that
on every hundred rupees
a profit of 42
artificial
p. c.
limitation
of
the
number of
rupees in circulation has turned the rupee into a token
money, about 72*5
p. c.
above
its
intrinsic
value.
Hence, prices calculated in rupees have a tendency to

fall,
or "the purchasing
tendency to increase.
power
of
the
rupee" has a
There was "a sensible reduc-
CH.
RUPEES NOW DEARER.
VIII.]
tion in the general level
of
3II
during
prices
1898 and
1899," and "a remarkable cheapening of food-grains"

in
1898 owing to this cause, as
ment.
{Ind. Etnp.,
iii.
466.)
is
admitted by Govern-
Therefore, the taxes
now
paid by the Indians represent more commodities than

formerly.
Similarly,
the value of debts contracted in
the time of free silver coinage has
repayment has to be made
by
this
as
increased,
in the artificially appre-
Thus, the Indian peasant, the Indian
ciated rupee.
tax-payer,
now
and the Indian debtor
currency legislation.
alike are sufferers
[The operation of
this
economic principle has been retarded since 1900 and

prices have been greatly raised by other causes.]
The
(4)
influx of gold into India is increasing, as
foreign merchants have to

ill
make
remittances to India
gold for their purchases, so that while silver has
been appreciated, gold has been depreciated in India.

Indian commodities
lated in
gold,
countries will
and
now
their
require a higher price calcusale
in
gold-using foreign
be restricted in the same proportion.
Both production and export will receive a check.
[This
objection has been already answered on page 309.]

(5)
ment
life,
For the purposes of internal trade, the paywages to labourers, and the expenses of daily
of
gold can never displace silver in a poor and low
standard country like India.
If
rupees are withdrawn
from circulation as more and more gold coins are

poured into India, increasing hardship will be
felt
by
the millions of poor Indians from the shortage of the
312
know and can
only currency they
is
home
This policy
change.
and
all
bound
Government
use.
maintain a double currency,
must, therefore,
metal for
[CH. VIIL
INDIA.
to
one
and another for foreign exa violation of economic laws

[No, as Keynes has clearly
uses
is
fail.
proved.]
(6) India's trade
with China and other silver-using
countries has been
China
disturbed.
is
the
chief
customer of the Indian cotton mills, but as she pays

in silver, the
Chinese
closing
dollars
of
our mints has led to the
received
by Indian manufacturers
fetching merely the price of bullion, whereas formerly
they could be freely coined into rupees.
monetary change in India caused a sudden

p.
to India's chief industry.
c.
Thus, the
loss
of
42
{Code 9222, Cd. 7060,
Gokhale's Speeches, 13, 17, 95, DwU, 585-591).

[This loss has been modified only in so far as silver
ii.
p. 84,
prices in
China have
risen to adjust themselves to the
alterations in the rate of exchange.
India
is
now
gold standard country and stands on exactly the same

footing as other gold countries in dealing with
silver country like China.]
Commercial Legislation. Down
to the viceroy-
Lord Lytton there were duties on many Indian

imports and exports. But in the year 1879 an Act
alty of
was passed repealing
the duty on
port, especially cotton goods,
many
though at a
eighty lakhs of rupees to the revenue.
time
many
articles of
export duties were also
sacrifice
imof
At the same
Under
abolished.
INDIAN TARIFF HISTORY.
CH. VIII.]
Lord Ripon
all
3 13
the remaining import duties, except
those on salt and liquors, were removed
For
(1882).
the next twelve years there was no revival of import
except a small duty imposed on petroleum
duties,
in 1888.
But the
the growth
fall in
of military expenditure caused
two millions
and
the exchange value of the rupee
sterling in 1894.
In the
deficit
March
of
of that
year duties were reimposed solely for revenue purposes
on
articles
per cent,
one
p. c.
imported into India including
was
the general rate, but iron
only
Five
silver.
and
paid
steel
books, gold, industrial machinery,
materials, grain, etc., were free.
raw
Foreign cotton goods
law
was amended, imported cotton goods (both fabrics and
were exempted from the duty.
In December, the
yarns) being subjected to the duty of 5 p. c.

but at
the same time a countervailing excise duty at the
;
same
rate
was imposed upon the yarns produced in

As the coarser Indian threads,
the Indian cotton mills.

viz.,
those below
20 counts, did not compete with
Lancashire yarn, they were exempted from the excise.
Act
II
of
1896 introduced further changes
(a)
All cotton yarns, whether imported or manufactured
were exempted from the duty. (6) The duty

on woven cotton goods imported from abroad was
in India,
reduced to
3!^
p.c, the
excise
on the cotton goods
manufactured in the Indian mills being

lowered.
By making
similarly
yarns duty-free, the law remitted
taxation on Manchester goods to the
amount of
5 1 lakhs.
314
INDIA.
[CH. VIII,
while the Indian cotton weaving industry was saddled
with taxation, the yield of which gradually rose to
48 lakhs in 191 1. As the coarser cotton goods of the

Indian mills, which competed to a slight extent only
with foreign imports in India, were equally subjected
to
the price of the poor
the excise, the duty "raised
man's clothing in India without the pretext of

ing the poor
duty
man
of Lancashire."
a net deduction from the
is
mill-owners, and for
some years
(Dutt, 543.)
after its
first
This
Indian
profits of the
imposi-
The evil was aggravated
tion restricted their output.
by the rebellion
reliev-
in China, the
closure
mints to the free coinage of
silver,
of
the
Indian
and Japanese
The mill
Bombay was sinking when a market was
opened for it at home by the Swadeshi movement.
competition in the Far Eastern markets.

industry of
{Ind.
Emp.,
In
iv.
261-265
Dutt, 401-416, 537-544.)
'>
the beet sugar industry of
order to encourage
Germany and
Austria, their governments gave
to
This
exporters large bounties on the sugar exported.
had the
effect of artificially
sugar in India, so that
Germany
injured
itself.
the
sale
reducing the price of beet
it
sold cheaper here than in
This unfair
of
the
the
competition
cane-sugar of
greatly
Mauritius,
Jamaica and other British possessions, and also discouraged the sugar industry of India which was on
the
decline.
So,
the
Indian Government in
imposed countervailing duties
(in
addition to
1899
the
general import duty of 5 p.c.) on bounty-fed sugar to
VIII.]
:H.
INDIAN TARIFF RATES BEFORE WAR.
he amount of the bounty, so as to place

he Indian market on terms of
)f
and
bounties
all sugars
fair competition.
The Germans then gave up
>CIV of 1899.)
315
escaped from
the
in
(Act
the system
countervailing
but they next tried to evade the law by the

'Cartel system" of combinations to manipulate prices,
iuty
ind a further law had to be enacted in 1902 (Act

{Ind. Emp.,
VIII) to counteract the effect of "Cartel"
iv.
264).
into
At
present, all foreign countries
coventions with
dropped
the
British
bounties and
their
have entered
Government
" Cartel,"
so
and
that all
kinds of countervailing duty on the sugar were with-
drawn in 191 2. The liquor duty was raised in 1906

and again in 1910 in the last-named year, silver,
petroleum and tobacco also were subjected to en;
hanced import
The
duties,
tobacco
trade,
but solely for revenue purposes.
however, greatly declined in
consequence, and therefore in 191
on
the rates of duty
all classes of
tobacco were reduced by one-third.
The
tariff as
Indian
it
stood in 1914.
In
addi-
on
(for
political
reasons),
ammunition
(i) arms and
(2)
liquors and spirits (for moral reasons), (3) silver, 4
annas per ounce (on economic grounds), (4) salt, which
pays an import duty equivalent to the excise on
salt manufactured in India, viz.. Re. i per maund, (5)
tion to the above, special import duties are levied
tobacco and
its
manufactures (usually Re.
to Re.
1-4 per lb.), opium (Rs. 24 a seer), and petroleum (i|^

annas per Imperial gallon). Most other goods pay the
3l6
general duty of 5
for
p.
In
c.
the free
list
are
quinine, machinery, gold, lead sheets
grain,
-animals,
[CH. VIII.
woven cotton manufactures
p.c,
c, iron and steel
3J- p.
INDIA.
railway materials, books, coal, cotton
tea-chests,
(raw and yarn), hides and

type and ink (but not paper),
skins,
printing presses,
raw wool, manures, &c.
The Indian tariff now contains about 400 different

articles. About one-fourth (exactly 23 p.c.) of the total
import duty collected in 1913 was derived from cotton
10 p.
goods,
from
liquors,
c.
and
and sugar each, 14 p. c.

c from petroleum and metals each.
from
7 p.
The balance (about 26
silver
p. c. of the
hundreds of minor
articles.
taken together yield
less
duty.
In
19 1 3
imports was 9*2
our
came from
total)
Some 76
petty articles
than ten lakhs of rupees as
revenue from sea-borne

which was thus made up
gross
crores,
Cotton goods yielded
...
...
2" 11
Liquors
...
...
...
Silver
.,.
...
...
98
Petroleum
...
...
...
70
Sugar
...
...
...
91
...
...
1*32
...
...
...
72
Other
...
...
...
2*42
The duty on imported

excise
salt
lakhs
Other metals
articles
crores Rs.
crores Rs.
and the countervailing
duty on Indian cotton manufactures are not
included in the above figures.
Export
on
rice
duties,
(a)
At present
exported from India.
there
is
a duty
on
Burma, where the annual produce far exceeds what
is needed for the consumption
The
of the people.
This chiefly
falls
WAR CHANGES
CH. Vlir.]
duty
in
is
highest
the
3 17
maundy and yielded 144 lakhs

on record, and 126 lakhs in
three annas per
igi2,
IN TARIFF.
1913(b)
very low cess of i pie per lb. has been

for financing a committee of
imposed on tea-exports
merchants formed in order to push on the sale of

Indian tea in foreign countries.
In
respect of this
Government acts merely as the collecting agency.

A duty on jute exporIts yield was 4 lakhs in 1913.
ted from Calcutta was imposed in 19 12 for the benefit
of the Calcutta Improvement Trust, yielding 1 1 lakhs
in 19 1 3. Its rate is 2 annas per bale of 400 lbs. of raw
duty,
jute
and 12 annas per ton of manufactured jute. A

duty is levied on jute exports from the port
similar
of
Chittagong.
War
changes.
This was the state of our
tariff till
March 1916, when additions to our custom duties became necessary for meeting the expenses incidental tO'
war. The result of the tariff amendments of 1916 and
19 1 7
was
the following changes
(a)
The
p.
c.
general import duty
the
y^
enhanced to 2^
stood at
3J-
rate
p. c.
of
;
p. c. only,
were
was
raised from 5
to
was
manufactures, which had
p. c.
cotton
on iron and
steel
in 19 17 subjected to the
general rate of y^ p.c.

(6)
The
special
import duties on arms,
liquors,,
manufactured tobacco, sugar and silverware,
have
been increased.
(c)
The
free
list
has been curtailed by
taxing
economics of British
3j8
india.
[ch. viii
imports of machinery, railway materials, food-grains!

coal, printing materials,
(d)
cuttings lo as.
of
400
tea
&c.
Exports were taxed thus in igi6
lbs.
and
jute manufactures Rs. 10 to 16
li per
Rs.
raw
jute
other descriptions Rs. 2^ per bale
100
In
lbs.
per ton
917 the duties on
jute'
and jute manufactures were doubled.

National
Protection how justified by the
System of Political Economy. Under free trade
we can buy a thing cheapest, as the products of all
countries openly compete for supplying our need.

protective duty raises the price of the
thus harms the consumer, while

directs
its
commodity and
artificial
stimulus
and labour into a channel naturally

the country and lowers their efficiency.
capital
less suited to
Protection,
immediate
therefore,
But
loss.
inflicts
it is
on
the
country
an
urged by a school of econo-
mists whose most illustrious exponent
is
the
German
that this immediate loss is compensated

by the ultimate gain of the country, from the
writer List,
for
growth of home industries and diversity of employment, the stimulation of

munications,
resources,
and
when
the
skill
organisation and com-
development
the country
national
of
becomes a seat of manu-
factures under the shelter of protective duties.

fore,
the
interests
of
the
be sacrificed to the larger
There-
individual consumer must

interests
*'Mere accumulation [of wealth]
is
compared with the organisation
of
of
the
nation.
minor importance
of the
productive
CH.
forces of
3I9
ULTIMATE GOOD OF PROTECTION.
VIII.]
society... From
the national standpoint of
productive power, the cheapness of the
moment might
be far more than counterbalanced by the losses of the

future
"
measured by the
The power
of
portant than wealth
gain of a power
an
Defence
it is
of production^
industrial
of
is
more im-
sacrifice of value is
made good by
the
which not only secures
amount
infinitely greater
goods, but also
war.
is infinitely
If
itself.
caused by protective duties,
to the nation
of productive power."
loss
producing wealth
of material
independence in case of
much more importance
than
opulence."
The present war has demonstrated the absolute

and helpless dependence of India on foreign countries
for several of the commonest requisites of civilised
life,
including medicines, sanitary appliances, artificial
manure, railway materials, educational apparatus and

even paper and the commonest metal goods.
same time
At tlie
which
the closing of the foreign markets at
we have been accustomed
to
sell
our only exports
(raw produce) has ruined millions of our peasants and

landlords.
Nations, according to List, must pass through three

stages in their industrial progress
agricultural stage
the more advanced nations as a
themselves from
developed the
the
first
or
means
of raising
a state of barbarism and of making
advances in agriculture.
is
(i) In
they must adopt free trade with
less
But the more agriculture

advantageous becomes free trade.
320
INDIA.
[CH. VIII.
the second or educational stage, nations must
(2) In
resort to protection to
promote the growth of manu-
factures, fisheries, navigation,
import duties should at
The nation must
raised.
and foreign
trade.
The
be lov^ and be gradually-
first
of
first
all
endeavour to
develop those manufactures v^hich produce articles

of general consumption.
Measures of protection are
only in the case of nations which are natur-
justifiable
ally capable of
developing industries, and " possess
all the
necessary mental and material conditions and
means
for
their
establishing
own."
(3)
In
the
a manufacturing power of
third
the highest degree of wealth

protection), nations
stage,
tection
in the
is
and power (by means of
apt to check progress and lead to deca-
home
producers.
{Listy
XXVI and XXVIL,
fosters
xviii-xxiii,
indolence
93,
must be the policy of a

and
not
a
tion age
permanent thing. When
abolished,
its
transiit
has
purpose, the protective duty should be
and
free trade resumed.
The home manu-
factures, fully developed during the interval, will

sell
107,
313).
Protection, therefore,
achieved
prin-
stage further pro-
the exclusion of competition
144, Ch.
reaching
must gradually revert to the
ciple of free trade, because at this
dence,
after
now
cheaper than the foreign import and the nation
will be benefited as a
When
this stage
protective duties
consumer.
(List^
117, 313).
has been reached, the continuation of

is
positively harmful to the country,
as they deprive the
home
producers of the bracing
CH.
YOUNG INDUSTRY ARGUMENT.
VIII.]
influence of full
and
free
321
competition and tend to keep
labour and capital inefficient and helpless, like a

grown-up lad who has been carried in his nurse's arms
ever since his birth.
Mill also defends protection for the benefit of
J. S.
young
industries.
"
The only
duties can be defensible,
is
case in which protective
when
they are imposed
temporarily (especially in a young and rising nation)

in
hopes of naturalizing a foreign industry, in
itself
perfectly suitable to the circumstances of the country.
The
superiority of one country over another in a branch
of production often arises only
There
sooner.
may
from having begun
it
be no inherent advantage on one
part or disadvantage on the other, but only a present

superiority of acquired skill
and
experience... It cannot
own risk,
new manu-
be expected that individuals should at their

or rather to their certain loss, introduce a
facture,
and bear the burden
of carrying
it
on until the
producers have been educated up to the level of those
with
whom
the processes
are
traditional... But
the
protection should be confined to cases, in which there

is
good ground
it
fosters will after
of assurance that the industry
which
a time be able to dispense with
it."
{Mill, Bk. V. Ch. X. p. 556).
India and Protection.
The
question
is
whether
India can and ought to lay protective duties on foreign
manufactures in the hope of encouraging the growth

of
home
industries.
Now
come from England, about

21
62*4 p.
7*5 p.
c.
c.
of our imports
from the other
322
British possessions,
(making a
Empire), and only some 30 p.
able
man can
like India to
total of 70 p.
or
c.
c.
for the
than one-third
less
(Figures for 191
from alien countries.
[CH. VIII.
No
1.)
reason-
expect a politically dependent country
be allowed to impose protective duties on
British goods.
(See Views of the Government of India
Even
on Preferential Tariffs, para 10, Webh^ p. 67.)
when Britain imposes " a particularly crushing and
unfair " duty on Indian tea, tobacco
iig and 123), and

Indian
many
matter, therefore, comes

less
protective
tariff.
is,
should India do so
is
justified
a temporary measure and
of countries
It is
(6)
and
tion to
them
nou) will
and decline
The late
was due not
List
to the
growth
not universally bene-
coal, are
each more than
years old and have attracted a vast
They can hardly be
have
in the case
In the case of India, our chief industries,
cotton, jute, tea,
effort
We
by Mill and
which are naturally suited
of the industry protected.

ficial.
The
than one -third of her imports by a
The next question

(a) as
colonies penalise
to this that India can at best
seen above that protection
only
coffee {Webby
India cannot retaliate.
manufactures,
discourage
British
and
amount
viz.,
fifty
of capital.
called young industries.
Protec-
be an encouragement to slack
of efhciency.
failure of several cotton mills in
Bombay
combad management, extravagance and

unproductive debt by the owners, diminution of effecto the increasing severity of foreign
petition, but to
CH.
VIII.]
PROTECTION NOT NEEDED
IN INDIA.
323
and consequent low rate of return on the

nominal capital, and lack of a reserve to buy
tive capital
total
raw cotton cheaply far ahead. Mills, under better

management, both in Bombay and Beawar, have been
earning good profits all this time. In respect of the
jute mills of Bengal, with every advantage of European
capital and direction, they have hitherto failed to turn
out
Germany), because of
finer fabrics (like those of
the
inefficiency
of
Indian labour and the scientific
backwardness of their higher

these
two
staff
and so long as
no protective duty, how-
defects continue,
ever high, can transfer the weaving of jute wrappers
and coating from Germany
to Bengal.
Protection
alone will not serve our purpose.
We
have shown
in
defects of Indian sugar
a previous chapter the organic
The
and paper manufactures.
removal of these defects rather than protection

necessary to foster
several
them.
small industries,
cigar factories,
Next
to
these
is
we have
candle works, cutlery

conducted
firms,
soap factories,
etc.,
all
with small capitals and hand appliances, by a comparatively inefficient because out-of-date process.
duty on imports of these things will Pjerely enrich the
and act as a premium

on inefficiency, at the expense of the general body of
consumers. By taking to production on a large scale,
the latest machinery and more capable management,
existing Indian manufacturers,
these
industries
protection.
can yield
Many
profit
even
now without
petty industrial ventures which the
324
INDIA.
[CH. VIII.
Swadeshi movement has called into existence, are

backed by so little capital and brain that they cannot
possibly succeed
managed by men
they are generally
v^ho have failed in other departments of
New-
life.
branches of industry, earnestly and competently undertaken, have
no chance
secure
of failing to
market while the Swadeshi
spirit is alive,
the
home
and
it
has
yet to be proved that any such venture has succumbed
from unrestricted foreign competition.
So
far as
can
see,
no case has been made out
favour of protection in India at present.
hand, there are some special reasons

should be continued.
On
why
in
the other
trade
free
Apart from the general consi-
deration that protection involves an immediate sacri-
national resources,
of
fice
like India
can
ill
afford to
which a poor country

the
bear, there
fact
is
that in this semi-tropical and conservâtive country,
man
has a natural tendency to
and
let
slacken his exertions
matters follow their wonted course, which
opposed to industrial
efficiency
and
is
Such
progress.
a tendency can be fought and kept down only by

the freest intercourse with the rest of the world
an ever-present fear
we
unless
latest
ceaselessly
improvements.
on
inefficiency
Its
effect,
people,
is
of being beaten in competition
exert
ourselves
and adopt the

premium
Protection would be a
and would
unless
and
foster
a fatal indolence.
counteracted by the spirit of the
always demoralising
;*
and we must
* "It seems not unnecessary to call attention to the
confess
numbing.
CH.
EVIL EFFECTS OF PROTECTION.
VIII.]
325
with sadness that the Indian people are not like the
Germans
or Americans.
Secondly, protective
are
duties
By them
but very hard to repeal.
are soon created w^hich fight tooth
a return to
case that protection
vested interests
and nail
to
resist
and can always make out a
trade
free
easy to impose,
Witness the
necessary.
still
is
long opposition of the English landlords to the repeal
Corn Laws at a time when a part of the

nation was regularly starving. In manufacture the
evil effects of protection do not manifest themselves
in the same glaring form as in agriculture, and hence
opposed with
free trade in manufactures can be
of the
greater plausibility
than the free import
corn.
by the protective system.
exercised
enervating influence
of
An
industry that has been secured against foreign competition
seldom
elastic,
it
is
seldom abreast of the times.
country the stimulus of
foreign competition
native competition being, of course,
less
is
keen
is
In a small
indispensable,
[there].
When
people speak of the disadvantages of foreign competition, they
would do well not
to forget
advantages, not only for the
its
consumer, but also for the producer... It
easy thing to reawaken the

body.
many
Even
in
numbed
France, industry
points when,
derably reduced."
in
i860,
{Pierson,
protection to free trade
is
is
faculties
was found
by no means an
of an enervated
to be lagging at
the protective duties were consiii.
189.)
"The
transition
always accompanied by
from
losses for
some and by temporary lack of employment for a portion of

the working classes. There are objections which usually make
-the legislator hesitate [to sweep away protective duties ever in
future]."
{Ibid, 187.)
30
Even
duty
List
till
[CH. VIII.
wishes to continue a moderate protective
his country has reached
of wealth
INDIA.
"the
highest
degree
and power" and can compete on equal
terms with the most advanced industrial nations of

the world,
We
that
is
to say,
till
the millennium arrives
may, then, be sure that protective duties
if
they
once como, will come to stay and continue to exert

for ever their demoralising influence
admits.
(Pp.
This danger
93, 249.)
8,
great in India, where
the
which even List
common
is
especially
people have no
voice in the administration, where the capitalists (botli
European and Indian) exert a disproportionate
on the
in-
and where the old social

system, with its checks and remedies, is undergoing
a rapid disintegration which will make the plutocrats
supreme for some time to come. It is quite possible
fluence
legislature,'^^*
for protection to be continued here for
the
rich,
after its
silent millions of
economic necessity
the
is
benefit
over,
of
and the
consumers to be permanently sub-
jected to this indirect tax.
Quite distinct from the promotion of

tries
by
protection,
is
the
home
indus-
question of retaliation or
which lay heavy

duties on Indian manufactured imports. For example,
penalising the products
of countries
Indian jute manufactures are subject to a duty of 20

p. c.
in
States of
*
made
Two
Germany, Austria and the United

America, and of 32 p. c. in Russia. England
France,
was pubUshed, Lord Cromer

same argument in the Spectator,
years after the above
use of exactly the
CH.
VIII.]
SWADESHI MOVEMENT
ITS ORIGIN.
327
imposes "a crushing and unfair tax" (in the words of
Webb) on Indian
Mr.
tea
and tobacco.
Now,
retalia-
means revenge, and we can indulge in it only in

power of harming our fiscal
who
(a)
import
raw materials from us and
enemies,
Our power
(6) export their finished goods to India.
tion
proportion to our
to tax either of these will be discussed in
But
on Tariff Reform.
that retaliation
when
the
threat of
it
carried
fails
and
the
out,
should be borne in mind
it
importance
removes the
disabilities
produce in foreign countries

threat
retaliatory
result
is
it
only
on our
when, however, such a

measures
actually
are
a diminution of our pro-
duction, through a contraction of
Unlike protection,
section
econon>ic
of
is
the
its
foreign
market.
cannot cause new industries to
grow in India. But it can increase pur revenue somewhat at the expense of the foreigner and thus make
some amends for the restriction of the sale of our
goods abroad.
Swadeshi means the use of goods made in one's

country.
The movement originated more than
own
thirty years
ful
ago
in the
Bombay
Presidency.
Thought-
Indian leaders were alarmed at the lack of diver-
employment as a protection against famine,

immense preponderance of agriculture with its
accompaniment of a low type of civilisation, the
absence of arts and industries which might raise
sified
the
our labourers to a higher standard of wages and

living, the industrial subordination of India to
Europe,
328
the
of
life
and death struggle
Bombay
and long- established
and the economic neutrality
a Government that refused to
initiate,
home industries in
Germany. They resolved
(directly)
assist
in
[CH. VIII.
of the infant cotton industry
against the powerful
mills of Lancashire,
State
INDIA.
of
pioneer or
imitation of the
the people
that
should try to do v^hat the State declined, and that

the voluntary preference
a part
in
Germany
spirit
of
the nation should effect
of the result that protective duties
or the United
had achieved
America.
This
animated Ranade, Telang, and many
other
leaders of the South.
States
When
of
Mr. Viswanath
Mandalik, a Maratha scholar and patriot,
Narayan
came to
Calcutta in Lord Ripon's time, his Bengal hosts were

at
surprised
the
coarseness of his dhotis.
queries he replied, "I must
my
country's mills
wear these thick
cannot yet produce
To
their
clothes, as
any
finer
fabric."
About
a decade afterwards, in the nineties of
a protest against modern luxuries

and foreign things in general began to be preached
by the orthodox section of the vernacular press. The
patronage of home manufactures and the rejection of
foreign imports, hitherto based on patriotic motives
only, now began to be taught as a social and almost
the last century,
religious duty.
trade
own
England's motive in enforcing
on her dependency,
industries
century,
by
after
relentless
was misconstrued
free
having built up
protection
in the very
in
the
manner
lier
i8th
of List.
CH.
SPREAD OF SWADESHI.
VIII.]
The
(See List, 295).

to a select few
The
into
idea, however,
Bengal made
it
329
was
still
confined
universal.
homogeneous people of Bengal

two mutually exclusive and even antagonistic
division of the
administrations,
against the wishes of the country
and with the avowed
political
object of creating
public opinion between their capitals,
diversity of
roused the Bengali leaders in August 1905 to administer to the nation the
vow
of
avoiding foreign goods
and using home manufactures
instead.
The quick
spread of the idea throughout our society was due

to the wonderful oneness of
the
life
and thought among
Bengali population, irrespective of rank, caste or
creed.
among
Alone,
the
Indian provinces, Bengal
possesses the advantages of having
4I
crores of
people
speaking one language, a high percentage of literate

people, and several newspapers with a circulation of
above 20,000 copies, (each copy being read by a score
The movement even affected the genuine

Musalmans of the lower middle class in
that had no standing source of religious
of people).
Bengali
localities
friction,
the
reason
evidently being that the lakhs
hand-loom weavers in Bengal are Muslims and the

Swadeshi movement gave them bread after years of
steady loss of business and growing starvation.
After a rather stormy career, (due to non-economic
of
causes), "honest
of
the
It is still
Swadeshi" received the approbation
King-Emperor's representative in the land.

far
from being universally followed even
in
;^^0
Bengal
but
it
INDIA.
[CH. VIII,
has got a substantial body of deter^
mined adherents, whose number will not

the years roll on.
It
decrease
as
has gained for several kinds of
Indian goods a secure market at the very doors of

the producers.
From
to
me
thing,
in
the
to be
it
is
Germany
price
Swadeshi seems
entirely voluntary
Nobody
home manufacture
free foreign
For one
the State does not, as
or the U. S. A., artificially
the sacrifice of money.

is
of view,
than protection.
better
a commodity.
of
dearer
economic point
much
enhance the
need buy a
in India
unless he
is
willing to
make
Secondly, the fact that there
competition compels our manufacturers
to be ever vigilant in increasing the efficiency of pror
duction, because they
know
abuse their countrymen's
that in proportion as they

spirit
of sacrifice
and turn
out worse or dearer goods than the foreigner, they will
exhaust the nation's patience and lose the

ket.
To
The
ethical value of
Swadeshi
is
home mar-
even greater.
hardly one in a million comes the chance of doing
a great deed for his country, or sacrificing his

fore the nation's eyes.
But each one of
poor his means, can make a small
us,
who
however
silent sacrifice for
The poor
his country every time he goes to market.
student
all be-
spends an extra eight annas by buying a
pair of Indian dhotis, denies himself this treat or
that
which he might have bought for the money if only he

had preferred the cheaper foreign dhoti, but he feels
that he
is
making
this sacrifice of his
own
pleasure
ia
CH.
Deccan
labourers,
whom
thank him.
will never
oi
331
put bread into the mouth of a starving family
)rder to
)f
SWADESHI VeVSUS PROTECTION.
VIII.]
he will never see and whO'
The wider outlook and
broader sympathy which
knits provinces together into
is
fostered
spirit
by such
acts,
The customs-
a nation.
union of the numerous German States consolidated

their
union into one empire.
Some
thinkers prefer protection to Swadeshi
on
the grounds that unlike protection (a) Swadeshi brings
no revenue to the
State, (6)
and not based upon any
and
(c)
the
demand which
to be uncertain
it is
generally uninformed
clearly thought out policy,

arises
and spasmodic.
tion, it is evident that taxation
from Swadeshi
As
for the
is
apt
objec-
first
of foreign goods for
revenue and their taxation for protection are mutually

In proportion as the yield of the
inconsistent ideals.
import duty
is
large, the
consumption of foreign goods
home
has been great and the protection of

has been ineffectual.
when
industries
logical protectionist
is
fully
the import duty yields no revenue
satisfied
only
at
Then, again, the disadvantage of Swadeshi
all.
from the revenue point of view
when
at
it
is
only temporary
has succeeded in establishing
new
home, the addition to the income-tax from
source compensates the State.
Lastly,
industries
this
the revenue
by protective duties imposes an unfair sacrifice

on the consumers of particular goods, as distinct from
raised
the whole nation, {Pierson,
ii,
i88,) whereas in the
case of Swadeshi such a sacrifice
is
voluntary.
The

332
second objection has some force

<:ertain that
a protectionist
ripe political
tariff
INDIA.
[CH. VIII.
but
not quite
it is
embody
will always
wisdom, or that protective duties will be
abandoned when no longer necessary for the

As a practical politician like
the late prime minister of Holland remarks, " Protection is a costly specific, and any mistakes made in
applying it mistakes which are unavoidable produce
readily
good
of the country.
very harmful results."

tion
of
is
{Ibid^ i88.)
no practical significance
The third
among a
objecfairly
educated and public-spirited community.
any
Boycott, or the exclusion of

is
a mere negation
industries.
An
fill."
But
unlike Swadeshi
advocate
" Boycott creates a
class of
it
boycott
of
commodity,
cannot create
has
asserted,
gap which Swadeshi rushes
it is difficult
to see
in to
how something can
be
you decline to buy a

thing which is not produced at home, you save the
money but you do not thereby encourage a rival
created out of nothing.
If
home
industry.
starting such
If
the conditions are favourable to
an industry
here, the industry
and you buy the manufacture,

ference for
case of
home
goods,
boycott.
i.e.,
When
it
is
is
founded,
a case of pre-
of Swadeshi,
and not a
Americans
boycotted
the
English tea in 1774, they could not thereby create tea

plantations in the United States
they simply gave
up tea-drinking. Moreover, boycott, like retaliation

in trade, is an appeal to the passions, and may cause
a diversion of energy into a wrong path. You adopt
CH. VIII.]
it
to spite
PREFERENTIAL TARIFF HARMFUL.

your enemy, though
it
does not benefit you.
weapon, not economic.

India and Tariff Reform, England
It is
333
political
trading country,
is
a free
while the Continental nations, the
United States, and even the British colonies are pro-
England admits foreign goods free of duty,

but her own manufactures are handicapped in foreign
countries by having to bear heavy import duties. This
tectionist.
has created a feeling of resentment

class of English politicians.
among a
certain
They want England
to
give up the policy of unconditional free trade and lay

duties
retaliatory
on foreign imports
(or to
induce
by the threat of such retaliation to lower

duties on English goods).
Secondly, they want
foreign States
their
to tax imports into England, not so
much
to
protect
English industries (which are too well established to
need such
contribute
artificial support), as to
to
arrange the
either
the
tarifE in
It
way that an
may fall on the
such a
wholly or in part,
producer.
make
English revenue.
the foreigner
is
possible to
import duty,
profits of
In such a case the foreigner will be
for England's defence,
and the burden
of
the
taxed
taxation on
Englishmen will be proportionately lightened. Thirdly,

as the colonies are sometimes as great sinners
England
as
Germany
or
U.
S.
against
A., the tariff reform
party propose a system of imperial preference by which
England and her colonies will lay lower import duties

on each other's produce than on the goods of foreign
countries.
They hope
to
knit the
empire together
334
by
the
common
of
ties
INDIA.
[CH. VIII.
common
and
interest
animosity.
The Indian Government,

October,
refused
1903,
following grounds
on the
England will
(a)
22nd
in its despatch of
to join in the scheme,
refuse
to
India impose any
let
protective duty on English goods, though the duty be
light
and foreign goods are taxed at a much higher
rate.
the existing duties imposed for revenue
(6) If
are
only
lowered on British imports and enhanced
foreign goods, the loss of revenue will be
because
we import
thrice
as
on
very great,
much from
the British
Empire as from foreign countries, and the
loss of
customs from the former source cannot possibly be
made good from
the increased taxation of the latter.
Besides, in one-fifth of our
between
market
British
is
so
imports,
the competition
and foreign manufactures
keen that
this
in the Indian
preferential
duty will
enable the former class of goods (paying the lower

duty) to displace the latter (which will be taxed at a
and so the Indian revenue will
higher rate),
while the British manufacturer will

(c)
India
is
a debtor country and must
exports worth 6
countries,
regularly.
imports
if
she
is
But a
millions sterling
to
pay
interest
preferential
may provoke
those
suffer
profit.
sell
surplus
in gold-standard
on her foreign debt
duty against foreign

foreign
countries
to
exclude Indian goods, \îth the result of forcing India

CH.
WE CAN TAX OUR
VIII.]
EXPORTS.
335
to be insolvent to her European creditors.

result of Continental
the
off,
reprisals,
As the
may
India may
our exports
balance of trade in favour of
fall
dis-
appear, and India's revenue and credit in the money-
market decline
would be
''the result
disastrous."
But, the Tariff Reformers argue, India has an
ad-
vantage which no other member of the British Empire

possesses
she
*'
industries.
several products in
a monopoly,
etc.,
(such as wheat,
competes
their
Our exports
which India
viz., jute,
balans, mowra,
huge
quantities
of
raw
England's commercial rivals require
materials which
for their
out
sends
til
composed
of
practically enjoys
seed, lac, teak
wood, myro-
while in several other articles
seeds,
[in foreign
are
hides, etc.)
in
which India
markets] with outside producers,
remarkable cheapness places us in a particularly
strong position
many important
so
we can
that
rest assured that in
branches of commerce outside nations
will be forced to come to India, in order to obtain the
raw materials necessary
to keep
their
own
peoples
occupied and their industries prosperous."* (Webb's

India and the Empire, 88.)
*
But the Indian Government
is
not so confident about our
monopoly in these things and foreign nations

being absolutely dependent on us for raw materials. It is unwise to rely too much upon the hypothesis that India enjoys
an effective monopoly in any large number of articles which
having an
effective
"
are essential to the existence of foreign
quoted, para
15).
industries."
(Despatch
33^
[CH. VIIL
INDIA.
Therefore, according to the Tariff Reformers, Indian
can punish the foreign rivals of England by laying
ai
duty on Indian raw materials exported to these foreign^

countries, (preference being
Mr.
consumer).
Webb
shown
export of " jute, the resultant

rather to the United
is
no reason why
duty
99.)
(p.
It
to
admits that
England as a
if
India taxes her
benefits
would accrue
Kingdom than
to India.
But that
India should not " impose such a
not pretended that an export
is
duty on Indian raw materials, which must contract
market and thereby injure their Indian producers

some extent at least, will benefit any Indian manufacturer, because most of the foreign manufactures
their
to
we import
are such as " either in kind or quality India
And
does not produce at all."
yet India must impose
such an export duty for the benefit of England and

her colonies
mere tool
that
must be used as a
to say, India
is
in England's
commercial war with Germany
or U. S. A.
Professor
the nature of
Lees Smith has clearly shown that from
England's trade with India, "Great
Britain cannot offer any fair reciprocal advantage to
India without a substantial
rise in the
raw materials on which some

tries
depend, or of food
either to lose or gain

tariffs
price either
of
of her important indus-
stuffs... India
has equally
little
from a scheme of preferential
within the Empire. The results for Great Britain
[will
blow."
be that] British trade will
He shows
that
among
suffer
a staggering
the ten articles which
CH.
NO FIELD FOR PREFERENCE.
VIII.]
represent go p.
from India,
in
the
raw
first
of the
c.
of the total value of British imports
(a) preference is
jute, lac, tea,
and
a practical impossibility
jute manufactures, because in
three of these India has a practical
English market.
and raw
cotton
are
monopoly
(Ceylon shares with India
the tea supply of England),

voool,
337
(b) Hides, oil-seeds,
raw
necessary raw materials of
manufacture, "of which an appreciable rise in

would not be tolerated" by the English people.
Wheat and rice are articles of food "of which no
British
price
(c)
substantial rise in price
will
be permitted in Great
(India and the Tariff Problem, 86-96J.
Britain."
22
CHAPTER IX.
PUBLIC FINANCE.
The
sources of Indian revenue. (i) The British
Indian Government owns land and forests and has
Native
States
these sources
it
politically
incident of lordship
or
dependent on
income which
derives an
domain,
rent
viz.^
From
it.
the natural
is
from the
actual cultivators in certain parts (ryotwari) and land
middlemen
revenue from
others {zaynindari)
in
sale proceeds of forest produce
in
the
tribute
and
fees
grazing
for
State forests, royalty for working mines
from
the feudatory States.
(2)
the
and
Government
has a monopoly of the sale of opium for retail vending
and export abroad
in India
derived from this source

(3)
is
the income
the gain
of
which
is
a monopolist.
Then, the State undertakes certain commercial
services for the public, viz., the conducting of railways,
and telegraph systems, from

what may be called business remunera-
irrigation works, post
which
it
earns
tion or "fees" in the economic sense of the

It also
payment from
exacts
petitions,
^c,
in
Law
ment
the
to
(4)
file
In proportion as the pay-
in these cases exceeds the
rendered by
who have
Courts, or record commercial
transactions in a valid form.

*
all
term.
value of the service
State to the party, such judicial fees
must be regarded as a tax and not "fees"
in
the
CH.
SOURCES OF INDIAN REVENUE.
IX.]
economic
The income from Registration
sense.
longs to the same class.

levies
taxes
339
(5) Lastly,
the Ciovernment
various kinds on
of
its
subjects
(6) It
makes a
currency,
is
on the coinage
due to the
artificially
relatively to silver bullion
of the
for
sometimes
the expenses of the administration.

profit
be-
wliich
enhanced value of the rupee

;
but such profits are
strictly
a Reserve and do not form part of the
set apart in
fund for ordinary expenditure.
As Government has
to send the equivalent of above 20 millions sterling to
England,
makes a
it
profit
when exchange
is
favour-
able to India and a rupee fetches more than the fixed

rate
of
is.
to us, there
Conversely,
^d.
is
when exchange
is
adverse
a loss under the head of ^'Exchange."
These amounts are usually negligible.

In the financial statement presented to our legislature, the gross revenue of
Government
consists of all
receipts under these various heads, with the
its
exception
that the working expenses of the railways
and the share
of surplus profits paid to certain railway
companies are
not entered in the gross expenditure but are deducted
from the gross revenue, and the railway revenue shown

in
Government. The
interest charges
and
amount received by
found by deducting the
the accounts represents the net

net revenue is
and working expenses
of the
irrigation works, the cost of cultivation
facture of
opium
in the British districts,
railways
and manu-
and the charges
against other revenue- earning departments (except the

cost
of
collection)
these items are treated, as dsduc-
340
The
tions from revenue.
INDIA.
[CH. IX.
receipts of spending depart-
ments are not credited to revenue, but treated as

from expenditure.
deductions
tion
in
the
cost
The
cost
of
national defence, civil administration,
the
82
crores,
p.
149.)
121
crores
Thus
and
in igio, the gross
the
net
while the gross expenditure was
net expenditure
being nearly half as
76
crores,
much again
the
stores,
{Moral and Mat.
net expenditure.
48th No.,
revenue was Rs.
and the
insurance",
on ordinary debt, and the price of
together form
Progy.y
collec-
revenue-earning departments, as well as
public works, and "famine relief and

interest
of
the
revenue
115 crores
the "gross" figures
as the "net" figures.
Indian Finance in the twentieth century.

ProporNet
Proportion of
crores Rs.
land rev.
to total
Net exincome penditure
Annual av- 67-81
crores Rs.
tion of
military
ex p. to
Proportion of
opium
revenue
total
to total
revenue
revenue,
revenue,
p.c.
p.c.
p.c.
Deficit
Surplus
crore Rs.
62-83
40
40-8
7*5
+ 4.96
73-08
39'2
39'47
+ 0-81
erage for
1901-5.
Annual av- 73*92

erage
for
1906-10.
1911
85-48
79*57
35
34'3
9-1
+ 5"9i
1912
90'54
85-88
38-2
324
7'5
+4-65
1913
8677
83-3
35-6
34*4
+3-46
1914
7977
82-45
38-4
38-4
1-7
-2-68
1^915
CH.
NET REVENUE.
IX.]
341
Our net revenue (19 13) was raised from the following sources
:
Crores Bs,
Domain,
I.
viz.,
34-88
..
Land revenue
Forest
3o'93
3-32
Tribute from Native States

II.
Monopoly and State farming
III.
Fees for commercial services,
i.e.,
viz.,
Opium
sold for export
909
9*57
7-i8
1-89
;:
Irrigation
office
<
Railways
Post
61
")
..
and Telegraph
fV. Taxation,
48
'1
40-91
..
'
viz.,
Excise
..
Customs
Stamps
Salt
13-18
ii'ii
7-89
..
477
...
Income-tax
2-9
..
Registration
Provincial rates
( = cesses on land)
V.
77
27
Min t and Exchange
49
..
Total
86*77
...
ci'ores.
Opium* The wholesale trade in opium is a

monopoly of the State. In British territory it is
grown only by licensed ryots who have to sell their
entire out-turn of crude
Rs.
opium
at
the
fixed
6 per seev to Government agents, by
purified
and manufactured into
ment factory at Ghazipur.
balls in
In
price
whom
the
of
it is
Govern-
accordance with the
recent policy of stopping the export to China, Govern-
ment has been steadily diminishing the sanctioned area

its growth has been
for the cultivation of opium
;
stopped in Bihar, and
is
now
confined
to
a part of
342
[CH. IX.
The quantity
home consumption
the Gangetic valley in the U. P.
of pre-
pared opium required for
(called
"excise opium")
made
is
ment and vended through

in
India
I '93
crores of rupees in
excise
revenue.
it.
is
The opium consumed
1913 and
Opium
"provision opium")
high duty, which yielded
to a
subject
is
over to the Excise Depart-
is
credited to
the
intended for export (called
sold in chests of
by auction at Calcutta. Opium

States of Rajputana and Central India
140
lbs.
each
grown in the Native

(called
"Malwa
opium,") cannot enter British territory without paying
a heavy duty, (which was raised from Rs. 600 to Rs.

1200 per chest in
1912}.
The
right to export this
opium used to be sold by auction at Bombay, and

the profit used to be divided between the British
Government and the Indian princes according to the
terms of their agreement.
But early
in
19 13
the export of
opium (mainly
from Bombay was totally discontinued^
to China)
and the opium department
The export
of
History
of
Bombay was
abolished.
Malwa opium has, therefore, ceased.

the opium trade with China*
of
Nearly three -fourths of the opium exported from India

used to be taken by China, the remaining one-fourth
going to the Malay Peninsula and other countries.
By
the Treaty of Tientsin (1858) with England,
recognised foreign
import.
By
the
opium
additional
Convention, signed in
China
as a legitimate article of
1885,
article
it
to
the
Chefoo
was agreed that in
OPIUM TRADE WITH CHINA.
CH. IX.] HISTORY OF
consideration
to
taels
would
no
free the
port
when
Chinese Government
imported opium from the payment of

taxes
transit duty) while the
the
import duty from 30
taels per chest, the
other duties or
all
the
raising
of
343
of entry
to
the likin or internal
(like
opium was
the
transport from
in
of the kingdom
opium was opened at the
would not be subjected to
interior
the chest of imported
place of consumption
it
any tax in excess of what might be levied on native

opium. Or, in other words, the Chinese Government
restricted its power of internal taxation on foreign
opium, though
it
was
free to terminate these arrange-
ments by giving a year's notice at any time.

of
opium Com.
p.
132.)
In
of 1893, Cd. 7313, p.
igo6 the Chinese Government issued edicts
ordering the growth of
ed
137
{Report
Cd. 7723,
within
opium
10 years, and
in
the
China
to be suppress-
Indian
Government
agreed to Co-operate wuth this policy by gradually
amount of opium exported from India

by putting up to auction fewer and
for export to all foreign countries. Under
restricting the
to
China,
fewer chests
i.e.,
a new agreement, signed in
May
igi
i,
the Indian
Government agreed to put a stop to its opium trade

with China even earlier, on condition that the growth
of opium in China was suppressed before the expiry
of the ten years' period
at the same time a further
limitation was placed on the number of chests of
Indian opium auctioned as certified for export to
;

344
Chinese ports.
Bombay)
19 13
opium thus
of
China was
now produced
the sale
in
last
(at
certificated
stopped,
finally
with China at
traffic
is
In
[CH. IX.
Calcutta or
for
export
to
and the Indian opium
came
to
an end.
Opium
India, in certain districts of the
U. P. only, under a Government monopoly, for in-
consumption
ternal
in
India and for export to those
Dutch East Indies, the

Malay Peninsula and the Straits Settlement) where
its use is permitted mainly for medicinal purposes.
foreign countries (such as the
By the closing of the China market since 191 3,

we have lost a net annual revenue of more than
6
croves of Rs., derived entirely
total
number
from foreigners.
of chests exported declined
80,000 in 1890 to 65,700 in 1907,

11,856 in 1914,
Salt tax.
and 9786
The
from above
44,600 in
191
1,
in 1915.
On the foreign salt

and
imported, a custom
and on the
duty
is
salt
manufactured in India an equivaler^t excise
levied,
levied at our ports
frontier,
but these two sums are
included
is
under a
separate head, " Salt revenue," instead of being credited- to
Customs and Excise
respectively.
This tax was
reduced by Lord Ripon (1882) from Rs. 2^ to Rs.
by Lord Dufferin (1888),

reduced by half a rupee each time in 1903, 1905 and
1907, and raised to one rupee and a quarter in 1916.
These successive reductions have greatly lessened the
gross revenue from this source, which was 9 crores in
1902 and a little below six crores in 19 16, though the
maundy raised to the old
level
CH.
INCOME TAX.
IX.]
consumption has increased.

p.
c.
home-made and 30
345
[We consume about 70

Govern-
foreign salt.
p. c.
ment itself conducts most of our salt-works.]

The stamp revenue is derived from (i) judicial or
court-fee stamps which have to be affixed to plaints,
petitions, and most other documents filed before lawcourts, and (ii) non-judicial or "revenue" stamps
which have to be affixed to records of commercial
transactions,
such
as transfer
of
property,
bonds,
In igio the
cheques, bills of exchange, receipts, &c.
rate of stamp duties on certain commercial transactions

and on probate was raised. (For the merits and defects
of this tax, see Mill, Bk. V. Ch. V., p. 517, Bastable's
Public Finance, 3rd Ed., 165, 241, Pierson,
The Excise revenue
is
ii.
537.)
derived from (a) the sale
of licences to shopkeepers to vend (and, in the case of
country-made
facturing)
all
spirits, also
the distillery fee for
manu-
sorts of intoxicating liquors, including
the juice of the toddy palm, opium, ganja, hhang, &c.,
and
(6)
the excise duty on opium, ganja, &c.,
in India.
The import duty on
consumed
and the
foreign liquors
countervailing excise duty on India-made cotton fabrics

are included in the
under Excise.
Customs Revenue and not entered
For our Customs, see Chapter VIII.
The Income Tax (called "assessed tax") before

the war was assessed on all incomes of Rs. 2000 or
above a year at the rate of 5 pies per rupee of the
income, while incomes between Rs. 1000 and Rs. 2000
paid at the rate of 4
pies.
In 1914 the
total
number
346
of persons
(or
INDIA.
IX,
companies) assessed was 332,000, and
they paid in all 3 crores of rupees.
graduated Income
to Rs.
[CH.
Tax
In
191 6,
a fully
schedule was introduced
up
5000 a year there was no change, but incomes
from Rs. 5000 to Rs. 9999 were taxed at the rate of

6 pies per rupee, between 10,000 and 24,999 ^^ ^^^^
and Rs. 25,000 and above at one anna. In 191 7,

a super-tax was introduced for all incomes above
pies,
Rs.
50,000
amount
the
half
first
lakh
in
excess
the
of
pay an extra anna in the Rupee, the

second half lakh an extra ij as. in the Rupee, the
third
is
half
an extra
extra 3
The
now
to
lakh,
2|- as.,
an extra
and
2 as., the fourth half lakh
incomes above 2I
all
lakhs
an
as.
cesses
on land
(called "provincial rates") are
levied for roads, schools,
and
dispensaries
only
in Bengal and Assam.

In 1906 the cesses formerly
imposed for famine-protective canals and railways
(in the U. P., C. P.
and for the
and Punjab),
for the district post,
salaries of the village officers
and patwaris,
were abolished, and the total yield of the tax was

reduced to nearly one-half. In 19 14, the cess imposed
for
payment of the rural police in the U. P. was

The rate of the cesses is usually one anna
the
abolished.
in
every rupee of rent or the estimated annual value
of land,
and they are paid,
landlord.
taxes
They arc
and the share
District
entirely
or half,
therefore a direct tax.
Boards are
of
by the
[Municipal
the provincial rates paid to
not included
in
the
amounts

RAILWAY REVENUE.
'
IX.]
CII.
347
shown in the Imperial revenue, as they are entirely

spent by the local bodies.]
The head of revenue marked as " fees for commercial services
year to year.
**
to
yielded
It
4"6i crores in 1906
extreme variations from
liable to
is
its
record surplus of
first
but two years afterwards, owing"
a heavy falling-off in railway earnings and post
office
income, there was a deficit (the only one in this
century)
amounting to
surplus
continued to
figure yet attained,
rise
9' 5 7
brought on a decline
There
is
to
viz.,
touched the highest
it
till
crores
the
in
191 3.
The war
crores in 19 14.
5' 13
always a net income from Irrigation, which
reached a
in
From 1909
1*13 crores.
maximum
The
1914).
and 1909
of i'89 crores in 1913, (1*38 crores
Post Office caused a net loss in 1908
only, but yielded a profit in all other years,
the highest being 47 lakhs in 1913.

deficits in
1902-1909 and again
Telegraphs caused
in 191
a (small) surplus in other years.
In
1,
but supplied
19 14 Post and
Telegraphs together yielded half a crore of net income.
The Railway
surplus
rose to 3*46 crores in

deficit of nearly
two
first
exceeded one crore in 1901,
1906,
but was turned into a
crores in 1908.
Since then there
has been a good recovery, the net revenue exceeding

7
crores
in
191 2
and again
in 19 13,
with a
fall
to
3*23 crores in 19 14 in consequence of the war.
Our
I.
II.
III.
net expenditure (1913) was thus
Interest on {oTdina.iy) debt
Military expenditure
CoHect/on of revenue
made up
*i6 crore Rs,
...
...
...
...
29*84
...
...
io'02
348
IV.
V.
[VI.
CxV/Z expenditure
viz.y Civil depts.
...
...
Miscellaneous,
2478
7* 12
civil charges,
10*19 ]
Civil Public Works,
Fow/ne relief and insurance
...
Provincial balances met exp. of 42 lakhs]
Total
is
cvore R^.
42*1
i'^
83-3
"civil departments " (or
Under the head

civil ")
...
[CH. IX.
''genera!
included the expenditure on the Secretary'
of State's office establishment in
London, the Viceroy,
Governors, Lieutenant-Governors, and their Councils,
and other
officers
down
as well as courts of law,
to
Commissioners of
jails,
divisions,
and the police, education
medical and political departments. ''Miscellaneous
made up
civil
and printing charges, furlough allowances, territorial and political

pensions, &c.
The salaries of magistrates and the excharges' are
of pensions, stationery
penses (other than judicial) of thejdistrict administration are entered under the
head of " collection of land
revenue." "Famine relief and insurance'* consists of the

amounts spent on actual relief and on the construction
of railways and irrigation works as a protection against
famipe, about 60 lakhs in 19 10, besides a sum spent
on " reduction or avoidance of debt " in connection
with famine. The capital outlay on our railways and
irrigation
by the
works
is
mainly met from loans contracted

from the issue of debenture by the
State, partly
railway companies, and partly from the revenue of the

year (usually the
Famine Insurance
fund).
Excluding
railways and irrigation, our civil public works
i.e.,
PROVINCIAL FINANXE.
IX.]
[.
roads, buildings, &c.
provincial revenues,
are maintained
349
mainly out
of
and to a small extent (less than one-
seventh) out of the funds of the Imperial Government.
Provincial Finance.
assigns to the Provincial
"The Government of India

Governments
fixed shares of
revenue collected by them under certain heads...
the
customs, post office and telegraph,

and
railways are wholly Imperial,
mint, exchange
[While] opium,
salt,
land revenue, irrigation, stamps, excise, assessed
and
forests
are
taxes,,
divided [between the Imperial and
Provincial Governments, according to certain
terms
decided upon at the 'provincial settlements'].
From
the revenue so assigned

are
required
to
the
Provincial Governments
meet the whole
of the expenditure
within their respective provinces under certain heads
and a portion
of the expenditure
The revenue
retained by the Imperial
under other heads."
Government
is
devoted to meeting the expenditure described in the

accounts as Imperial,
viz.,
the
Home
Charges, the
and political pensions,

and also a portion of the "General
military expenditure, territorial

ecclesiastical charges,
Administration" expenses.
If
the Provincial
ments spend less in any year than
Govern-
their income, the saving
added to the provincial balances and treated in the

accounts of the Government of India as though it had
is
been spent.
It
is
Moral
interesting
sources of revenue
crores of rupees).
&
Mat. Progr., 47th No., p. 16.)

the growth of certain
to note
and expenditure
in recent years, (in
350
INDIA.
[CH. IX.
vD
cy\
'"'
vo
ot^
a.
oo'
r>.
!>.
^
o
ON
t^
7^
Vi
00
ot^
b
m
t^
ro
'^
r<
w^
vO
'ro
b^
b
ro
00
~~~
1>-
ro
c^
CO
b
00
Vo
00
Th
00
00
r<
u->
g.
00
i->
0^
3 cd
c ?.^
a ^ o
00
00
LO
lO
00
*a.
t>.
00
cr^
rn
t>-
oK
'O
ON
lO
Vo
t-*
b
ro
r<
V^
'^
CO
VO
"P
>o
lO
0?
'~
t^
^
o
ON
CO
i_i
l>w
CO
wo
CJ
^r^
r^
c<
!>.
Co
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t>.
ri
H
'pH
>o
t>.
o
vO
HH
i>.
<N
cn
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00
0^
vb
o
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vD
t^
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ro
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cn
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a>
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t>.
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i:>^
ro
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r^
cn
00
vp
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'*-
vp
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C7>
t^
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vb
ro
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i^
r*
ri
^
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o
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ro
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Vi-
ro
ro
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cn
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b^
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cn
rn
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*M
<u
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'~
s
53
"^
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cn
ro
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r
b^
'<*-
ro
p
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c<
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ro
-<*
"
ro
"
"
r*
"
'a,
;/!
=3
'6
^-
.1
v^
O W u ^
pV^
ro
cr.
t^
ro
"->
1
c3
c^
d*
nd
s
cx3
c^
Vh
4)
ro
00
00
r<
'rh
d,
'cn
r
5^
Q::
>
-<*-
CO
'uO
CI
vb
"
00
ro
b^
ro
i:^
-r*-
00
"n
00
cr>
!>.
.Th
00
ia
< j;-
*o
m %
ci,
(U
1 .1
1
3 'O3
a,
w S U S
0)
-"
CH.
INCOME OF LOCAL BODIES.
IX.]
351
Leaving out of account

income from our export of opium (which is
entirely paid by foreigners), the land revenue (which
Incidence of taxation.
the
is
held by
many
to be not a tax at
all,
but only the
exploiting natural resources belonging to the
price of
State), the
forest
income, the tributes from Native
income from commercial undertakings by

Government, and the Mint and Exchange revenues,
States,
the
the
total
was
i>f
amount
population
the
land revenue
the
that
of
by pure taxation in igii

and the incidence per head
year was is. ii^d. But if
raised
36' 53 crores of rupees,
(is.
8d. per head)
burden of taxation would be

3s.
be included, the
3s. yjc^. in
191
(against
2^d. in 1901).
For a contrast between Indian finance and

see Ind. Emp.,
iv.
Englisli,
162; Bastahle, 256; Alston 97-101,
46).
Local taxation.
in
The
rates
are very
low (except
Calcutta and Bombay), because in most of the
towns the municipality discharges the barest minimum

of the
and
duties of local government,
light
only.
In
very few
drinking water (and that too
viz., police,
places
is
it
road,
supplies
mostly the
gift of
pious founders) or undertakes house conservancj^
support of education
is
most niggardly, and
it
its
is
usually contented with maintaining one small hospital.
The
district
of funds
main
boards are equally hampered by the lack
and can do
little
useful work.
artery roads all the other
Except the
roads of the
district,
352
INDIA.
particularly in stone-less Bengal, are
and
few
very
mere mud-tracks,^
Education
bridged.
are
rivers
[CH. IX.
is
financed by these boards as far as their scanty means
which
permit,
is
below the need
far
of
the vast
population.
The usual
sources of municipal income are (a)

on goods brought into a town for sale, in
Punjab, C. P. and Bombay, (6) taxes on
octroi duties
the U. P.,
houses, lands, animals, vehicles, professions
on roads and
(c) tolls
ferries
and
trades,
which are farmed out

and conservancy rates
to the highest bidder, (d) water
and lighting
(only where these exist)
income
rate, {e)
from pounds, hackney carriages, and liquor licences

within municipal area,
(/)
receipts
from markets and
slaughter-houses, (g) fines, (h) grants from local funds,
and
(i)
varying annual
gifts
from Government by
way
of aid.
In 191 2 the total
in India
was
income of the 712 municipalities
8*25 crores.
In 191
1,
the average incid-
ence of municipal taxation per head of municipal
population for British India as a whole, was

rate having been 2s. 8d. in 1899).
and
local boards
(in 191 2),
had a
total
4s., (the
Our 1126
income
district
of 6* 10 crores
and the incidence per head was probably
(against 2id. in
local boards
is
1899.)
The income
mainly derived from
tural land over
of district
cesses
3-2-d.
and
on agricul-
and above the land revenue.
Since
1908 the accounts of these boards have been excluded
from the general provincial accounts, and their funds
A
CH. IX.J
IS
LAND REVENUE A TAX?
353
treated independently like municipal funds,
i.e.,
the
proceeds of these cesses are not included in the general
Government makes grants-in-aid to the funds

of all boards amounting to about one-third of their
income from cesses levied on land. There are somerevenue.
from
times contributions for specific purposes

provincial funds.
boards are cattle
the
The other sources of income of the

pound receipts, tolls from ferries and
bridges, educational receipts, &c.
The
nature
good deal
of
land
of
controversy
revenue in India.
tion whether the Indian land revenue

rent.
India
The
is
writers
official
revenue
natural
monopoly which
to
certain
it is
individuals,
is
a land-tax or
argue that, as the land in
ultimately the property

levied from
has raged round the ques-
of
the
State,
the
merely the annual yield of a

the
either
State has surrendered
permanently
(as
in
Bengal) or for 20 or 30 years (as in the other pro-
Hence they deny to it the name of a tax

and regard it as only a royalty or compensation paid
to the owner for the exploitation of a monopoly.
So
long as the land-revenue is assessed on the landlord's
vinces).
rent (or
on the
'net
assets'
equivalent to rent),
of his
own
profits,
it
is
theoretically
regarded as
paid by the landlord out
and does not
fall
on the producer.
from the land-tax of Europe.

writes
in
connection
with our mahalwari
As Bastable
It,
however,
and ryotwari
The machinery
23
differs
areas,
"The State
and
of assessment
is
ultimate owner.
collection
is
com-
354
pulsory
it
nearer akin
is
INDIA.
to the process of the tax-
than of the landlord... In
collector
[CH. IX.
strictness
[the
Government receipts from land] belong to neither class

[viz.) taxes and rent]. They differ most markedly from
the rent, either customary or competitive, of a modern
landowner and more nearly resemble the dues of the
just as distinct
from
the
at the utmost they might be
ought to conform
it
assimilated with
taxes
Where
on special advantages or monopolies.
the
dues are frequently revised in accordance with
State
movement
rent
are
ordinary tax, and are not
governed by the canons to which
the
They
also this book, p. 223.]
[See
feudal lord.
is
of land values,
very close
to suit the needs of
where they are changed

the
State,
discussion,
therefore,
is
profitless
(See particularly Alston, 45-46,
words.
in order
they are practically
{Public Finance, 173-175.)
taxation."
The
approximation to
the
distinction
between a tax and a rent
matter of amount ; and

absorb the rent
it
See Marshall, 727
if
a land-tax
becomes
in
fact
is
war
so
rent."
of
"A
54-56.)
merely a
is
high as to
{Campbell.
n.)
The following advantages
are claimed
writers for the Indian land-revenue
large branch of the revenue which
by
official
(i) It is the
is
raised
only
without
enhancing prices or diminishing the general consumption,
as
it
is
obtained from the landlord's profits and
does not add to the cost of
production.
approximates to the "single tax" which
is
(2)
It
the ideal
CH.
REAL PRESSURE OF LAND REVENUE.
IX.]
type of assessment
writers.
in
many
to
economic
Except in the permanently settled
(3)
which
Europe.
parts,
advantages of the "nationalisation
India enjoys the

of land"
according
355
is
advocated by
falls
(4) It
many
philosophers
on that part of the produce
which goes to the intermediate rent-receiver and does

not touch the
pocket
{Indian Empire^
tax on rent
iv.
falls
234.)
actual
the
of
It is
cultivator.''
true that a proportionate
wholly on the landlord, as
it
does
not affect the price of agricultural produce, while a

fixed
charge
(i.e.,
raise prices, as it
yields
monopoly
would be an
and would
even on land which
rent) per acre
duty on agricultural produce
indirect
would be
no economic
land-tax
may
rent.
levied
(Pierson,
i.
104.)
Rut "the
be so increased as to check the applica-
tion of capital to the
improvement of the
This
soil.
disadvantage attaches to every land-tax which does

not consist in the payment of a fixed sum and which
increases with the rent of the land."
(Ibid, 106.)
The real point at issue between the Indian Government and its critics is one of fact and not of principle.
Is
the
land-revenue under the non-permanent
ment a tax on
rents only, or
is
of
settle-
screwed up so high
wages and the

the capital spent on improvement ? That
as to encroach on
interest
is it
the
the essential question.
cultivator's
The
official apologists assert
that the State takes less than half the 'net assets' and
wages of cultivation
besides, which equals or
leaves to the farmer not only the
but a substantial
profit
356
exceeds what the State exacts.
Such
222-225.)
assessment laid
in the
INDIA.
(Ind.
[CH. IX.
Emp.^
iv.
217^
no doubt the theoretical principle of

down, and it seems to be followed
is
Punjab and the U. P. (where agriculture
is
and the ryots are thriving)

and also in certain parts of Madras, where the average
ryotwari holding is 8 acres and a portion is sub-let,
showing that the direct tenant of Government enjoys
a net rental. But with regard to Oudh, Bundelkhand,
protected by
irrigation
C. P., certain Madras

and particularly the Bombay Deccan and
Gujrat, we have the adverse testimony of those who
have observed the actual working of the land-revenue
system and have been in the closest touch with the
the unprotected parts of the

districts,
In these parts, they assert, " the land revenue
people.
represents
more than the economic rent and trenches
on the cost of cultivation." The sober and states

manly Ranade, who had a long official experience of
the
indebted Deccan peasantry, came to the conclu-
sion (1892) that "the so-called land-tax

India]
[of
Western
not a tax on rents proper, but frequently
is
encroaches upon the profits and wages of the poor

peasant,
who
standard of
32.)
has to accommodate himself to a lower
life
as
the pressure
increases."
{Essay s^
Mr. Gokhale, the ablest student of Indian econo-
mics for the
Bombay
last
twenty years, has shown
Presidency "
how
in
the
improvements are taxed in spite

and rules at every periodical revision, how
lands which can leave no margin for the payment of
of statutes
CH.
WHERE LAND-TAX
IX.]
EXCESSIVE?
IS
assessment are assessed all the same,"

increases of land-revenue,
especially
357
how
U.
the
in
" the
P.,
Madras, and Bombay, are large and weigh with undue
The
pressure on the land."

is
according to him
effect,
discourage all expenditure of capital on land
to
render agricultural improvement an

{Speeches^
31,
103,
139,
combined high scholarship with the

experience of a district
to
the
and varied
ripe
bore personal testimony
grinding poverty and hopeless misery of the
peasants
certain
officer,
in
parts
the
of
C.
P.,
the
Deccan,
than the entire economic

502,
and
Gujrat,
Madras, and was driven to conclude
more
that the land-revenue in these parts represented
48i-'7,
who
Mr. R. C. Dutt,
179.)
and
impossible hope.
rent.
and especially 492
(Dutt,
w.)
462,
332,
But
it
must be
admitted that these opinions were formed before the

partial
rules
relaxation
of the stringency of the assessment
and the more considerate treatment
in the temporarily settled areas that
by Government
in the last
few
of
the
ryot
have been ordered
years. Moreover, during
the unexpired portion of the running
ment, the cultivators will reap the
full
term of
settle-
benefit of
present high prices of agricultural produce.
the
CHAPTER
X.
INDIA DURING THE WAR.

The war has
naturally affected India differently
from most other parts of
the
British
Empire.
In
England and her self-governing Dominions the manhood of the nation has been more or less withdrawn
from trade and industry for war purposes, and the
manufactories of commercial goods have been turned
into munition
the output of the
restricting
factories,
former^ India, being a Dependency and a preponderantly agricultural country, has not suffered decrease
of production
her chief industry,
in
viz.y
agriculture,
through conscription and the consequent depletion

It may almost seem at first sight that
a neutral country and not a portion of one of
of labour.
she
is
the belligerent States.
On
closer
found to be
examination, however, this opinion

In
false.
as
much
as
is
India has been,
more than any other part of the British Empire,

helplessly dependent upon foreign countries for the
sale of her produce, the
supply of the manufactured
goods she uses in daily
life,
and the ocean transport
of both these classes of merchandise, she has

loss
are
more than
the
they.
The raw
only things she can
in price, while the
suffered
materials,
offer for sale,
have
which
fallen
manufactures she consumes have
IMMEDIATE EFFECTS OF WAR^
CH. X.]
risen
in
price
359
consequence of the war, and thus
in
a sufferer both as a
seller and as a purchaser.

At the same time, her utter lack of a shipping of
her own and the restriction of her exports by order
of Government have prevented her from* making the
she
is
goods (except gunny
extra profit out of her saleable
bags and indigo) which
nations of the
neutral
all
world (and even England and Canada) are making

during the present war.
mercantile marine
India had possessed a
If
Japan and had been
like
left free
to sell her goods to the highest bidder, she could have
compensated
herself
for
imports by raising
foreign
enhanced price
the
the
price
of
of her
raw
the
materials she produces.
The outbreak
of the
war
in
the following economic effects
They used
off.
exports
(against
9' 2 p.c. of
(6)
Trade with the enemy countries was at once
(a)
cut
August 19 14 produced
237
take
i4"2
p.c.
materials
manufactured
p.
c.
of our
total
by England) and send us
our imports (against 64
Export of
import of
to
p.c.
by England).
manufacture to and
of
goods
from
the
Allied
countries
greatly decreased on account of the curtail-
ment
their
of
diversion
of
economic
men and
production
capital
to
the
through
the
unproductive
purposes of war and munition making.

(c)
(i)
Great and growing scarcity of shipping, through
the disappearance of the
(3*3
German mercantile marine,
million tons against 12*4 million tons of Eng-
360
land and i'8 mil. tons of U.

sion
of
70
p.c.
of
British
S. A.),
INDIA.
and
[CH. X.
(ii)
the diver-
and neutral ships
to the
and munitions to the scenes

this head may be included the temof the Indian Ocean through the
German cruiser Emden. [During
in September, 1914, though it was
transport of troops, stores

of
Under
war.
pCHrary insecurity
ravages of the
" Emden week"
the height of the jute export
season,
there
was.no
sailing from Calcutta.]

(d)
(e)
bank
The withdrawal of foreign capital from India.

Rush to secure gold, cash notes and withdraw
deposits.
This
last
^-^
was temporary and
the scare affected the
ignorant few only, though the evil was aggravated
by Marwari speculators trying

sovereigns and metallic
to
money and
make a
corner in
trade on the public
This phenomenon, however, was much
credulity.
less
widely spread in India than in any other belligerent

country and passed away very soon.
[A part of the
withdrawal from the Government Savings Banks was
due not to panic but to the needs of our people, who

suddenly lost their usual income from jute cotton and
even ordinary trading, and were at the same time
called
upon
consumed.
upon
for
to
pay higher
Bank deposits
prices for
the
goods they
were, to some extent,
drawn
investment in the cheapened Public Debt.]
The above economic

stage of the war.
features
marked
the opening
But as the struggle was protracted,
they changed in the course of the second year of
it,
PRESENT ECONOMIC CONDITIONS.
CH. X.]
and a
now
of
sort
adjustment to the
new
361
situation has
taken place, of which the following are the
noticeable characteristics
(a)
'
state of siege
'
prevails,
i.e.,
export, import,
production and sale are not governed by the free play

of
economic laws, but by " war ordinances " and made
subservient to the needs of the State.

(6) There is a phenomenal shortage of shipping,
which has absolutely stopped certain classes of export
and import, and greatly reduced the volume of others,

it has not been done by order of Govern-
ven wher;^
ment.
Internal transport has been harmfully restricted
(c)
through lack of materials for renewing and repairing

railways and the commandeering of inland and coas-
war work.
ting steamers for
Certain industries have been
(d)
greatly reduced
others
closing
of
the
Abnormal
subservient to war,
steel
and
(/)
India
iron,
costlier,
and
all
through the
supply of necessary materials, such as
machinery, chemicals,
(e)
and made
killed
&c.
artificial dyes,
development of
e.g.,
a few
industries
the manufacture of jute bags,
woollen clothing, and leather goods.
Inflated profits in the
few industries
for
which
was already equipped, (viz., paper, cotton and

mills), and which are enjoying the advantages
woollen
of
a monopoly, except so far as

(g)
(g) operates.
The phenomenal advance
lesser extent,
of the
of
Japan (and, to a
U. S. A.) as sellers in the Indian
362
market.
INDIA.
Our imports from Japan
rose
1913.
matches against only 44
of our
c.
from 4*4
crores
In 1915 Japan
of Rs. in 1914 to 7'5 crores in 1915.
sent 83*4 p.
[CH. X.
p. c. in
'
To sum up
the whole case,
we have
suffered in
proportion to our dependence on those foreign countries
our communication with which has been interrupted

either
by war or by lack of transport.
For example,
our food-stuffs have been lowered in price, but not

salt,
because the 30
p. c. of
our salt consumption which
comes from abroad (Liverpool) having quadrupled in

price, our home salt has grown dearer in sympathy
with this rise. [The retail price of salt is now
Rs. 3-12 per
maund
(against Rs. 2-4 in 1913), though
the salt- tax has been enhanced by 4 annas only in the

interval.]
At present
(April,
situation in India
is
191 7),
whole
the
economic
dominated by the lack of shipping,
reduction of railway service, and coal scarcity, (the

price of coal being
months ago,)
all
now 2^
of
which
times
what
it
was
facts (esp., the last
eight
two)
are seriously affecting our industries.
How
Indian producers have suffered

The outbreak of the war greatly reduced, and
cases altogether stopped, the
demand
produce in European markets.
loss.
in
some
for Indian staple
In the eight
months
March
following the declaration of war (Aug. 1914

1
91 5) our imports decreased from
166 crores
(the
record of a year ago) to 95 crores, a shrinkage of 43
OUR LOSS FROM THE WAR.
CH. X.]
Imports
p. c.
The
period.
fell
loss
oil-seeds (ii'02
(7*55
I
off
p. c.
heaviest on
rice
cr.),
(9"45
during the same
raw
jute (17*9 cr.)
raw
cr.),
manufactures
cotton
^Ôj
by 34
fell
363
(4*11
cotton
raw
cr.),
and jute manufactures (2*49 cr.),

the export of which declined in 19 14- 15 from the
level of 19 13- 14 by the amount of Rupees stated
against each within brackets.
But these figures
hides (3 '9 1
cr.)
under-estimate our actual
loss, as
the reduction of the
quantity exported was accompanied by a
fall in price,
and the Indian growers received more than proporFor

tionately less for what they parted with.
example, the jute crop of 1914 was 10*44 million
bales, but as the average price in 19 14 was Rs. 40 per
bale less than in 19 13, the total diminution of the
income
was 41 '77 crores of Rupees.

was 7*34 million bales and the
of jute growers
In 191 5, the jute crop
price Rs. 31 per bale lower than in 1913, so that our

total loss
was 22*75
total losses in
crores of
Rupees.
In cotton the
19 14 and 191 5 were about
4*56 crores respectively, due
1976 and
to the fall in prices
the level of the last year of peace.
from
In Oct. 19 13
first
had sold at more than Rs. 16 per maund, in

September 1914 it went abegging at even less than a
class jute
made
quarter of the price.
This
fitable to cut, steep
and extract the fibre of the ripe

Bengal in the season 19 14, as
jute in
many
parts of
fall in price
it
the labourers did not lower their old rate of
day
and the
result
was
that a crop
unpro-
Re
which a year ago

364
might have fetched
crores of
INDIA.
Rupees was
the following years, and the jute
Cotton
shown below
{all
left to
perish
This fact reacted on the cultivation in
in the fields.
declined as
[CH.
India)
Jute
and cotton sowings
{in millions of acres)
1913
1914
1915
...
25-2
24*59
1774
...
2*9
3-36
2-37
1916
entirely
upon the Indian producers
as the European jute mill
owners replenished their
This
loss
fell
stock for 2 years in advance very cheaply during the
slump of 1914. When in 1913 raw jute appreciated

on account of war demand for bags, the profit went
(One Marwari middleman of
entirely to the brokers.
Calcutta
Our
in
is
said to have gained 5 crores in one year.)
losses in oil-seeds (the large
and
skins,
were very high, though
and cotton.
district
1
demand for which
France and Germany had ceased), and raw hides
9 14
sub-division
single
suffered
loss
of
less
in
lakhs on
than
the
its
in jute
Rangpur
tobacco in
on account of the Bay of Bengal being unsafe
and the Burma
The
loss
in the price of
buy the leaf.

by the Indians througli the
traders refusing to
suffered
rise
may be illustrated by
we imported 647,700 tons
imported goods
the case of sugar.
In 19 15
which we had to pay 16*62 crores of Rupees,

whereas the pre-war price would have been nearly 6
of
it,
for
crores less,
which was, therefore, our net
sumers.
[In the
war months
loss as
con-
of 19 14 our loss through
INDIGO AND JUTE
X.]
H.
he
in
rise
osses
PROFITS.
sugar prices was 2 '3
365
Our
crores.]
other
can be studied in the table given at the end of
chapter.
his
WAR
Opium
exports, in particular, declined
n value by nearly 2 crores between 1913 and 191 5.
How
las
in
India has benefited by the war.
been a
special
wheat,
rise
demand
tea,
the
in
Europe
in
indigo,
woollen
in
war-time,
stuff,
There
which are
prices of articles
such
dressed
as
leather,
and tobacco, and the rise has benefited

India in so far as Government has not interfered with
their sale.
But as regards wheat, the Government of
India on 28 December 19 14 restricted wheat export to
bags,
sjunny
British
mum
possessions only
of 78,000 tons
and even there up
a year.
It
also
to a
maxi-
began to purchase
and export wheat on its own account (amounting to

82 p. c. of our total wheat export in 191 5, Rs. 6*89
crores worth out of 8*44 crores worth).
Tea prices
have risen in England, but the enhanced British duty
on
the
has curtailed India's
it
profit.
As the
result
of
disappearance of synthetic indigo, the vegetable
indigo of our country

price
in
now commands a monopoly
Europe, and yielded an extra or war profit
But the whole of this amount

I "20 crores in 191 5.
went to the European planters and not to the peasants,
though the latter have borne the entire loss of the
depreciation of our jute and cotton. Jute manufacture
received a tremendous impetus during 191 5, which
has been rightly called by Mr. Shirras an minus mir"War demands from the
abilis for the industry.
of
366
[CH. X.
Russian and British Governments, for sand-
French,
gunny cloth
bags, grain-bags,
&c., were so
considera-
on an unique period of
trade entered
that the
ble
INDIA.
But this war profit was shared solely

by the European managers and share-holders of the
jute mills, and not by the jute growers nor by the
prosperity."
labourers.
demand
"The
[for
raw
disappearance of the
jute]
and the absence
Continental
of freight
gave
the Calcutta mills a complete hold on the market
raw
jute
in
a long period.... Another factor which
for
favoured the mills was the good supply of labour.
The stoppage
owing to war,
and other large projects

released a large mass of labour which
drifted to the Calcutta mills"
and there was, in conno
rise
in
wages.
The export of gunny
sequence,
of railway
bags doubled in a single year (1915).
The
total
value of our jute manufactures exported rose from

crores
in 19 13
to 38 crores in J915.
The
28
price of the
shares of several jute mills trebled in 191 6.
Raw
cotton
(food for cannon)
and coal appre-
ciated in 19 1 5 and 1916 on account of military needs.
The
war
former, however, has not yet
recovered
price-level.
War and
the cotton
industry,
''Some
its
pre-
Bombay
spinning mills went into liquidation in September

19 1 5
on account of the general depression
industry following
the
to the difficulty of financing mills
had
suffered
from the
in
the
outbreak of war and owing

fall of
which during 19 14
yarn prices in China."
WAR
:H. X.]
PRICES AND WAGES.
The stoppage
{Shirras, 35).
which used
of chemicals
and
But
output of our cotton mills.

revival
took place
in
spite
in 1915,
of
when
time the value of our home production
first
dyes,
be supplied by Germany, affected the
to
satisfactory
367
it,
for the
of cotton
goods exceeded that of imported goods. ,In. 1914 the
3'65
and cloth had been worth

more than our mill production, but in
foreign yarn
irnported
crores
19 1 5 the latter outstripped the former by 2 '56

Scarcity of coal caused by
stock
now
is
crores.
the shortage of railway
(19 17) the most serious problem for our
cotton mills.
Prices
and Wages.
In
addition to what has
been stated above on these two points, we may note

that on the outbreak of the war grain prices (esp.,
that of rice
fell,
in
Burma, the
realised poor prices.

its
chief exporting province)
while everywhere cotton, oil-seeds and
was
price
and the
rise
Wheat was
rapidly
forced
hemp
the only exception
up
by
the
war
continued in spite of the limitation of
export from 28 Dec. 1914 by Government order.
So,
March 1915 the Indian Government undertook its

"wheat deal," i.e., it purchased the exportable surplus
in India and placed it in the London market on its
in
own
account, private wholesale trade or export of
the
grain being forbidden.
doned
in
May
This scheme was aban-
191 6, and wheat
is
exported privately on permits
now allowed
from
the
to
be
Customs
Department, on condition that Government decides
368
maximum
the
INDIA.
[CH. X.
quantity to be exported in each season
^nd also by each individual firm. The movement

of wheat prices since the outbreak of the war, (taking
Sept. 19 14 (102),
the July 1 9 14 price level as 100),
Oct. (110), Dec. (125), January 1915 (134), Feb. (145),
March
(121),
in July,
the decline continued
when a
rise set in
till it
Nov. 19 1 5 and January 19 16, with a fresh

touched 91 in March 19 16.
For three months
reached 93
in 102 in
which culminated
which
fall
outbreak of the war
after the
the price of most imported manufactures did not
rise,
as there had been over-trading and accumulation of
large stocks (esp. piece-goods)
in the preceding year,
raw cotton and jute

greatly diminished the purchasing power of the Indian
t>69PteJ THe Burga Pujah market of Sep.-Oct.
1 914 was the dullest and least profitable seen for a
and the decline
in the prices of
generation.
their
Holders of imports were eager to convert
gbbds into cash on the outbreak of the war and
very wisely decided not to scare
away
the
unexpect-
edly impoverished customers by raising prices.
But
from November a rise began in the price of imported

goods which has continued since then (with special
severity in the case
of
and metallic jwareV

table will show
chemicals,
as
the
medicines,
metals
following comparative
CH.
RECENT PRICE VARIATIONS.
X.
July
1914
Prices.
Wheat
...
Rice
Raw jute
. .
Cotton
Java sugar
369
March
March
March
1915
1916
1917
100
132
90
108
108
64
90
72
102
174
183
Liverpool salt
206
394
Tea
>
117
107
>
83
82
Jute manufactures
96
144
Cotton
121
Oil-seeds
...
Metals
>
95
112
Corrugated sheets
128
210
Indigo
>
386
372
168
The outbreak of the war was followed by retrenchment in railway construction, public works, private
house building and in the growth of mills and business firms.
This led to a considerable amount of
In Bengal during 191^.-1^ agriculwages suffered from the low jute prices and the
poor paddy crop, and also in Bihar and Assam where
The unemployment
the rice harvest was defective.
unemployment.
tural
was very wide-spread, though for a time only, in the

cotton trade, and in a lesser degree in the jute industry.
did not rise in any industry (except breweries
and tea-gardens) during 1914 and 1915. Notwithstanding the heavy war orders in the jute and wool
industries and the extra demand on paper
mills,
mines, cotton mills and the rice industry, there was
Wages
24
370
no
rise in
the pre-war urates of the
INDIA.
wages
[CH. X.
paid, (except
c. in the sizing and weaving departments only.)

Exchange, freight &c. Ocean freights in March
3 p.
1915 were from 3 to 4 times the pre-war

had risen to 9 or 10 times by March 19 16.
On
its
readiness
to
Reverse
sell
Councils
necessary up to one million sterling a week.

of Council Bills in
to
the
and
1914 the Government of India
3rd August
announced
rates,
if
The sale
London naturally declined
it
fell
unprecedentedly low figure of y'j mil. in
1914 (against ;f3i'2 mil. in 191 3), and ;f 2070 mil.

Reverse Councils were sold to the amount
in 191 5.
of ;f8"7o mil. in 1914
and
;f4*89 in
of gold to private individuals in
The issue
was stopped
1915.
India
from 5 August 19 14. The import of gold (net)

declined from 23*33 crores in 1913 to 7*64 crores in
1 9 14 and was stopped by the Home Government in
1915-16.
The
net imports of silver were i3'03 crores
1913, 8'88 crores 1914,
Public Finance.
port
of our staples
and 4*82
crores 1915.
The great falling
and consequent
power by our people
in the
first
off in
loss of
the ex-
purchasing
few months of the
In Bombay, in
crisis.
had accumulated heavy stocks of
piece-goods in which a large amount of capital wasf
locked up. Any forced sale by the merchants to pay
their liabilities, would have ruined them.
At the
same time none would venture to buy the raw cotton
at a fair price and save the rj'ots from starvation.
war,
threatened a commercial
particular,
there
OUR WAR BUDGETS.
CH. X.]
To
371
avert this double catastrophe,
Government placed
Treasury balances at the disposal
of the trade, through the Presidency Banks, and the
a
large portion of
situation
its
became remarkably
The W3LV involved
easier in consequence.
the Indian
financial liability in spite of
its
Government
in
heavy
retrenchments in civil
departments and public works and railway construction.

The comparative figures t)f gross revenue and
expenditure are given below in millions sterling
Gross Revenue
Expenditure
Surplus or
The
1913
1914
1915
1916
1917
85-20
8ri5
82-62
96-83
98.85
82-89
82-94
85-26
89-45
98-81
1-78 2*64
+ 7*39
+ -03
deficit
+ 2-31
increase
of
Chapters VIII and IX.
taxation has been described in

In addition, our Public Debt
has been increased, both in England and in India.
March 19 17 the Government of India decided

to jnake a free gift of 150 crores of rupees to Great
This amounts to an incidence
Britain for the war.
of Rs. 61 per head of the British Indian population,
man woman and child, rich and poor alike, and
In
represents one-fifth of the total annual national

of
India and nearly
will
two
income
years' public revenue.
It
involve on the Indian Exchequer an interest and
372
INDIA.
[CH. X.
redemption charge of 9 crores of rupees a year for 30

years to come. The previous war contributions in
kind made by the Government of India to England,
had exceeded 73 crores by the end of 1916, besides 5
crores subscribed by our people to various war funds.
IMPORTS.
Net gold
...
silver
1913
1914
I915
23*33
7-64
1-11
fy
13-03
8'88
4-82
>
66-29
48-99
4327
0-95
45
Rs.
cr.
...
Cotton goods
Woollen
J>
3-85
1-88
Dyes
,,
1-41
71
>>
I4'95
10-52
i6-6i
cwt.
17-93
II
12-85
Rs.
6-43
...
Sugar
...
1916
'
(quantity),
Hardware and cutlery

and
Iron
))
...
viil.
...
cr.
steel
...
Quinine
>
51
-II
4-II
2-77
74
15
12
lb
lbs.
117
89
95
mil. gross
13-89
15*41
18-30
Rs.
89
I-I2
1-38
Rs.
cv.
,,
thousand
...
"
...
9-19
74
^ ...
Matches
976
42
>
...
4-o8
mil. tons
Copper
}>
16
4-29
cr.
I'OI
WAR AFFECTS
CH. X.]
EXPORTS.
EXPORTS.
Jute, raw,
manuf.
Cotloti, raw,
1913
I9I4
1915
6
...
mil. tons
768
.505
...
cr.
Rs.
30*82
12.91
15-64
28-27
25*82
37-98
mil. civt.
10*62
10*34
8*85
Rs.
41-04
33-48
24-92
...
...
...
manuf.
373
cr.
...
12*12
8-OI
9*61
Oii-seeds
...
25*67
14-65
10.12
Raw
...
11.72
7-8i
9-79
...
425
4-75
5-63
hides
Manuf. leather
Indigo,
thousand
...
Opium
ctvt.
Rs.
cr.
...
Coal
Tea
...
mil. tons
...
mil. lbs.
...
cr.
Rs.
Rice
,,
Wheat
...
...
...
Total grain, pulse and
flour
mil. tons
cr.
Rs.
io'9
17*1
42
213
2*07
342
1*76
1.47
69
'52
73
72
59
289
300
338
14.97
15-52
19*98
26*6
17*15
15-45
1-56
1*36
2*45
1*2
'7
13-13
8*32
4yH
-^2:21
65
8-44
29-07
1916
374
Under the
stress of
INDIA.
[CH. X.
war, in order to maintain the
exchange, the Government of India took power
to
invested portion of the Paper Currency
the
increase
Reserve in 19 15 by 6 crores of Rs., in 19 16 (Act IX)

crores more, and in December 19 16 by 24 crores
more, (making a total of 50 crores against 14 crores up
by 6
to 1914).
On
25th January 1917,
of 83*40 crores of rupees,

Securities in
England
Silver in
...
India
Gold
we had a note
which was thus secured
England
...
32*82 cr
Rs.
9'99
0-13
11*17
Silver in India
16-68
Gold
12-52
issue
:
83*31
The
introduction of one -rupee paper
under contemplation.
money
is
now
BIBLIOGRAPHY.
[In lliis work when any reference is given, it merely indicates
that the reader will find the same subject treated in the work
referred to.
In the following Bibliography, I have put an asterisk
against the books which an economic inquirer will find most
useful.
* Indian Empire.
The first 4 vols, of the new ed. of the
Imperial Gazetteer of India. Vol. Ill is indispensable to the
student of Indian economics, as it has distilled the essence of
a large number of blue-books. Vol. IV. supplies the most
correct and authoritative
information on tfie government,
finance, public works, etc., of India.
(Statistics obsolete.)
* Statement exhibiting the Moral and Material Progress and
Condition of India during the year
presented to Parliament
Sons, London).
(Wyman
Issued annually, about 15 months
after the year under review.
It summarises the contents of all
our periodical returns and reports, and no student can do without it. [The 48th No., for 1911-12 and the 9 preceding years is
very useful Cd. 220].
* Statistical Abstract relating to British India, presented to
Parliament, 49th No. [Code 8157.] Invaluable for reference.
(Wyman Sons, 191 6).
* Statistics of British India, Pt. I. Industrial, Pt. II. Commercial.
(Suptdt. Govt. Printing, India). Replaced, since 1913,
Vol. I. Com., II.
by Statistical Abstract for British India.
Finance, (Govt. Pr., Calcutta.) * Noel Paton's Notes on Sugar
in India, 3rd ed., 191 1, (Suptdt. Govt. Pr.)
Prices and Wages in India, 30th issue, 1913.
(SuperinF'ull of detailed statistics.
tendent, Govt. Printing, India).
Minutes of Evidence... Indian Currency Committee, (Eyre
Spottiswoode, 1893), ^^^^ 7060-11.
* Minutes of Evidence... Indian Currency Committee, Pts. I.
&
&
&
&
(Eyre and Spottiswoode, 1898-99), Code 9037 and 9222.

* Revieiv of the Trade of India, (Suptdt., Govt. Printing),
issued annually. Review of the Industrial Position and Prospects
.published for each province. Technical and Industrial Instruction in Bengal, and other official papers published in India.
Among blue-books published in England, I have also consulted Factory Labour in India, 1907 {Cd. 3617) ; Labour Commission Report, 1893, ^'ol- II' {Code 6795-U)
Reports of the Famine
.
II.
Commissions, 1898 and 1901 East India Home Charges Return,

1893 {Cd. 327) First Report Opium Com. 1894 {Cd. 7313).
;
376
BIBLIOGRAPHY.
* K. L. Datta's Inquiry into the Rise of Prices in India, Vol.

Report (Govt. Pr., 1914), most useful. Report of Committee on
Co-operation. (Simla Govt. Pr., 1916).
* Nicholson's Report on Agricultural Banks, 2 vols., Dupernex's People's Banks for Northern India.
Journal of Indian Arts and Industries (Griggs) contains
good accounts of old Indian handicrafts. Baden Powell's Short
Account of the Land Revenue in British India, 2nd ed.
* Jones's Peasant Rents (reprint by Macmillan).
I.
Seton-Karr's Cornwallis (Rulers of India series).

* Morison's Industrial Organisation of an Indian Province.
One of the best special treatises it indicates the right line of
economic research in India. [Quoted as Morison^ The same
author's Economic Transition in India contains interesting essays.
* Howard's India and the Gold Standard (Thacker Spink
Co.,
191 1) gives a very lucid, informing and accurate account of our
currency and its operations, as well as of several connected
* Alston's Elements of Indian Taxation (Macmillan,
subjects.
1910) is a short but indispensable exposition of the principles
governing Indian taxation and the effect of the fiscal system.
Lees Smith's India and the Tariff Problem. * Keynes's Indian
&
Currency and Finance (Macmillan, 1913). Chamberlain Commission Report (Code 7236 of 1914).
Among general works on economics, I have consulted Mill's
Principles (People's ed., 1888), Marshall's Principles, Vol. I.,
Pierson's Principles, 2 vols., Macleod's Theory of Credit, Gide,
the Statesman's Year-Book, Mulhall's Dictionary of Statistics, 4th

(1S99), Webb's New Dictionary of Statistics (191 1), List's
National System of Pol. Econ., tr. by Lloyd, (Longman, 1904),
Cunningham and McArthur's Outline of Eng. Industrial History,
(Cambridge), Cunningham's Grovuth of Eng. Indus., Vol. II.,
Leone Levi's Hist, of Br. Commerce, 2nd ed.
On the Indian side we have Ranade's *Essays on Indian
Economics (2nd ed. 1906), Gokhale's ^Speeches (Natesan, 1908),
R. C. Dutt's India in the Victorian Age (2nd ed. 1906), Prof.
V. G. Kale's Indian Industrial and Economic Problems (Natesan,
191 2). * Jack's Economic Life of a Bengal District, (Oxford,
ed.
1917).
* Indian
Year-Book, 4th year,
1917
(Bombay),
quarterly journals of Economics published at
Allahabad.
* Indian Trade Journal, weekly, (Govt.
and two
Calcutta and
Pr., Calcutta.)
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UC-NRLF

SARKAR & SONS,

Harrison Road, Calcutta.

*Firsf edition \{\iYP?^,

Second edition ($04

edition (336 pp.),

edition (384 pp.),

In this edition the book has been thoroughly revised, the

and a chapter on the economic

war on India added.

fast is the literature

India going on before our eyes and so

growing up, that a

general account of the "subject requires to be mostly re-written

every six years,

and not only have new

but even the old conclusions have

Such a restudy has been attempted

Throughout the book

in the present edition.

913-14, the last year of peace, as the standard of comparison

and the basis of study.

But the changes effected by the

and studied together

new; and the

additions are the inquiry into

Report of the Royal

Currency (19 14), recent developments of co-operation and

SARKAR & SONS

Sarkar, 90-2, Harrison Road,

Deccan, physical aspects,

land and climate, 10

aspects of different provinces,

distribution of our chief crops, 20

Population, urban and

family system and

lagan Committee's report, 106.

term settlement, 130

India's foreign debt and balance of

and growth, 143

agriculture should be associated with manuIndian labourers,

good work, 186

of cotton mills, 193

Indian production, 176

labour, in textiles 181

of capitalists according to race, 190

of jute mills, 195

tea plantations, 198

apprenticeship system of India,

of genuine students, 202

lines of technical education suggested,

Atkinson's report on technical education, 209

Indian Factories Acts, 213.

how custom broken,

high prices, 260.

partly business profits,

India's imports by sea (1913),

foreign trade, 273

Currency Commissions and Legis

Exchange standard explained, 292 how

Gold Standard Reserve, origin growth and

net revenue in 19 13, 341

341 recent opium

local taxation, 351