Britain took control of India because of the plunder of its wealth, and Britain’s industrial rise, as we are told in textbooks, did not come from a steam engine and powerful financial institutions, but through the violent theft of the country’s wealth And other people and land.
There is a story in Britain that Indian colonization – which was inherently a horrific phenomenon – did not bring any significant economic benefits to Britain itself. In addition, the Indian administration may have incurred costs for Britain. As a result, the fact that the British Empire lasted so long – and the story continues – has been a benevolent gesture from Britain.A new study by renowned economist Otsa Patnike, recently published by Columbia University Press, strikes a chord with this narrative. After nearly two centuries of tax and trade records, Patnick concludes that between 1765 and 1938, Britain amassed a total of about $ 45 trillion in Indian wealth. his figure is staggering. To better understand the meaning of this figure, it is not bad to know that $ 45 trillion is 17 times more than the total annual GDP of Britain today.
Where does such a large sum come from?
This happened through the trading system. Prior to the colonization of India, Britain bought goods such as textiles and rice from Indian producers and paid for them in the usual way – mostly with silver – just as it did with any other country. But in 1765, shortly after the East India Company took control of the subcontinent and monopolized Indian trade, something changed.This is how the system worked. The East India Company began collecting taxes from India and then cleverly used a portion (about one-third) of this revenue to pay for Indian goods purchased for British consumption. In other words, instead of paying for Indian goods out of their own pockets, British merchants seized them for free, “buying” the goods of their subjects and weavers using the money they had taken from them.This was a large-scale fraud and theft. Most Indians, however, were unaware of what was going on because the tax collector was not the one who came to buy their goods. If a single person did these two things, they would definitely smell fraud.Some of these stolen goods were consumed in Britain and the rest were re-exported elsewhere. The re-export system allowed Britain to finance goods imported into Europe, including strategic metals such as iron, bitumen and wood, which were essential for British industrialization. In fact, the Industrial Revolution largely depended on this systematic theft from India
With this tactic, Britain was able to sell stolen goods from India at much higher prices than it had “bought” in other countries in the first place, and not only pocketed 100% of the original value of the goods, but also increased profits.
After the direct rule of India by the British in 1847, the colonialists added a new and special change to the tax and purchase system. As the East India Company monopoly was lifted, Indian manufacturers were allowed to export their goods directly to other countries. Britain, however, made sure that funds made for these goods ending up from London.
How did this trick work? Basically, anyone who wanted to buy goods from India had to use special banknotes; A unique paper money printed and circulated only by the British government in India. And the only way to get these notes was to buy them from London for gold or silver. As a result, merchants paid gold to London to receive the banknotes, and later used the banknotes to pay for goods purchased from Indian manufacturers. When Indians smashed banknotes at the local colonial office, they were “paid” taxed rupees: the money they had also collected. So once again the British were not only not paying anything at all, they were cheating on the Indians.In the process, all the gold and silver that had to go directly to the Indians in exchange for Indian exports ended up in London. This corrupt system meant that although India had an impressive trade surplus with the rest of the world – a surplus that lasted until the first three decades of the twentieth century – there was a deficit in their national accounts because of real income. Because the real income from India’s exports went entirely to the British.
One of the purposes of this imaginary “deficit” was to act as evidence of India being nothing more than a scapegoat for Britain. While the exact opposite was true. Britain received huge amounts of revenue that rightfully belonged to Indian producers. India was a goose that laid golden eggs. At the same time, this “deficit” meant that India had no choice but to borrow from Britain to finance its imports. Thus the entire Indian population was forced to pay a completely unnecessary debt to their colonial masters, which further consolidated British control over the country.
Britain used the profits of this fraudulent system to refuel its engines of imperialist violence; That is, to finance the invasion of China in the 1840s and the suppression of the Indian Revolution in 1857. And this was in addition to what the British government in India was receiving directly from Indian taxpayers to finance its wars. As Patnick points out, “the financing of all British victorious wars outside India has always relied entirely or largely on the revenues it earned from India.
This is not the whole story. Britain used this endless tribute from India to finance the expansion of its capitalism in Europe and parts of European colonies such as Canada and Australia. Thus not only British industrialization but also the industrialization of a large part of the Western world was facilitated by the plundered wealth of the British colonies.
Patnaik identifies four distinct economic periods in Indian colonization from 1765 to 1938 and estimates the wealth extracted from each of these periods and then rates them at a moderate interest rate (about 5% less than the rate It is the market interest) from the middle of each period to the present. Adding these figures, he then estimates the total amount coming from India at $ 44.6 trillion. According to him, this figure is conservative and does not include the debts that Britain imposed on India during its rule.
But the real costs of this exploitation cannot be calculated. If India were to be able to invest its tax revenues and foreign exchange earnings in the development of the country – as Japan did – there is no doubt that history would be quite different. In this case, India could very well become an economic engine room and prevent its centuries of poverty and suffering. All of these thought-provoking findings are an antidote to the false narrative that has always been promoted by certain powerful voices in Britain. Conservative historian Niall Ferguson has claimed that British rule helped “develop” India. While David Cameron assured during his tenure as Prime Minister that British rule had been a “pure aid” to India.
The traces of this narrative can also be traced in the public imagination to a considerable extent. According to a 2014 poll by Yu Gao, 50% of people in Britain believe that British colonialism has ended in favor of the British colonies. However, throughout the 200 years of British rule in India, India’s per capita income has seen almost no increase. In fact, during the second half of the nineteenth century – the height of British intervention – India’s incomes fell by half. The average life expectancy of Indians dropped to one-fifth from 1879 to 1920. Tens of millions of people died unnecessarily as a result of the policy-driven famine.Britain did not develop India. Quite the contrary – as Patnick’s work makes clear – it was India that led to the development of Britain.
What does this fact require Britain to do today? An apology? Absolutely. Repaying looted wealth? Perhaps, though, there is not enough money across the UK to repay the amount that Patnaik’s calculated. In addition we can begin to retell the true narrative of history. We must acknowledge that Britain took control of India not only out of benevolence but also out of plunder of its wealth, and that the rise of Britain’s industry, as we are told in textbooks, came from the heart of the steam engine and powerful financial institutions. It has not emerged, but has relied on the violent theft of the wealth of other lands and peoples.