{"id":120065,"date":"2021-11-06T14:58:48","date_gmt":"2021-11-06T21:58:48","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=120065"},"modified":"2021-11-06T14:58:48","modified_gmt":"2021-11-06T21:58:48","slug":"an-in-depth-study-about-trade-between-british-and-its-colonies-eye-popping-revelations-us45-trillion-fraud-by-british-raj-in-india-alone","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2021\/11\/06\/an-in-depth-study-about-trade-between-british-and-its-colonies-eye-popping-revelations-us45-trillion-fraud-by-british-raj-in-india-alone\/","title":{"rendered":"An in-depth study about TRADE between British and it’s Colonies-Eye Popping Revelations: US$45 Trillion Fraud By British Raj In India Alone"},"content":{"rendered":"

Senaka Weeraratna<\/em><\/span><\/h2>\n\n\n

There is a story that is commonly told in Britain that the\ncolonisation of India – as horrible as it may have been – was not of any major\neconomic benefit to Britain itself. If anything, the administration of India\nwas a cost to Britain. So the fact that the empire was sustained for so long –\nthe story goes – was a gesture of Britain’s benevolence.<\/p>\n\n\n\n

New research by the renowned economist Utsa Patnaik – just\npublished by Columbia University Press – deals a crushing blow to this\nnarrative. Drawing on nearly two centuries of detailed data on tax and trade,\nPatnaik calculated that Britain drained a total of nearly $45 trillion from\nIndia during the period 1765 to 1938.<\/p>\n\n\n\n

It’s a staggering sum. For perspective, $45 trillion is 17\ntimes more than the total annual gross domestic product of the United Kingdom\ntoday.<\/p>\n\n\n\n

How did this come about?<\/p>\n\n\n\n

It happened through the trade system. Prior to the colonial\nperiod, Britain bought goods like textiles and rice from Indian producers and\npaid for them in the normal way – mostly with silver – as they did with any\nother country. But something changed in 1765, shortly after the East India\nCompany took control of the subcontinent and established a monopoly over Indian\ntrade.<\/p>\n\n\n\n

Here’s how it worked. The East India Company began\ncollecting taxes in India, and then cleverly used a portion of those revenues\n(about a third) to fund the purchase of Indian goods for British use. In other\nwords, instead of paying for Indian goods out of their own pocket, British\ntraders acquired them for free, “buying” from peasants and weavers\nusing money that had just been taken from them.<\/p>\n\n\n\n

It was a scam – theft on a grand scale. Yet most Indians\nwere unaware of what was going on because the agent who collected the taxes was\nnot the same as the one who showed up to buy their goods. Had it been the same\nperson, they surely would have smelled a rat.<\/p>\n\n\n\n

Some of the stolen goods were consumed in Britain, and the\nrest were re-exported elsewhere. The re-export system allowed Britain to\nfinance a flow of imports from Europe, including strategic materials like iron,\ntar and timber, which were essential to Britain’s industrialisation. Indeed,\nthe Industrial Revolution depended in large part on this systematic theft from\nIndia.<\/p>\n\n\n\n

On top of this, the British were able to sell the stolen\ngoods to other countries for much more than they “bought” them for in\nthe first place, pocketing not only 100 percent of the original value of the\ngoods but also the markup.<\/p>\n\n\n\n

After the British Raj took over in 1858, colonisers added a\nspecial new twist to the tax-and-buy system. As the East India Company’s\nmonopoly broke down, Indian producers were allowed to export their goods\ndirectly to other countries. But Britain made sure that the payments for those\ngoods nonetheless ended up in London. <\/p>\n\n\n\n

How did this work? Basically, anyone who wanted to buy goods\nfrom India would do so using special Council Bills – a unique paper currency\nissued only by the British Crown. And the only way to get those bills was to\nbuy them from London with gold or silver. So traders would pay London in gold\nto get the bills, and then use the bills to pay Indian producers. When Indians\ncashed the bills in at the local colonial office, they were “paid” in\nrupees out of tax revenues – money that had just been collected from them. So,\nonce again, they were not in fact paid at all; they were defrauded.<\/p>\n\n\n\n

Meanwhile, London ended up with all of the gold and silver\nthat should have gone directly to the Indians in exchange for their exports.<\/p>\n\n\n\n

This corrupt system meant that even while India was running\nan impressive trade surplus with the rest of the world – a surplus that lasted\nfor three decades in the early 20th century – it showed up as a deficit in the\nnational accounts because the real income from India’s exports was appropriated\nin its entirety by Britain. <\/p>\n\n\n\n

Some point to this fictional “deficit” as evidence\nthat India was a liability to Britain. But exactly the opposite is true.\nBritain intercepted enormous quantities of income that rightly belonged to\nIndian producers. India was the goose that laid the golden egg. Meanwhile, the\n“deficit” meant that India had no option but to borrow from Britain\nto finance its imports. So the entire Indian population was forced into\ncompletely unnecessary debt to their colonial overlords, further cementing\nBritish control. <\/p>\n\n\n\n

Britain used the windfall from this fraudulent system to\nfuel the engines of imperial violence – funding the invasion of China in the\n1840s and the suppression of the Indian Rebellion in 1857. And this was on top\nof what the Crown took directly from Indian taxpayers to pay for its wars. As\nPatnaik points out, “the cost of all Britain’s wars of conquest outside\nIndian borders were charged always wholly or mainly to Indian\nrevenues.” <\/p>\n\n\n\n

And that’s not all. Britain used this flow of tribute from\nIndia to finance the expansion of capitalism in Europe and regions of European\nsettlement, like Canada and Australia. So not only the industrialisation of\nBritain but also the industrialisation of much of the Western world was\nfacilitated by extraction from the colonies.<\/p>\n\n\n\n

Patnaik identifies four distinct economic periods in\ncolonial India from 1765 to 1938, calculates the extraction for each, and then\ncompounds at a modest rate of interest from the middle of each period to the\npresent. Adding it all up, she finds that the total drain amounts to $44.6\ntrillion. This figure is conservative, she says, and does not include the debts\nthat Britain imposed on India during the Raj.<\/p>\n\n\n\n

These are eye-watering sums. But the true costs of this\ndrain cannot be calculated. If India had been able to invest its own tax\nrevenues and foreign exchange earnings in development – as Japan did – there’s\nno telling how history might have turned out differently. India could very well\nhave become an economic powerhouse. Centuries of poverty and suffering could\nhave been prevented.<\/p>\n\n\n\n

All of this is a sobering antidote to the rosy narrative\npromoted by certain powerful voices in Britain. The conservative historian\nNiall Ferguson has claimed that British rule helped “develop” India.\nWhile he was prime minister, David Cameron asserted that British rule was a net\nhelp to India.<\/p>\n\n\n\n

This narrative has found considerable traction in the\npopular imagination: according to a 2014 YouGov poll, 50 percent of people in\nBritain believe that colonialism was beneficial to the colonies.<\/p>\n\n\n\n

Yet during the entire 200-year history of British rule in\nIndia, there was almost no increase in per capita income. In fact, during the\nlast half of the 19th century – the heyday of British intervention – income in\nIndia collapsed by half. The average life expectancy of Indians dropped by a\nfifth from 1870 to 1920. Tens of millions died needlessly of policy-induced\nfamine.<\/p>\n\n\n\n

Britain didn’t develop India. Quite the contrary – as\nPatnaik’s work makes clear – India developed Britain.<\/p>\n\n\n\n

What does this require of Britain today? An apology?\nAbsolutely. Reparations? Perhaps – although there is not enough money in all of\nBritain to cover the sums that Patnaik identifies. In the meantime, we can\nstart by setting the story straight. We need to recognise that Britain retained\ncontrol of India not out of benevolence but for the sake of plunder and that\nBritain’s industrial rise didn’t emerge sui generis from the steam engine and\nstrong institutions, as our schoolbooks would have it, but depended on violent\ntheft from other lands and other peoples.<\/p>\n","protected":false},"excerpt":{"rendered":"

Senaka Weeraratna There is a story that is commonly told in Britain that the colonisation of India – as horrible as it may have been – was not of any major economic benefit to Britain itself. If anything, the administration of India was a cost to Britain. So the fact that the empire was sustained […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[165],"tags":[],"class_list":["post-120065","post","type-post","status-publish","format-standard","hentry","category-senaka-weeraratna"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/120065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=120065"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/120065\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=120065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=120065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=120065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}