India in 1865: the first impact of globalization on India

Calcutta Telegraph, India
Aug 17 2004

– The first impact of globalization on India

Writing on the Wall Ashok V. Desai

George E. Eyre and William Spottiswoode, Printers to the Queen’s Most
Excellent Majesty, printed in 1867 a Statistical Abstract Relating to
British India, from 1840 to 1865 (as far as the Particulars can be
stated,) Compiled from Official Records and Papers Presented to
Parliament, and presented it to both houses of Parliament on the
Command of her Majesty. According to it, the population of India was
196 million – just about a seventh of what it is in the same area,
including Pakistan, Bangladesh and Burmah, which became an Indian
province in 1852. Bombay then had 816,000 people, Madras 427,000, and
Calcutta 378,000. Of Calcuttans, 11224 were Europeans – 6820 men,
2545 women and 1859 children. Most of the men must therefore have
been unattached and childless. No wonder there were 11636
Indo-Europeans – 4082 men, 4218 women, and 2736 children. They were a
largely Calcutta phenomenon; Bombay had only 1891 Indo-Europeans as
against 8415 Europeans. The Madras census did not bother to count
them separately; they were probably too few. Calcutta also had 763
Armenians, 681 Jews, 409 Chinese, 53 Africans, 30 Greeks, and 1441
Asiatics, whatever that may mean.

The Government of India received £45.7 million in revenue in 1865
(the financial year then ended on 30 April), and spent £46.5mn –
£39mn in India, the rest in Britain. That is as many crore rupees; to
get the rupee equivalent, just multiply the figures by ten, for its
value was fixed at 2 shillings for decades. The revenue went up from
£20.1mn in 1840 to £47.6mn in 1865; the star performer was Bombay
presidency, whose revenue went up from £2.4mn to £9.6mn. It was
booming thanks to opium exports. The deficit shot up to an average of
£12mn in the three years following the mutiny because of additional
military expenditure; but taxes were raised, expenditure strictly
controlled, and the deficit was brought down to less than £1mn by
1864. The debt went up to £107.5mn in 1861, but prudent fiscal
management brought it down to £98.5mn in 1865 – £72.4mn raised in
India, and £26.1mn in England. On it, £4.6mn was paid in interest –
6.25 per cent on the average.

Opium brought in £7.3 million in revenue – only second to the £20
million from land revenue. It was a great arrangement – the Chinese
ruined their health, and Indians got rich; the government took a part
of their riches. Salt tax brought in an astonishing £5.5 million – no
wonder Gandhiji picked it for picketing 66 years later. Various
excises – sayer, abkarree etc – brought in £2.6 million, and customs
£2.3 million. Stamp duties were important then, bringing in £2
million. Unaccountably, tax on tobacco was abolished in 1854.

The year 1865 saw 26,823 ships entering British Indian ports; 26070
cleared out of it. Why their numbers differ, I do not know;
presumably 753 vessels slipped out while the harbour master was
sleeping – or were built in the ports. They weighed 4 million tons –
that is, 150 tons on the average. The 20577 Indian vessels weighed
771000 tons – an average of 37 tons; 6246 foreign vessels weighed 3.1
million tons – 500 tons on the average. An average British ship
weighed 940 tons, a Chinese one 620 tons, a Siamese one 62 tons, and
a Ceylonese one, 113 tons. Obviously, size mattered in longer
voyages, especially around the Cape of Good Hope. (In 2003/04, 13
major Indian ports handled 85 million tons.)

Over the 25 years to 1865, the number of foreign vessels entering
went up from 1390 to 6246; their tonnage increased from 460,000 to
3.1mn tons. The number of native vessels went down from 24497 to
20577; their tonnage increased from 591000 tons to 771000. Clearly,
the share of native vessels came down. An anticolonial would
immediately think that the British displaced natives in competition,
fair or foul. Not really; long-distance, inter-ocean trade increased
more than local trade, and the British had a bigger presence in the
latter. Bombay specialized in short-distance trade across the Arabian
Sea; the average vessel entering its port weighed 23 tons in 1840 and
81 tons in 1865. Its trade increased 2.3 times. Calcutta specialized
in long-distance trade; the average vessel entering its port weighed
340 tons in 1840 and 540 tons in 1865. Its trade multiplied 4.5

Calcutta trade was then overwhelmingly international and
western-oriented. The only Asian vessels entering Calcutta in 1865
were 12 Arabian vessels weighing 6884 tons; native vessels accounted
for another 17000 of the total 1.092mn tons. The rest were from white
countries. The British dominated with 1584 of the 1796 foreign
vessels; there were 137 French vessels, 40 American and 22 from the
rest of Europe. Native ships accounted for 26 per cent of the traffic
in Madras and 38 per cent in Bombay. Clearly, native shipping
survived better on the south and the west coast.

India had a massive trade surplus in the entire quarter century from
1840 to 1865; its exports came to £69mn and imports to £50mn in 1865.
Even this is misleading; for of the imports, £22mn was bullion; only
£28mn was goods. The share of bullion climbed from 18 per cent in
1840 to 44 per cent in 1865.

The major suppliers of imports into India in 1840 were Britain (60
per cent), China (15 per cent), the Middle East and the Straits (7
per cent each). By 1865 the market shares of all had fallen –
Britain’s to 46 per cent, China’s to 8 per cent, the Middle East’s
and Straits’ to 3-4 per cent. India had acquired new trading partners
– Australia (7 per cent), France (6 per cent), and Alexandria and the
Suez (13 per cent). Remember, this was before the commissioning of
the Suez Canal in 1869; even before it, trade to Europe had begun to
pass through Egypt.

Exports nearly quintupled from £14mn in 1840 to £69mn in 1865. In
1840, Calcutta dominated with exports of £8mn; by 1865, Bombay was
exporting £41mn out of the £69mn. The reason lay in the direction of
trade. In 1840, 52 per cent of exports went to Britain, 15 per cent
to China, 12 per cent to the Straits, 5 per cent to the Middle East,
and 3 per cent each to Ceylon and Mauritius. In 1865, Britain’s share
was 67 per cent.

China held its share thanks to booming opium which, however, went
from Bombay; Straits’ share fell to 3 per cent, Middle East’s to 3
per cent and Mauritius’ to 1 per cent. India was becoming a raw
material supplier to industrializing Great Britain, and Britain’s
demand turned India’s exports away from the traditional markets
closer to it.

Thus we see in the mid-19th century the first impact of globalization
on India. Shipping technology changed; ships became larger and
travelled further (steamers were just coming into use in 1865). With
it, direction of trade changed; from trade within the Indian Ocean
region, India began to trade more with Britain and China.
Industrializing Britain and opium-eating China created new markets;
as they expanded, India developed a massive export surplus. It did
not know what to do with all that money, so it stashed away gold and
silver. Was that deindustrialization? There may have been; but there
was export-led growth too. For some of India’s people, this must have
been a golden era.