Chapter 1

The day broke, the day which was to decide the fate of India. At sunrise the army of the nabob, pouring through many openings of the camp, began to move towards the grove where the English lay. Forty thousand infantry, armed with firelocks, pikes, swords, bows and arrows, covered the plain. They were accompanied by fifty pieces of ordnance of the largest size, each tugged by a long team of white oxen, and each pushed from behind by an elephant. ...The cavalry were fifteen thousand, drawn, not from the effeminate population of Bengal, but from the bolder race which inhabits the northern provinces; and the practised eye of Clive could perceive that both the men and the horses were more powerful than those of the Carnatic. The force which he had to oppose this great multitude consisted of only three thousand men. But of these nearly a thousand were English; and all were led by English officers, and trained in English discipline. The battle commenced with a cannonade in which the artillery of the Nabob did scarcely any execution, while the few field-pieces of the English produced great effect. Several of the most distinguished officers in Surajah Dowlah's service fell. Disorder began to spread through his ranks. his own terror increased at every moment. One of the conspirators urged on him the expediency of retreating. The insidious advice, agreeing as it did with what his own terror suggested, was readily received. He ordered his army to fall back, and this order decided his fate. Clive snatched the moment, and ordered his troops to advance. The confused and dispirited multitude gave way before the onset of disciplined valour. No mob attacked by regular soldiers was ever more completely routed. ... Only five hundred of the vanquished were slain. But their camp, their guns, their baggage, innumerable waggons, innumerable cattle, remained in the power of the conquerors. With the loss of twenty-two soldiers killed and fifty wounded, Clive had scattered an army of near sixty thousand men, and subdued an empire larger and more populous than Great Britain.

So runs the classic description by Lord Macaulay of the battle of Plassey in June 1757, the display of military opportunism by which the British toppled an implacable opponent, and from which sprang their own direct control over Bengal. This was the foundation-myth of the British raj - the portrayal of a contest between a small band of determined, disciplined Englishmen and a mass of cowardly, irresolute and treacherous natives that could have only one outcome, because the qualities of leadership and fortitude were so poorly matched. To Macaulay, it was also the climax of a process of British expansion in Asia that had begun a century and a half before, and conclusive proof, if any were needed, that the future of India could only be secured by binding her ever closer to the moral integrity and leadership of the imperial elite.

The English East India Company had been founded in London in 1600, and given a charter by Elizabeth I granting it exclusive trading rights in the East Indies. It secured its first trading station in India at Surat in 1613, and slowly established string of `factories' (trading stations) around the coast during the course of the seventeenth century. By the early eighteenth century British merchants had established a solid but unspectacular business in the East, sending £750,000 to £1,000,000 worth of goods to London from Asia each year from the 1720s onwards, almost 15% of Britain's total imports. The bulk of its trade was in cotton `piece goods', many of which were then re-exported from Britain to other European countries. The Company did not organise production of Indian cottons directly, but bought them from Indian middle-men and local agents better able to deal with the complex socio-economic organisation of the Indianweaving trades. In addition, Company servants had the right to engage in private trade on their own account, provided that this did not infringe the Company's Charter. This privilege led to an expansion of British commercial activity in the `country trade', buying, selling and transporting goods within India and to and from Persia, the Gulf, South East Asia and China. Here Indian merchants provided stiff competition. As late as the 1750s only about one-third of the cloth exports of Dacca - the leading textile-producing region of Bengal - was handled by European traders,and then often simply as a front for Indian interests.

The activities of European merchants in India brought them into contact with the Mughal empire - one of the great territorial powers in Asia that reached its furthest extent in the second half of the seventeenth century under the rule of Aurangzeb (1658-1707). At Aurangzeb's death the imperial capital at Delhi exacted tribute from all of mainland South Asia except the southern-most tip of the Indian peninsula - an empire with 180 million subjects, about one-fifth of the population of the world. Yet even at its most powerful the Mughal empire was never a centralised autocracy. The emperor was Shah-an-Shah, the `king of kings', and this was a precise description rather than a piece of empty rhetoric. His power depended on being able to manipulate the many petty kings and notables who controlled resources and exercised authority in the cities, towns and villages of the empire. The emperor was never an absolute dictator, acting instead as an `entrepreneur in power' who was able to buy obedience by royal honours and enforce it on occasion by military might.

Aurangzeb's constant wars in western and southern India stretched the resources of the empire to breaking point. After his death central control weakened once more, and old rivals broke free from the restraints of imperial rule. The result was a much more fluid political system during the eighteenth century that British apologists and Muslim chroncilers liked to describe, in retrospect, as a black period of destructive anarchy. Mughal power certainly declined markedly, as symbnolised by the sack of Delhi by Nadir Shah of Persia in 1739, and by the Afghan war-leader Ahmad Shah Durrani in 1757. However, the power vacuum was largely filled by new regional states. Some, like the Sikh kingdoms of the north-west and the Maratha principalities of western and central India, were the heirs to a long tradition of rebellion against Mughal control. Others, like Nawad Alivedi Khan's Bengal, Asaf Jah's Hyderabad, and Saadat Khan's Awadh, were established by Mughal courtiers and governors who siezed the opportunity to build a personal power base.

Eighteenth century India saw remarkable dynamism and resilience, but also profound social and economic change and widespread political conflict. On the ground, local magnates secured or maintained their control over the land, and extracted rent or tribute from the cultivators, much as they had during the Mughal period. The regional rulers made accomodations with such men, often allowing them to farm state revenues in rteturn for a cash payment in tax. In areas of advanced commercialisation - notably Bengal, which had grown rich from the annual import of silver to buy up its textiles - mercantile interests also commanded political power, financing states and armies as well as landlords and artisans. In return, they secured valuable monopolies in local commerce, and used a wide network of contacts to link Indian regions to each other, and to inter-regional and intercontinental trade.

The new states of late-Mughal India had to maximise their military and fiscal strength if they were to survive. Most reimposed the old Mughal administrative systems, adapted to their new mercantilist concerns. Such actions generated severe tensions, especially between military leaders, tax-farmers and merchants, all of whom were involved in trade, usury, revenue management and military finance, and competed for the surplus production of town and countryside. It was these internal tensions, rather than the centrifugal forces released by the collapse of Mughal authority, that were to destroy the political independence of India in the years to come.

The European trading companies played little direct part in the the political and military realignment that followed the implosion of the Mughal empire. However, they enjoyed important privileges that gave them aninterest in Indian affairs. The European settlements were rich, but they were not liable for taxation, and the foreign companies had all negotiated agreements by which they paid very low customs duties on their huge trade. The fiscal needs of the new Indian states made it likely that these privileges would be challenged at some point, but the immediate cause of the foreign intervention of the 1750s came from Europe not India.

When Britain and France went to war in 1742 the conflict was exported to southern India. Dupleix, the Governor of the French trading station at Pondicherry, caled in a French fleet from Mauritius, which captured Madras in 1746. The town was rstored to Britain by the Treaty of Aix-la-Chapelle in 1748, but Dupleix now became involded in the dsisputed succession to the Nizam of Hyderabad who died the same year. The prize was to secure a favourable candidate as Nawab of the Carnatic - the regional governor based at Arcot who controlled the territory surrounding the English and French settlements. Dupleix backed one candidate while the English East India Compoany backed another; the issue was resolved by the capture of Arcot by 500 men under the leadership of a young captain in the EIC's army - Robert Clive. When war broke out again in Europe in 1756 the French beseiged Madras once more, but British sea-power proved decisive this time and Pondicherry surrendered in 1761. By 1763 French power in south India was at an end, and the British installed Mohammed Ali Wallajah as Nawab at Arcot, binding him to them by a `subsidiary alliance' by which Company troops were supplied for his defence in exchange for a `subsidy', or tribute, to pay for them. Over the years that follwoed the Nawab proved unable,or unwilling, to maintain his half of the bargain - the result weas the piecemeal annexation of his territories, culminating in the abolition of his title in 1799.

In Bengal, European rivalry surfaced in 1756. Here the situation was more complex, and the consequences far more momentous. The English Company began to fortify Calcutta on the outbreak of war in Europe, and this proved the final straw for the new Nawab of Bengal, Suraj-ud-daula, who was determined to assert his authority over all those - foreign merchants, Hindu financiers, court officials and landed magnates alike - who had established important privileges for themselves in the past. The Nawab demanded money from the French and Dutch settlements, and laid seige to Calcutta, which fell to him in June. The British reacted swiftly. Professional troops under Clive's command were shipped up from Madras in December, Calcutta was recaptured, and Suraj-ud-Daula forced to restore the EIC's privileges in February 1757. By now the extent of internal opposition to the Nawab was clear, and Clive joined a conspiracy to overthrow him, in which the Company was to provide the muscle and Jagat Seth, the government's banker, the money. The result was Plassey, which put Mir Jafar on the throne, ensured extensive privileges for the Company including the grant of territory to raise revenue for troops to protect its trade, and transferred over £1.25 million from the state treasury to the pockets of Company servants.

The battle of Plassey did not, contrary to Macaulay's phrase-making, `decide the fate of India', but the new strength of the EIC put Mir Jafar in an impossible position. The British fell out with their new ally over the ceding of territory to meet the Company's costs, and Mir Jafar was deposed in favour of his son-in-law, Mir Kasim, in 1760. The new Nawab wanted to build up his own power, which meant maximising revenue. This brought him, in his turn, into conflict with the EIC when he levied tols on the private trade of Company servants, who had been exempted from internal duties by Mir Jafar. This privilege was an important one for Company servants, for it gave them a competitivce edge over Indian rivals - so much so that they were able to penetrate deep into the inland economy for the first time, trading in salt and other goods that had previously been government monopolies. Again war broke out between Company and Nawab, and Mir Kasim was defeated at Baksar in 1764. Mir Jafar was briefly restored to the throne until his death in 1765, then the Company took over the diwani of Bengal, the right to impose and collect the revenue of the province for itself, in return for a fixed tribute payable to the Moghul emperor in Delhi. This agreement, made by the Treaty of Allahabad in August 1765, gave over almost all of the revenues of bengal to the Company to use for trade and military supply, and marked the arrival of the British as a territorial power in Asia.

The EIC's takeover bid for Bengal had been made because the demands of expanding trade clashed with the fiscal requirements of the local state. It succeeded because the Company had a well-trained mercenary army, with a core of European professional soldiers, which enabled it to sell protection to those threatened by the exactions of Suraj-ud-Dowlah and his successors. Outside Bengal the Company extended its influence through the `subsidiary alliance' system it had pioneered in Madras. Informal expansion began in the Carnatic, where the Nawab of Arcot was brought under British military protection in the 1750s to free him from his nominal overlord, the Nizam of Hyderabad. Hyderabad in its turn had an alliance thrust upon it to counter French intrigues in 1759. In 1765 the Nawab of Awadh (Oudh), whose territories lay north-west along the Gangetic plain next to Bengal, accepted Company troops in return for an annual tribute, and in 1775 the Raja of Benares, whose lands also bordered the EIC's territory was induced to transfer his alliegence from Awadh to the Company and pay Rs.4.5 million a year for the privilege of British protection.

The agrarian economy of the eighteenth century was largely organised on mercantilist principles, to meet the needs of the independent or semi-independent subordinate fiefdoms, controlled by regional and local officials, military strongmen and political magnates, that had been created by the decentralisation of the Mughal empire. Urban merchants and rural entrepreneurs who could supply cash, men or material to the state were rewarded with tax concessions and local power; market networks developed that met the needs of these internal patterns of demand, as well as serving the external requirements represented by the English East India Company and other foreign traders.

At the local level, agricultural production and rural social and political relations were determined by a complex mixture of ecological, customary and technological factors. The well-watered rice-growing areas of the great river deltas and flood-plains in north-eastern and south-eastern India formed the agricultural heartlands of India's traditional civilisation. Structured and hierarchical, with extensive urban and cultural centres, these areas depended on capital and labour-intensive rice cultivation, with rigid social distinction between the status of the landowners (high-caste, often Brahmin) and the labourers (low-caste, often untouchable). They were already supporting very high population densities by the eighteenth century, and could not easily expand further without exhausting the soil. By contrast, the drier areas of upland India, notably in the Deccan, the Punjab and western Gangetic plain, which were sparsely settled and semi-arid, grew millets and wheats irrigated by wells on farms run by peasant families. Free land, of a sort, was usually available, and the levers of productive and social power were more finely balanced, favouring decisively only those who could impose a monopoly on access to security, irrigation, or infrastructure - the keys to the successful development of such regions.

Over the course of the nineteenth century the British changed and adapted the economic, political and social institutions of rural India fundamentally, with effects that were as often destructive of old development systems as they were creative in building new links. The most obvious impact of British rule on the rural economy was through the imposition of new systems of land revenue. Agricultural taxation provided an important source of revenue for any Indian government, and especially for the Company which had to pay a dividend by using its surplus to purchase Indian goods for sale in Britain. The land-tax system also provided the focal point for the state's relations with the society it ruled, and Company officials believed that their Indian subjects would judge them by the degree of continuity and security that they provided, for only thus could improvements in agricultural output and living standards be achieved.

Creating an adequate administrative system of this type caused particular problems in the Bengal Presidency, the first area of India to come under direct British control. The main difficulty here concerned the Company's relations with the large zamindars, rural magnates who had built up hereditary fiscal powers as agents and tax farmers for the Nawabs of Bengal. British officials generally agreed that the position of such men would have to be maintained since rural society required continuity and stability and a stable landlord class would promote social order. For these reasons it was decided in the 1780s that a permanent settlement should be made, giving rights in land to zamindars in perpetuity, provide that they continued to pay their revenue. Security of property rights was also intended to give landlords an incentive to improve their land, increasing the rent they could charge, and hence the profit they could make over the fixed land revenue demand. The sole check on landlord power under this system in its original form was the requirement to pay the land revenue in full. By this means the Company intended to ensure that only capable and efficient men would hold the title of zamindar. This who could not make a profit on their estates would be sold up to make good any arrears, thus ensuring the survival of the fittest through an active market in land.

As an instrument for agricultural improvement the Permanent Settlement was a failure, since many existing zamindars could not work the new system successfully. The break-up of old estates put land and power into the hands of smaller landlords, mainly drawn from the rural gentry that had grown up around local administration, service industries and trade. While some zamindars did invest in agricultural improvements, and in promoting new crops such as indigo, the bulk of their income came from rents. Below the landlords substantial peasants and under-proprietors also profited by the control of agricultural output and the manipulation of social power. By the 1830s, in many parts of eastern India, rural population levels were such that the bulk of cultivators were dependent on non-farm income to survive.

Zamindari settlements, on the lines of the Permanent Settlement in Bengal, were imposed in other areas of central, northern and south-western India that the British acquired during the early nineteenth century. After 1820, however, the great settlements of most of north-western, western and southern India were conducted on a very different basis, that of a new ryotwari system of land settlement and taxation that vested control of the land in the hands of peasants (ryots), eliminating `parasitic' landlords and stimulating growth through direct assessments that rewarded careful husbandry. In the large areas of northern India where this new system was imposed after 1820, tenurial arrangements were made with village zamindars holding pattidari rights, or with joint-owning brotherhoods (bhaiachara), that had the right to raise revenue before British rule. Elsewhere, notably in western and southern India where such groups did not appear to exist, individual or joint settlements were made with peasant proprietors who claimed to have traditionally paid revenue and managed land rights in each village. Under these arrangemnts the state became the landlord and the cultivator or village proprietary body was designated the tenant, holding a lease granted for a fixed period at a fixed rent. Settlements were renewed, upon resurveying, at thirty-year intervals; in the meantime proprietary and cultivating rights in land were alienable, and proprietors could be sold up for failure to pay their rent.

The ryotwari settlements of the 1820s, 1830s and 1840s officials were based explicitly on the Utilitarian doctrine that rent was an `unearned increment' which represented the advantages of productivity and fertility enjoyed by good lands over bad. Land revenue was seen as the state's share of this rent, and it was thought that it could be fixed `scientifically' by careful survey and settlement that would establish the product of each agricultural holding, enabling the state to leave the cultivator enough to meet the costs of production, subsistence and productive investment.

The declared aim of the ryotwari settlements was to revitalise the rural economy by setting cultivating peasant brotherhoods free from the depredations of corrupt state functionaries and greedy landlords. But administering direct revenue assessments put tremendous strains on the capacity of the Company and its British officials, who had to calculate the appropriate level of taxation by surveys of individual fields, and an estimate of the market rental value of the land where no such market yet existed. Surveys and settlements that tried to do this ran into insuperable theoretical and practical difficulties, aggravated by the use of Indian subordinates who had their own preferences and contacts among the surveyed.

The early land settlements in northern and western India were later widely acknowledged to have been both onerous and inequitable, and were modified considerably in pitch and theoretical rigour from the middle decades of the nineteenth century. But even with a more pragmatic approach to revenue assessment, the ryotwari system had a disruptive impact on rural society. The village-level proprietors with whom the British were dealing in most parts of India were distinguished as holders of proprietary, rather than cultivating, rights. They represented the local elite with whom previous rulers had made agreements to farm revenues or collect taxes. Such groups often reinforced their local influence by acquiring a place in the local administrative hierarchy, usually as village headmen or village accountants (who had the duty of registering landholdings). These posts, in Bombay and Madras in particular, brought remuneration partly through dues in cash and kind and partly through rights to revenue-exempt inam land. Even in northern India many village proprietors lived largely on the profits of their role as local revenue and political managers for the state, rather than from direct rental income or agricultural production.

In most of the ryotwari areas at the time of British conquest possession of government office remained the key to economic superiority in the village. Like the zamindars of Bengal, the village proprietors of northern, western and southern India had used an implicit licence from the state, backed up by military leadership, kinship ties, custom, and sometimes caste and ritual systems, to manage local society. These rural social, political and economic networks were often delicately balanced, and were submitted to great strains as a result of the imposition of British rule. Military service was no longer an option for most local elites and population increases diminished the shares of proprietary rights for each inheritor. The village proprietors and superior ryots with whom the revenue settlements were made did not necessarily control either the marketing network inside or outside the locality, or have access to the liquid resources that were now so vital to meet fixed revenue payments that had to be paid in cash and could no longer be renegotiated annually. As a result the rate of attrition among such groups was quite high and there was a considerable volume of transfers of land titles, especially in north India.

The creation of a land market in India in the first half of the nineteenth century that transferred control of land out of traditional proprietors into the hands of merchants and moneylenders (mahajans) was identified by nationalist historians as one of the most drastic effects of colonial rule. As demand for export crops such as sugar, indigo and cotton rose in the 1820s and 1830s, so the use of credit to finance agricultural trade and production increased. The British demand for regular (and rather high) revenue payments was also a considerable burden, especially since tax demands rarely coincided with harvest-times. These developments gave merchants and money-lenders a greatly enlarged function in the rural economy, and in some parts of northern India revenue rights in up to ten per cent of villages changed hands, although they usually came under the control of service gentry groups rather than traders.¹ However, the significance of these developments can be exaggerated. The largest volume of transfers of proprietory rights took place in the confused years before 1820. Where moneylenders and merchants did acquire proprietary rights in the 1830s it was usually in settlement of debts, or to secure an institutional link with village markets. Often such titles were leased back to their previous holders, in return for a tighter business connection. In poorer regions there were few rental profits to be had, and management could not be exercised without customary power.

From the 1860s onwards the Indian rural economy began to be dominated by the great expansion of overseas trade in primary produce that continued, with only minor fluctuations, until the late 1920s. In the first half of the nineteenth century India had exported indigo, opium, cotton (first cloth and yarn, then raw cotton as well) and raw and manufactured silk. While all of these were traditional products, much of the new export-oriented enterprise (except for raw cotton, but including also sugar which was tried in plantations in Bihar in the 1830s) depended at least initially on European enterprise and state support, and offered limited opportunities to peasant cultivators. This was especially the case with those crops that were grown by partial coercion under conditions of monopsonistic control - indigo and, to a lesser extent, opium. By contrast, the new export staples of the later nineteenth century were much more firmly rooted in the peasant economy. While exports of indigo and opium fell away, their place was taken by raw jute, food grains (rice from Burma and wheat from India), oilseeds and tea, while raw cotton remained the largest single item of export by value in most years throughout the colonial period. Of these products, tea was grown on plantations, but the remainder were produced as part of the peasant crop cycle.

The expansion of international trade was made possible by the building of an extensive railway system in India in the second half of the nineteenth century. The first line, which ran for twenty miles out of Bombay, was opened in 1853; by 1906, when all the major trunk routes were in place, there was nearly 30,000 miles of track. Railways had a considerable impact on the rural economy, and on internal migration and social mobility. They aided famine relief, linked large parts of the interior to the ports, and facilitated the movement of goods for domestic and foreign trade. But there were disadvantages as well. Many of the lines were built for strategic, rather than economic, reasons, and they tended to stimulate import-export trade rather than the internal economy. Most of the track was built by an alliance of state and private capital, but under a large number of different arrangements. The first lines were of `broad gauge' (66 inches), thought necessary to withstand Indian climatic conditions. Later metre-gauge track was laid for branch and feeder lines, and for some main lines as well, and there were two other widths of narrow gauge track for hilly and desert regions. By the 1900s there were as many as 96 different lines opened to the public, managed under one of ten different systems, and supervised by 33 separate railway companies. Even on the most efficient routes neither the efficiency nor the costs of the service compared favourably with the railway systems of her major international competitors. By the 1900s the system was severely undercapitalised, leading to delays in shipment, slow trains and obsolete rolling stock.

The commercialization of the agricultural economy and the expansion of long-distance trade in primary produce put new demands on the rural credit market. Revenue demands had long had to be paid in cash, which had helped to draw urban moneylenders and traders into local-level economic relations, and the spread of new cash crops for sale outside the locality further increased the need for local credit, and also the rewards for its use. Many cultivators took loans to provide seed, implements and cattle, to dig wells, store grain or simply to obtain food between harvests. Much of this credit was best supplied in kind, and moneylending was closely linked to the grain trade in many parts of the subcontinent. British officials observed the growth of `peasant indebtedness' with alarm in the last third of the nineteenth century, arguing that it represented yet another threat to the homogenous character of traditional village communities. However, in most parts of the subcontinent the creation of a credit-market for investment and subsistence was not a new phenomenon of the late nineteenth century, and the direct influence of mahajans and urban capitalists on agriculture was often not as large as it appeared to be, especially where peasants could turn to more than one source of funds, and where rival sources of rural credit and land management existed within village society.

Overall, agricultural production in nineteenth century India was largely financed by rurally-based entrepreneurs, drawing capital from those who had profitted from the export-led expansion of cash-crop farming. The commercial expansion of the late nineteenth century required new crops, new transport networks and increased market activity. Control of credit, carts, storage facilities and agricultural capital brought advantages to some groups in village society. The protection that the colonial government gave to agriculturalists against non-agricultural moneylenders made it easier for surplus peasants and local landlords to dominate the supply of credit and the power that accompanied it. Tenancy legislation, such as the Bengal Tenancy Act of 1885 which gave occupancy rights on controlled rents to those who had held tenancies for twelve years, with the right to sub-let without hinderances, also bolstered the position of this important stratum of local society. The rural magnates who were best able to take advantage of new opportunities in cultivation were, for the most part, the same elite that had determined agricultural decision-making since well before the coming of the British, but connections between rural social stratification and agricultural development were complex and confused. In much of the subcontinent the commercialization of the rural economy in the half century after 1860 was not `forced' or `compulsive' - in the sense that it was not designed or manipulated solely by dominant groups to expropriate the surplus or determine the decision-making of the mass of cultivators.

Given the reality of cultivating conditions it is hard to identify meaningful divisions in society with particular sizes of land-holding, or to argue that the dominant elites of late nineteenth century India represented a new class formation that had resulted from the spread of capitalism to the land.

By 1860 the facade of British rule in India was securely in place once more. The Mutiny had been crushed, and the final abolition of the East India Company meant that British territories in South Asia were formally administered by the British Crown. Lord Canning, the Governor-General who had weathered the storm of revolt, now became the first Viceroy. In London the Court of Directors and Board of Control were replaced by the India Office - a separate department of state headed by the Secretary of State for India, a British Cabinet Minister responsible to Parliament. The Viceroy was the pinnacle of governance in India, but his power was always hedged by London's suspicion and parsimony, while his subordinates often hid their entrenched interests behind inertia, poor communication and local particularism. The House of Commons took an occasional interest in Indian affairs, and could be whipped up to near hysteria by a whiff of corruption or a distant threat of invasion, but India never became an issue in domestic politics to rival Ireland or Egypt, or questions of moral and material progress at home.

The half century from the suppression of the Mutiny to the outbreak of the First World war saw the full incorporation of South Asia into the British imperial system. It was in these years, the India became Britain's `English barrack in the oriental seas', and the largest single purchaser of British exports. In these years, too, India acquired a considerable amount of British investment, and played a significant part in sustaining London's role as a currency centre and earner of invisible income. In the domestic economy Indian peasants and British planters grew cash crops to sell in the international market - cotton in Bombay, jute in Bengal, wheat in the Punjab, tea in Assam, oil-seeds in Madras - while native and expatriate entrepreneurs invested in processing and service industries. Part of the profits of these enterprises stayed in India, but average incomes and standards of living remained low. Prosperity still largely depended on a good monsoon; with erratic rainfall there were frequent famines and dearth in the 1870s and 1890s.

The commercialization of the agricultural economy and the expansion of long-distance trade in primary produce had important effects on the structure of rural society. In particular, the new economic arrangements made significant demands on the rural credit market, but the effect of this on social organisation was not as dramatic as many contemporaries assumed. Revenue demands had long had to be paid in cash, which had helped to draw urban moneylenders and traders into local-level economic relations, and the spread of new cash crops for sale outside the locality further increased the need for local credit, and also the rewards for its use. Many cultivators took loans to provide seed, implements and cattle, to dig wells, store grain or simply to obtain food between harvests. Much of this credit was best supplied in kind, and moneylending was closely linked to the grain trade in many parts of the subcontinent. British officials observed the growth of `peasant indebtedness' with alarm in the last third of the nineteenth century, arguing that it represented yet another threat to the homogenous character of traditional village communities. However, in most parts of the subcontinent the creation of a credit-market for investment and subsistence was not a new phenomenon of the late nineteenth century, and the direct influence of mahajans and urban capitalists on agriculture was often not as large as it appeared to be, especially where peasants could turn to more than one source of funds, and where rival sources of rural credit and land management existed within village society.

By 1900 there was probably more British capital and enterprise at work in India than in any other part of the colonial empire, but the relationship between expatriate businessmen and the colonial establishment weas a complex one. Many colonial administrators affected to despise the box-wallahs engaged in trade, although a few businessmen acted as advisers to governemnt and were energetic and successful lobbyists for the interests they represented. Firms of British expatriate entrepreneurs dominated India's export economy in the nineteenth century, virtually monopolising the trade of Calcutta and Bombay, and someof these spread out across into the Indian Ocean into East Africa, South East Asia and China. Most expatriate enterprises had interests in the domestic economy as well. Here they owned and managed tea plantations, jute mills, coal mines, engineering shops and other trading and manufacturing enterprises. Many of these firms worked closely with Indian associates, who acted as their agents in the interior of the country

While British businessmen took the lead in developing India's new regional and international economic role, Indian bankers, traders and producers played an active part as well. Parsi and Gujerati merchants from western India were active in the China trade, and in developing and extending exports of capital and goods to the Persian Gulf and East Africa. In South Africa Gujerati traders and shopkeepers had become the target for specific official racial discrimination by the 1880s because of their business success. The greatest penetration, however, was in South-East Asia, where the Chettiar bankers and merchants of southern India invested heavily in Sri Lanka (Ceylon) Burma and Malaya, developing new areas of rice production and supplying capital even to European-owned rubber, tea and coffee plantations.

This spread of Indian goods and capital was matched by the emigration of her people in the second half of the nineteenth century. Indian labour was in demand for agricultural work all over the tropics, especially on sugar plantations in Mauritius, Trinidad, Guyana, Natal and Fiji, on rubber plantations in Malaya, and on tea and coffee estates in Ceylon.Much of this labour supplied through a system of indentures, under which labourers contracted to work for a fixed wage for a fixed period, with the option of a free passage home, permanent settlement or a renewal of indentures at the end. Migrants also went to Ceylon, Burma and Malaya as seasonal agricultural workers, or to open up new lands as peasant colonists. Much of this migration was temporary and the numbers involved cannot be estimated with any certainty. The Census of India calculated that there were roughly two million Indians living abroad in 1911 - 500,000 each in Burma and Ceylon, 250,000 each in Mauritius, the West Indies and Malaya, 150,000 in South Africa, 40,000 in Fiji and 10,000 in East Africa. These migrants laid the foundation of the present world-wide diaspora of the South Asian peoples, an empire of culture, language and race that has already outlived the system of imperial power and profit that gave it birth.

The late nineteenth century saw the refinement of the Anglo-Indian world summed up by the phrase `the British raj'. Once the Suez Canal was opened, regular P&O steamship sailings initiated, and some basic understanding of tropical hygiene documented, family life, of a kind, became possible for Europeans. Now, too, began the world of clubs, of hill-stations, of Victorian upper-middle class gentility transposed to a tropical setting, that made up the distinctive colonial society of British India.

The pomp and pride of British rule was best expressed in the imperial durbars that were held in 1876, 1903 and 1911 to mark the accession of Victoria, Edward VII and George V to the imperial title. Such durbars were traditional court rituals of Mughal India, which the British revived to express dominance over their subjects. The colonial ceremonies were designed to gratify Victorian notions of gothic chivalry, and to bind the native aristocracy to its monarch. The most lavish of them, in 1903, symbolised Edwardian ideas about India, and also the pro-consular style of the Viceroy, Lord Curzon, who spent six months organising the programme down to the smallest detail. The key to the event was the participation of the Indian princes, who for the first time offered direct acts of homage to their new Emperor (who did not attend in person). The emotional high-point of the occasion was the assembly of loyal veterans from the Indian Mutiny more than forty years before, who marched around the parade-ground to the strains of `See the Conquering Hero Comes' and `Auld Lang Syne'. As Curzon recorded, it was a spectacle that `brought tears to the eyes of strong men and a choking in every throat'.

The Indian Princely states covered about one third of the area of the Indian empire, and contained about one quarter of its population. There were over 560 States, ranging in size from Hyderabad, which was as large as some European nation-states, to petty chiefdoms covering no more than a few acres. The Princes were all vassals of the imperial power, having made treaties with the British Crown which gave them some freedom to rule as they wished, but under the supervision and guidance of Residents appointed by the Viceroy. At the 1903 durbar, Curzon was dazzled by the Princes' appearance, `ablaze with jewels and in their most splendid raiment' as he described them. Others were less impressed, however - Gandhi, who visited the durbar to raise money for his political activities in South Africa, thought that the Princes looked like `khansamas' (waiters).

The romance of the vanished social complexities and nostalgic sentimentalities of the Victorian and Edwardian raj should not blind us to the fact that India was an occupied territory of the British empire.To Britain in the nineteenth century India was a unique imperial asset, supporting as she did an army that provided half of the Empire's world-wide military might. The creation of a large army of native troops had been one of the great achievements of the East India Company, and British regiments stationed on garrison duty in India were paid for by local revenues as well. By the 1860s, the Indian army consisted of about 125,000 Indian troops and 62,000 British ones.

The Indian army played a major role in extending and defending the British Empire in the second half ofd the nineteenth century, but the Mutiny of 1857 had been a great shock to the raj, and the old Company army had to be reformed extensively to make it a fit vehicle for Victorian imperialism after 1860. This was done be laying added stress on security and loyalty. New defence rules were laid down to ensure that there would always be one British sldier to two every Indian soldiers in the garrison towns, which meant incresing the number of British troops and reducing the number of Indian. In addition, Indian recruits were barred from the artillery, and the equipment and weapons of Indian troops were deliberately kept inferior to those of British soldiers.

The most significant change in the new Indian Army was the identification of `martial races', who were thought to make the best soldiers, and on whom recruitment was concentrated. Gurkhas and Sikhs were the most prominent martial groups so identified, but in general northerners were preferred to untrustworthy Bengalis or `effeminate' Madrasis. Of the fifty-two battalions of Madras infantry that had stood loyally by their British masters in 1857, twenty were disbanded between 1860 and 1882, and none were left at all by the 1930s. Even the martial races, despite their bravery, were not generally thought to be officer-material. As Lord Roberts, who went out to India as a subaltern n the Company's army in 1852 and rose to become Commander -in-Chief in 1885, pointed out, `Eastern races, however brave and accustomed to war, do not possess the qualities that go to make good leaders of men. I have a thorough belief in and admiration for Gurkhas, Sikhs, Dogras, Rajputs and select Mohamedans, ... but we cannot expect them to do with less leading than our own soldiers require.'

The new army of India garrisoned and defended India herself, and was also available for use as an expeditionary force overseas - to China in 1839, 1857-60 and 1900, to Ethiopia in 1864, to Perak in 1876, to Malta in 1878, to Afghanistan in 1878-80, to Egypt in 1882, to the Sudan in 1885, and to East and Central Africa in 1893, 1896, 1897-8 and 1902-4. Much of the cost of these expeditions was met by taxpayers in India, not Britain. Defence expenditure took about one third of the Government of India's budget in the second half of the nineteenth century. As Viscount Cranborne (the future Prime Minister, Lord Salisbury) claimed in Parliament in 1867, India was `an English barrack in the Oriental seas from which we may draw any number of troops without paying for them'.

The possession of India - and the availability of the Indian army - was undoubtedly a stimulus to British expansion in the nineteenth century as her influence and control spread out across the Indian Ocean and the China Sea, and deep into inland regions of Central and South-east Asia. Despite this dynamic, cautious policy-makers in London could see that India's role in facilitating expansion might not always be a blessing. To Lord Salisbury in 1867, for example, the existence of the `English barrack' was `bad for England, because it is always bad for us not to have that check upon the temptation to engage in little wars which can only be controlled by the necessity of paying for them'. Nevertheless, such doubts and warnings were often ignored, or were swept aside by the pressure of events during the successive imperial crises of the nineteenth century.

Maintaining and defending the raj was the most important single aim of British policy in Asia, with the Government of India itself an active participant in the policy-making process. From the 1820s onwards, experts in London and Calcutta began to worry ceaselessly about the possibility of a Russian invasion of India, stimulated by her intervention in Turkey and Iran (Persia), and her conquest of Turkestan and most of Central Asia in the 1860s and 1870s. This fear of Tsarist expansion dominated Indo-British policy towards intermediate states such as the Punjab, Sind, Afghanistan and Persia that lay between India and the expanding borders of the Russian empire. These states were deemed too weak to withstand an invader, and so Britain sought to make her influence in each secure by a system of agreements and alliances. The result was that Sind was annexed in 1843, the Punjab conquered in 1846-9, Baluchistan absorbed in the 1870s, and spheres of influence carved out in Persia that led to a virtual Anglo-Russian partition in 1887. Only Afghanistan retained her autonomy, winning the right to be recognised as an independent buffer-state, at the price of considerable diplomatic interference in her internal affairs and two full-scale wars with British India in 1839-42 and 1878-80.

On the north-eastern frontier of her Indian empire there was no rival great power for Britain to contend with, but the steady territorial acquisition continued nonetheless. The main threat here came from the kingdom of Burma, which was an aggressive imperialist power in its own right , and had subdued a number of smaller states in north-eastern India between 1782 and 1819. The authorities in Calcutta tried to secure good relations through a system of influence, but co-operation from the Burmese was not always forthcoming. War replaced diplomacy in the 1820s, 1850s and 1880s, with the Indo-British armies victorious each time: in 1826 the East India Company annexed Assam and other peripheral territories to the north-east of Bengal that the Burmese themselves had conquered only recently. In 1852 Lower Burma passed into British hands, and in 1886 the Burmese heartland of Upper Burma was taken over as well.

External conquest was not the only form of intensified imperialism that took place in the second half of the nineteenth century. In the `long afternoon' of the Victorian empire, internal rule was refined and developed in many ways as well. The problem that the British faced in India was how to secure their interests while engineering the co-operation or acquiesence of the bulk of their subjects, and the political history of their rule in India is the story of constructing, modifying and rethinking systems of control and coercion. The most popular solution to this problem was to strengthen the paternalistic and bureaucratic elements in the administration. This was an approach that appealed to conservatives - to Tory politicians and ministers in Britain, to the old India hands who made up the Council of India in London and to established bureaucrats in India. As Lord Lytton, the Viceroy from 1876 to 1880, asserted, `we hold India as a conquered country, which must be governed in all essentials by the strong, unchallenged hand of the conquering power'. Men of this school saw themselves as enlightened paternalists, with a duty to `protect and foster the interests of the people of India' - the `voiceless millions' with `neither education nor civilisation' - as another Viceroy, Lord Dufferin, put it.

The chosen instrument for this type of rule was the Indian Civil Service. The ICS was a meritocratic bureaucracy selected by competitive examination, which had been set up in the 1850s to replace the corrupt patronage system of Company rule. The top ranks of the ICS - the thousand or so posts in the covenanted civil service - were designed to be filled by young Englishmen who had spent a year studying for the examinations (which were always held in Britain), and who showed the all-round leadership qualities and `gifted amateurism' thought most important for future rulers of colonial subjects. Inevitably such conditions militated against Indian applicants to the covenanted service, only a handful of whom were successful before 1914.

For all its amateur ethos, the ICS was probably the most professional, and certainly the most long-lasting, of all the British colonial bureaucracies. Its ability to generate facts and figures about the country it rules was staggering. In the 1890s, before Lord Curzon slimmed down the process, the `Heaven-born' graduates of the covenanted civil service supervised the preparation and publication of more than 18,000 pages of official reports and 35,000 pages of official statistics each year and looked after the interests of, on average, over a quarter of a million of the Queen-Empresses' Indian subjects. Thus it was hardly surprising that local bureaucrats actually accomplished much less than met the eye. Detailed knowledge and understanding of the indigenous population could not easily be obtained by completing statistical returns and filing memoranda. In reality the `Heaven-born' did not always live up to their name. By the end of the century, indeed, the appeal of the ICS as a career had become distinctly limited, with India now seen as getting only the `leavings' of the Home Civil Service, and concern growing about the poor calibre of new European recruits, their `lack of manners, decline in social status, [and] want of consideration for Indians'. [Royal Commission on the Public Services in India]

In the 1860s British power in India seemed secure. The Mutiny had been suppressed; subsequent armed insurrections were almost entirely local (except for a rebellion led by Wahhabi Muslim reformers that culminated in the assassination of the Viceroy, Lord Mayo, in 1872), and composed of groups who were well outside the mainstream of Indian society. Yet by the time that Victoria was declared Empress of India in 1876 her Indian subjects had adopted a new and more subtle form of disloyalty - questioning the validity and legitimacy of British rule with arguments disconcertingly close to those of the liberal nationalism sweeping through the ancien regimes of eastern and southern Europe.

British rule offered some Indians a chance to use the power of the raj to their own ends. The British had brought European-style administration, law courts, newspapers, businesses and public utilities to South Asia. Employment in such enterprises and services was available to Indians, in the lower and less well-paid levels at least. Between 1867 and 1887, for example, the number of middle-ranking posts in government service (those with salaries of Rs.75 per month) rose from 13,341 to 21,466, and the proportion filled by Indians (excluding Eurasians) went up from 45% to 52%. Education in English was the key to these opportunities, and university graduates were at the forefront of the Indian invasion of government service and the law. Yet such men demanded more than mere employment. During the 1870s criticism of colonial policies increased, especially of those policies that seemed to limit the advantages of imperial government that Indians could enjoy.

The educated elites of the major colonial cities soon claimed to speak for an Indian nation that had been discovered by the action of British rule, but was now being held in check by colonialism. Nationalist sentiment was expressed in the founding of a number of political associations by Indian reformers and their British sympathizers, to put pressure on the Government of India over educational and constitutional reform. This process culminated in the creation of the Indian National Congress, which met for the first time in Bombay in 1885. The British found it easy to ridicule the early nationalist leaders, caricaturing them as `babus' (clerks), and dismissing them as the self-serving representatives of narrow sectarian interests. While it is true that the active base of support of the Indian National Congress was narrow at this time, it did contain a genuine enthusiasm for social reform and economic progress to improve the lot of all Indians. In particular, men like Dadabhai Naoroji (who became the first black M.P. at Westminster in 1892), R.C.Dutt and M.G.Ranade devised a searching socio-economic critique of India's material and spiritual poverty which demonstrated that colonialism could never solve the problems of growth and development that it had helped to create. They argued that British rule had led to a `drain of wealth' from India which made the costs of the imperial link to high to bear. Naoroji summed up much of the early nationalist critique of colonial rule when he argued that the British were failing to live up to their true responsibilities in India. As he put it in the introduction to this book, Poverty and Un-British Rule in India (1901):

True British rule will vastly benefit both Britain and India. My whole object ... is to impress upon the British people that instead of a disastrous explosion of the British Indian Empire, as must be the result of the present dishonourable un-British system of government, there will be a great and glorious future for Britain and India to an extent unconceivable [sic.] at present, if the British people will awaken to their duty, will be true to their instincts of fair play and justice, and will insist upon the `faithful and conscientious fulfilment' of all their great and solemn pledges.

In the last decades of the nineteenth century, the chief political problem of the raj was based on material problems rather than moral uncertainties. British rule in India depended on raising large sums of money in revenue. For various reasons, including currency depreciation, new administrative standards and external expansion, the costs of administering India were going up in the 1870s, 1880s and 1890s. To expand taxation it was necessary to increase representation, which meant that Indians had to be allowed limited executive power. This was not thought to be a threat to British control - as Evelyn Baring, Finance Member of the Government of India, pointed out in support of the Resolution on Local Self-Government in 1882: `We shall not subvert the British Empire by allowing the Bengali Baboo to discuss his own schools and drains. Rather we shall afford him a safety-valve if we can turn his attention to such innocent subjects.'

Devolution of government took two forms. Firstly, provincial and local administrations (in the form of the provincial governments and district and municiapal councils) were encouraged to find new revenue sources and were given some autonomy of administration. Secondly, representative Indians, nominated at first and then elected, were associated with these provincial and local administrative institutions. Provincial governments were now allowed to retain a larger and larger share of the revenue they colected, with only the money from `imperial ' sources such as customs, salt excise, land revenue and posts & telegraphs, being passed on to the Government of India. At the same time, the power of Indian representatives in local government was increased, since it was thought that Indian members of municipalities and district boards would be more efficient in raising, and more careful inspending, local taxes if they were responsible to an electorate.

Once begun, the devolutionary process carried on under its own steam. Granting administrative responsibility encouraged greater, not less, expenditure; Indians could not be given doles of political power only when it suited the fiscal needs of the raj. The political assumption which justified granting responsible government to Indians was that, by so doing, the British would draw into active politics the natural leaders of Indian society - landowners and other men of property, and the representatives of important caste and community interests - and thus widen the basis of their support while exposing the pretensions of the western educated professional men who, as nationalists, claimed to speak for a subject India. This assumption revealed a fundamental ignorance of the nature of political authority and political mobilisation in a colonial society. British acts of constitutinal reform helped to create unfulfilled expectations in larger and larger sections of the Indian population and the early leaders of the nationalist movement were able, spasmodically and haltingly it is true, to draw on wider and wider ripples of frustration and discontent to launch appeals and agitations for further advance. As Baring had also remarked, more presciently, in 1883, `when once the ball of political reform is set rolling, it is apt to gather speed as it goes along'.

Colonial bureaucrats did not stop to ask themselves the question, `what is the purpose of British rule in India?', but the underlying trend of their actions after 1860 shows that they had an answer ready. The lowest common denominator of official concern can be termed India's `imperial commitment', the irreducible minimum that the subcontinent was expected to perform in the imperial cause. This commitment was three-fold: to provide a market for British goods, to pay interest on the sterling debt and other charges that fell due in London, and to maintain a large number of British troops from local revenues. Over the course of the late nineteenth and early twentieth centuries the imperial commitment contained contradictions that released a destructive dialectic of their own. The Government of India's ability to meet its imperial obligations depended on the stability of the twin foundations of its rule - political consent and public revenue. Each arm of the imperial commitment cost the Indian treasury money, and sacrificed India's interests to Britain's. Encouraging imports meant forgoing tariffs; maintaining debt repayments and external financial confidence meant deflationary policies and high exchange costs; large military responsibilities meant a big defence budget, much of which was spent overseas. The relative poverty of the Indian economy imposed a further constraint by limiting the amount of revenue that could be extracted, and this helped to convince the British bureaucracy that the secret of successful government in India lay in low taxation. As Lord Canning, the first Viceroy to hold office after the Mutiny, pointed out in the early 1860s, `I would rather govern India with 40,000 British troops without an income tax than govern it with 100,000 British troops with such a tax'.¹ This advice was heeded for the rest of the life of the British raj, tax revenues amounting to only 5-7 per cent of national income except during the First and Second World Wars.²

From the 1860s onwards the colonial administration steadily devolved some power to local and provincial government bodies, first nominated and then elected, to buy political acquiesence from its Indian subjects. This policy of administrative decentralisation had fiscal as well as political purposes. The local, district and municipal councils established in the late nineteenth century, and the increasingly autonomous provincial administrations created between 1907 and 1935, were all intended to devise and legitimise new sources of revenue. However, as the process of political reform took on a dynamic of its own, the effect was to starve the central administration of cash by transferring existing powers of taxation from the centre to the provinces and localities. By 1919 the central government had surrendered its rights over the staple land revenue to provincial administrations in an attempt to buy the political peace needed to expand the tax base. From this point on the centre was dependent almost entirely on either tariffs or the income tax for any significant increase in revenue. The result was that customs duties were raised repeatedly, despite the protests of British manufacturers, since they were politically more popular and administratively much easier to collect than any form of direct taxation. Thus in the interwar years local revenue needs severely damaged India's role as a market for British goods. Over the same period the government in New Delhi found it increasingly hard to keep its military establishment up to strength, and curtailed Britain's expansionary ambitions in western Asia and the Caucasus in the early 1920s by refusing to supply men and materiel to the imperial cause. In the great crisis of imperial defence from 1939 onwards, as in 1914-18, the British government was forced to take over financial responsibility for much of India's war effort.

These intimations of mortality were not yet apparent at the end of the nineteenth century. At Queen Victoria's death in 1901 the foundations of British rule appeared as firm as when she had been declared Empress of India a quarter of a century before. Lord Curzon, the Viceroy from 1899 to 1905, was a paternalist in the Lytton mould, who believed in the raj's duty to protect the `voiceless millions' whose life was one of `mute penury and toil'. Yet over the twenty-five years from 1876 the means to that end had changed. Bureaucratic reform and racial even-handedness now had to be buttressed by active alliances with Indian supporters. Curzon and his successor, Lord Minto, saw the Indian princes, the rural propertied classes and, above all, the Muslims, as the natural allies of British rule against the threats posed by Hindu militants as well as liberal intellectuals. `Divide and rule', which had always been a tempting policy for colonial officials, now became a necessity - not least because it supported the view that India itself only existed as a result of British rule.

1. Kessinger, `North India', CEHI, 2, p.264; Stokes, Peasant and Raj, p.86.

1. Quoted in Gordon, Businessmen and Politics, p.11.

2. Kumar, `Fiscal System', CEHI, 2, p.905.