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A Re-interpretation of Nineteenth Century Indian Economic History?*


T. Raychaudhuri Indian Economic Social History Review 1968 5: 77 DOI: 10.1177/001946466800500104 The online version of this article can be found at: http://ier.sagepub.com/content/5/1/77.citation

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A Re-interpretation of Aiineteenth Century Indian Economic History ? *


T. RAYCHAUDHURI
Delhi School o f Economics
I Certainly, (sic) the general object of the ruj was the welfare of the society. This somewhat surprising statement indicates the tone and bias,-implicit and possibly unconscious,-of Professor Morris attempt to reinterpret the economic history of India in the 19th century. Incidentally, the entire exercise suffers from certain deficiencies in method typified by the statement quoted. There is a massive body of literature which argues that the general object of the ruj was not the welfare of the Indian society. Professor Morris arrives at his conclusion without disposing of the well-known evidence to the contrary. Secondly, his very broad generalization ignores the divergent,-often mutually contradictory,-strands as also the basic shifts over time in the policies of the British government in India. Thus a very inaccurate picture of what really happened is suggested. To repeat, this tendency to ignore familiar evidence as also arguments which contradict his major theses and a series of aggregative statements which distort historical reality detract much from the value of Morris essay in reinterpretation. As Bipan Chandra points out, the central thesis of the paper under discussion is not essentially novel. Theodor Morison, Mrs. Knowles, Vera Anstey and others have repeatedly tried to prove that there was substantial growth,-the word more generally favoured was development,-in the Indian economy during the nineteenth century. Morris derives the possibility of growth,specifically in the sense of rise in per capita income,-by applying
*I am grateful to Professor Jagdish Bhagwati and Professor Daniel Thorner, who kindly read an earlier draft of this paper, for valuable comments and criticism.

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the simplest tools of economic theory to certain impressionistic evidence. The argument is developed in three inter-related parts. First, Indias traditional economy is assessed as being at a very low level of development before 1800, with a very low per capita income and without any of the preconditions for industrialization. Secondly, the benefits conferred by the colonial government,-peace and security, modern administration, irrigation, railways etc.,positive developments in agriculture in response to expanding demand at home and abroad, the uninterrupted career of Indian handicrafts (some convincing arguments are presented in favour of this thesis), growth of modern industry and commercial expansion are emphasized as factors which must have induced a substantial increase in national income and, since there was very little increase in population, also in per capita income, Finally, Indias failure to industrialize is explained with reference to the brevity of the gestation period in relation to the backwardness of the traditional economy and the inadequacy of the states Zaissez faire policies. The present paper discusses the reasons why the above theses are not acceptable briefly along the following lines : (1) Morris assessment of the traditional economy and its level of development ignores much positive evidence which contradict his thesis. More important, the possibility that India in 1800 had none of the preconditions of industrialization has little relevance to her failure to industrialize in another 150 years. (2) Morris exaggerates the likely impact of the factors favourable to growth and ignores their serious limitations. Besides, he hardly refers to the negative features of the colonial rule which are likely to have inhibited growth. In fine, while some increase both in national and per capita income may have taken place, it is highly unlikely that this was in any sense substantial or that per capita income was very much, if at all, higher than at some points of time before 1800. (3) While no final explanation of Indias failure to industrialize is yet possible in the absence of adequate research, available theoretical and empirical studies of economic backwardness, which Morris has not drawn upon, suggest more satisfactory hypotheses than his gestation theory. Such studies indicate that the typical carrer of colonial economies is one of nearly inevitable stagnation after an initial period of limited growth in output. The seeds of stagnation are in fact inherent in the very changes which induce the increase in

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national income.
..

I1

Morris rightly emphasizes the fact, familiar to all students of traditional economies, that there are significant differences in their characteristics and levels of development. He tben suggests that even as a traditional economy India was relatively backward. I shall try to explain in the following paragraphs the reasons why an exactly opposite conclusion-viz., that among traditional economies India was one of the most advanced,-is far more acceptable.2 One crucial fact which Morris misses in his aggregative approach is that before 1800,-and probably before a much later date,-one cannot meaningfully talk of the Indian economy any more than one can identify an European economy in 1800 lumping together Britain in the process of industrialization at one end and the very backward territories of Eastern Europe at the other. There just was not enough economic integration and the differences in levels of development as between various regions were very considerable. For the same reasons, any guess at the hypothetical per cupifa income before 1800 is a fruitless quest. A question more relevant to our understanding of the nineteenth century development is whether, given favourable conditions, the sub-continent had regions with potentialities for growth and industrialization. The hypothesis developed below is that the highly commercialized coastal regions with their hinterlands,Gujarat and the west coast, Malabar, Coromandel, the BengalBihar region,-had no less potentialities for growth before 1800
all typical of every traditional society (Footnote 17). 2. Morris paper covers a very wide area of Indias economichistory and his statements, necessariiy very general, can be supported or contradicted only with reference to a mass of data. Such exhaustive treatment and documentation is not possible here for reasons of space. This critique, like Morris paper, is also based mainly on a selected body of qualitative evidence. Bulk of the evidence cited are discussed in such standard secondary works as Morelands volumes on the Mughal period and Indias agrarian history under the Turkish rule, Irfan Habibs Agrarian System of Mughal India, K. K. Duttas Survey of Indias Social L i f e and Economic Conditions in the Eighteenth Century (1803-1813).D. R. Gadgils Industrial rvolution of India in Recent Times, V . B. Singhs (editor), Economic History of Indiu, 1857-1947 and Indian Economics by Jathar and Beri. Specific page references have been given onlyvery sparingly becausemost of the statements in my paper are summary of descriptions or arguments spread over several chapters in the above-mentioned works.
1. After discussing reasons why per capita income must have been relatively low in India before 1800, he writes, The characteristics I have described are not

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than Japan in the pre-Meiji era. They were not ripe for industrialization. Nor was Japan in 1869 : there is nothing to indicate that in the absence of a deliberate policy of industrialization, unhindered by colonial control, Japan would have spontaneously developed her economy, in the way, say, Britain had done. A set of historical accidents different from the one India actually experienced could have triggered off the process of eventually selfsustained growth in the more developed parts of the country and its effects might have gradually spread to the rest of the country. Briefly, it is my contention that the economy of these commercialized regions before 1800 was not such that 150 years of gestation would be inadequate for their industrialization. T o examine this hypothesis one must get out of ones way several confusing irrelevancies introduced into Morris exercise. First, he seems to be under the impression that in a land area comparable to Europe minus Russia, the absence of continuous political unity was a serious negative factor for the economy. Presumably, failure to industrialize despite 150 years of growth was somehow causally connected to the absence of imperial chronologies comparable to that of Rome, Egypt or China. It is hardly necessary to point out that their imperial chronologies did not help the countries in question to industrialize. On the other band West and Central Europe, for many centuries bereft of this advantage even more than India, did not find this handicap any hindrance to industrialization in the nineteenth century. Even in smaller territorial units like Germany and Italy, pre-conditions for industrialization had emerged despite a long history of political disunity. Secondly, Morris identifies lack of political stability as a factor contributing to low levels of economic performance. The precise the term instability is not clear. I meaning in which he assume i t includes long periods of devastating warfare. It is worth noting that early capitalism was born in the Renaissance Italy and the Netherlands during the Eighty Years War precisely under such conditions. In short, political unity and stability are not necessary conditions for either the emergence of pre-conditions for industrialization or for high levels of economic performance. What is morz to the point, contrary to Morris belief, political instability did not produce any obvious economic effects everywhere in eighteenth century lndia and in no sense did it keep

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to very low levels. commerce and capital accumulation.. Indias overseas trade,-and, for extensive parts of the country, the inland commerce,-suffered no decline. As to accumulation of liquid capital, the House of Jagat Seths, who used to remit the entire annual revenue of Bengal, Bihar and Orissa with a single bilI of exchange drawn on their agents in Delhi, was not atypical of eighteenth century Indian merchants and financiers. It is a mistake to deduce the economic trends in that period from the declining fortunes of the Mughal Dynasty. A growing school of thought suggests that the eighteenth century was a period of peace and prosperity for many barts of the country, now free from the incubus of an inordinately expensive imperial army and administration. The economic consequences of the Maratha raids were no doubt severe in some regions and later the Anglo-Mysore Wars did spell ruin for extensive tracts in South India. But any general statement covering the entire sub-continent or even its greater part would be misleading. Morris is also mistaken in assuming that no continuous administrative institutions and no persistent bureaucracy ever developed in India. Organization of land revenue administration at the village and pargana level,-the most crucial aspect of administration in an agricultural economy,-had a centuries long history going back at least to the early days of Turkish rule. There were experiments and developments, but no discontinuities. The bureaucratic system created by the Mughals and many features of their administrative organisation survived the break up of the empire and were preserved almost intact in the Nizams territories well into the nineteenth century. The administrative set up at the village level had a history of rare continuity, covering not centuries but millenia. If one is looking for factors unfavourable to growth in pre-1S00 India, absence of continuous administrative institutions is not one of them. The political-administrative milieu in India before 1800,-and, for that matter, after it,-was not ideal for economic growth, but comparable conditions elsewhere have not stifled the economy. In the pre-British period, it surely did not prevent a high level of development such as was possible within the frame-work of a
3. K. K.Dutta, op. cit., 172, 175.

...

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traditional economy. In assessing the weaknesses .of Indias traditional economy, Morris next speaks of a very low level of agricultural productivity. One must admit that our information on this point is very meagre. I do not know on what evidence Morris feels so sure of his conclusions. His reference to non-animal powered agriculture as a limiting factor makes curious reading, Surely, from the days of the Vedas and the Epics, agriculture in India was animal-powered. It is possible, but by no means certain, that techniques were more primitive in the proto-historic period. The relevance of this somewhat dubious fact to agricultural productivity in the seventeenth and eighteenth centuries (which is presumably what Morris is discussing) is not obvious.* It is also not certain that climatic conditions and soil moisture which are very different in different parts of India made it impossible to achieve high yields. Further, Morris ascribes the survival of extensive virgin land as late as 1800 to political instability and limitations of pre-1800 technology. He ignores the facts that virgin land was available in plenty until population increased substantially after 1921 generating the problem of unfavourable land-man ratio and that the pre-1921 situation could be adequately explained simply in terms of a very favourable land-man ratio. Even in 1872 Indias population was only 255 million. Morris underplays or ignores the factors which were favourable to a relatively high agricultural productivity in the traditional economy. First, his assumption that there was always a waxing and waning of cultivated area owing to warfare and political instability is based on an evident misunderstanding. True, during times of political turmoil, there were large-scale movements of population. But there were rulers at all levels ever eager to welcome agriculturists as colonisers of virgin land, a sure source of increased revenue. This explains the quickness with which an uprooted village was recreated in a new locale. It is more than doubtful if under such conditions political turmoil meant any decline in the total area under cultivation. We have in fact a fair amount of evidence to show new lands being continually colonised during the
4. There are reasons to believe that in the 17th century an ordinary peasant had, compared to these days, a more numerous stock. (Habib, op. cif., 5 3 ) .

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seventeenth and eighteenth centuries.6 One would imagine that fluctuations in this respect were related primarily to the trends in population, a subject on which our ignorance is almost complete. One plausible guess is that in the long period there was a very slow but steady upward trend in population. It is hence a fair surmise that the extent of the arable had a similar curve over time with intermittent periods of relatively sharp upward movement caused by especially favourable conditions like positive governmental policy or a deepening of the market. Secondly, in any given area, when the land-man ratio was favourable, only the relatively more productive land was likely to have been cultivated! Virgin lands, which Morris identifies as an evidence of weakness of India's traditional agriculture, probably point towards an exactly opposite conclusion. Thirdly, in his aggregative approach, Morris overlooks some very important evidence. To repeat, our present knowledge regarding the state of agriculture in India before 1800 as a whole is very meagre. Travellers, however, refer to the extreme fertility of certain regions, especially parts of Central India and Greater Bengal. Blyn's recent study of agricultural output shows how divergent were the trends in the different regions even in the twentieth century? More important, Blyn traces a steady downward trend in Greater Bengal, the area proverbially free from famines during the days of the Mughal rule. One wonders in the light of such evidence if even the view that compared to earlier times average agricultural productivity in India declined under the British is entirely baseless. Lastly, Morris, who attaches so much importance to political stability as a plus factor, has ignored the striking phenomenon of the Mughal empire. Between 1575 and 1689, the greater part of the region north of the Vindhyas enjoyed a high level of peace and security. Administrative centralisation facilitated and encouraged internal commerce. Proliferation of the adminstrative machinery stimulated urbanisation and an unexpectedly high proportion of the
5. I. Habib. op. cif., 251 ff; Abdul Karim, Mimhid Quli Khan and His Times. 6. Morris argues that in the nineteenth century new tracts which proved to be extremely productive were opened up. Even if this is correct, it would not alter the fact that earlier, when the population was very small. within the settled regions, the cultivator was in a very good position to pick and choose.
7. See. Peter Mundy, Travels, (Hakluyt Society, London 1914). 11, 54-57, for Bcngal's record of long freedom from famines; also Habib, op. cif., 109,71. G. Blyn, Agriculfiiral Trends in India, 1891-1947 (Philadelphia, 1966), 99, for divergent trends i n different parts of India.

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population lived in towns. There are obvious similarities between Mughal India and Tokugawa Japan and this fact had implications for the economy not confined to the agricultural sector. For agriculture, however, Pax Mughalia had certain clearly discernible consequences. The urban development and the largely successful attempt to collect revenue in cash* generated a net work of trade, especially trade in grains, which drew in even the remote village^.^ The growth of the market and the state policy of encouraging the cultivation of the high revenue-yielding crops let to an extension of cash crop cultivation.1 The spread of tobacco cultivation all over the empire in a period of some 50 years is the most dramatic testimony to this development. Furthermore, the fact that the vast machinery of the imperial army and government financially dependent on land revenue and the numerous urban centres could be sustained by contemporary agriculture suggests a fairly high level of productivity. Morris questions the widespread notion that India before 1800 was a great manufacturing country. First, he argues that technology was probably at a low level of productivity and would compare very unfavourably with that of contemporary Europe. This si certainly true, subject to one important modification. Technique around 1700, and surely around 1800, was not at a uniform level throughout the continent of Europe. In India, too, differences in the nature of economic organisation,-the extensive prevalence of the putting out system, for instance,-permitted a relatively high level of productivity in regions where production was oriented to the market. It would be a matter for some surprise if during the seventeenth and eighteenth centuries productivity in manufacturing in a number of East European countries which have since industrialized or in Tokugawa Japan, which had very limited foreign trade, was higher than in the Coromandel Coast or Bengal, regions supplying manufactured goods to an extensive overseas market.
8. See Habib, op. cit. 76 for high proportion of people living in towns in Mughal India. 9. The trade in rice generated by the Tokugawa Shoguns collection of revenue in rice became a major factor in the development of the market and the merchant class in Japan. (See C. D. Sheldon. The Rise uf rlre Merchant Class in Tokugawa Japan 1600-1868). The monetization of the revenue demand under the Mughals, something which the Shoguns did not attempt, is likely to have quickened the pace of transition to a market economy even more. 10. Habib, op. cit., Ch. 11. .

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Secondly, Morris suggests that in assessing the level of Indias traditional manufactures manual dexterity has been mistaken for productivity. Such a view does scant justice to the fact that India was the major supplier of textiles,-not just fine clothes, but everyday wear for the masses,-to the whole of South East Asia, Iran, the Arab countries and East Africa. The European companies trade opened up fresh markets for the same commodity in Europe, West Africa, the New World, Philippines and Japan. Under the circumstances, I do not quite see why it is a mistake to assume that the importance of the international trade in textiles in the seventeenthand eighteenth centuries is a measure of its significance to the Indian economy.l Morris assessment of Indias traditional commerce is also unacceptable on several grounds. Regarding the composition of Indias foreign trade, he writes, Apart from cotton textiles, virtually all exports were primary agricultural products, while imports included a substantial proportion of metals in various stages of fabrication. Since cotton textiles constituted the overwhelming bulk of Indias exports, this description, to say the least, is somewhat curious. Raw silk, sugar and even saltpetre,-three other major items of exports,-also do not fit the description of primary agricultural products. The only primary agricultural product exported in quantities was indigo,-even this involved a certain amount of processing,-besides some rice sent to Ceylon and, occasionally, Batavia. The imports did include substantial quantities of copper, iron, tin, lead and bell metal, but what Morris means by various stages of fabrication with reference to these imports is not clear. Except for an insignificant amount of luxury goods, like richly carved swords, and occassionally, cannon, India imported no manufactured metal products before the nineteenth century. In her foreign trade, India was very much an exporter of manufactured products and an importer of primary or intermediary goods.
11. The inelasticity of textile supplies referred to in the English factory records and mentioned by Morris should not be taken literally. The alleged inelasticity was in relation to certain low prices which the companies offered in accordance with their well-known policy of buying cheap and selling dear. The factors repeatedly complain of the consequent advantage which their Indian cornpetitors obtained. Besides, no inelasticity of supply is reilected in the steady upward trend in the volume of exports unaccompanied by any corresponding rise in prices. Even during years of war, the exports seldom suffered, a testimony to the flexibility o f supply organisation. This point has been discussed at some length in my Jan Company in Corornandel, 1605-1690 (The Hague, 1962).

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In assessing the level of her economic development in relation


to other traditional economies this fact needs to be duly emphasized. In judging the level of commercial development, the volume of trade in relation to the total economic activity is no doubt an important criterion. The extreme inadequacy of our quantitative information makes any enquiry on this point very difficult. Morris firm conclusion that commercial activity, international and domestic, must have constituted an infinitesimal proportion of total economic activity on the subcontinent is therefore somewhat puzzling. The fact of urban development under the Mughals and the total dependence of the towns and cities for their basic consumption needs on supplies from the rural hinterland would suggest a different conclusion. So would the other fact of something between a third and a half of the agricultural produce being marketed to meet the revenue demand in cash. All available description of ant-like activity along the internal trade-routes crisscrossing the subcontinent convey the same impression. True, a major limitation of the internal trade was its character of one-way flow from rural to urban centres. This did not, ,however, prevent the emergence of an intricate organisation for commerce and money supply as also vast accumulations of liquid capital. These, one would think, were crucial factors for the development of pre-conditions. In the 17th and 18th centuries India and China were about the only Asian countries with a very rich merchant class trading in its own ships with distant markets. Even in Europe, only a few countries had merchants so well provided with liquid capital and with such a wide area of operation. Moreover, for any judglment on the significance of commerce to the economy, the sub-continent is hardly the relevant unit. The bulk of the supplies for the extensive overseas market came from a few limited regions near the coast. In response to the rising demand, these regions developed specialized centres for production, an extensive putting out system, and the beginnings of the manufacture system under the European factories and their Indian agents. Traders from these regions competed with the powerful European companies in the markets of South East Asia and towards the end of the seventeenth century reached out for new markets in the Philippines and, on one or two occasions, even

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Hong Kong.* The Coromandel merchants showed a capacity for imitative innovation .by organising limited liability companies to supply the staples of export to the European fa~t0ries.I~ In the extensive and intricate net-work of inland commerce, the traders from the coastal regions,-especially those of Western India,-played a very important role. The influence of the Surat merchants over Mughal commercial policy is a testimony to the fact.I4 The same merchants also gave evidence of their ability for successful combined action against the imperial bureaucracy.ls In short, in several regions along the coast we find a powerful and rich enterpreneurial class and focal points of specialized economic activity which were not quantitatively insignificant in relation to the not very extensive territories which are our relevant points of reference. As some of these territories, Gujarat and Bengal in particular, long enjoyed the benefits of Mughal peace and the urban-commercial development that went with it, conditions there were no more unfavourable to eventual industrialization than in pre-Meiji Japan. It would not be absurd to argue that in 1800 the relevant conditions were not more favourable anywhere else outside certain parts of West Europe and the New World. To repeat, I am not suggesting that the regions in question were quivering on the brink of industrialization,-a noble prospect that was foiled by colonial exploitation. It is only my very limited hypothesis that the conditions in these regions were favourable rather than unfavourable to industrialization and a different set of historical accidents,-e.g., failure of the East India Company to occupy these territories and a decision of the local powers to modernize the army in order to resist western aggression, might have led to a different pattern of economic change. Incidentally, several Indian potentates did begin to westernize their armies. From Indian armies commanded by European generals to Indian armament factories run by western experts might not have been a .very long step.I6 Economic stagnation and the failure of these regions to industrialize by the mid12. See, T. Raychaudhuri, Jan Company in Coromandel, 1605-1690. 13. Ibid. 14. W, Foster, English Factories in India, 1618-21, xiv, 11618. 15. Zbid, 1668-69, 190-92. 16. N. V. Sovani has developed this argument in his article, The British Impact on India after 1850-57, Journal 01 World History, 1954, 103.

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twentieth century are not consequences traceable to the conditions prevailing in 1800.

I11
The bulk of Morris argument is concerned with the thesis that per capita income must have increased substantially during the nineteenth century. It was very very low prior to 1800 because of the extreme backwardness of the traditional economy. In this context, the positive developments of the next hundred years could not but mean a considerable improvement. Per capita income, unless it shows a clear trend in the long period, is not a very good indicator of economic change. Even in the absence of basic changes in the structure and organisation of the economy, it may be subject to a wide range of fluctuations in response to temporary changes in conditions affecting production. More important, for a territory where economic integration was at a very low level and there were considerable differences in regional development, per capita income is a somewhat unrealistic concept. I n case it is suggested that even in the more developed regions of the traditional economy per capita income increased substantially under colonial rule, the evidence already discussed would not quite fit into the thesis, n Aassessment of tfie likely changes in per capita income in India as a whole in the nineteenth century is thus not a very fruitful exercise. However, Morris does discuss the likely changes in per capita income only as results following from basic changes in conditions affecting production in the long period. Any assessment of his thesis should hence be concerned primarily with his analysis of these basic changes.] Morris attaches great importance to the excellence of the British colonial administration, -the high degree of stability, standardization and efficiency, the establishment of public order, elc. erc,-as a likely source of economic benefits. Earlier in this paper, historical instances have been cited where conditions of political instability did not inhibit positive changes in the economy. It is similarly possible to argue that an improvement in thelaw
17. Morris arguments on this question have been discussed at length by Bipan Chandra and Toru Matsui. Their critiques provide a more detailed treatment of some of the points mentioned below.

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and order situation by itself need not generate improvements in the economy. More specifically, such improvement can be accompanied by the growth of new disincentives to production arising in part from the heavy cost of maintaining law and order. The typical problems of modern Indian agriculture,-sub-division, fragmentation, rural indebtedness,-arose in the nineteenth century, long before there was any pressure of population on land. The entire period is marked by continual agrarian unrest.18 The high level of revenue demand, an over-expensive legal system heavily weighted in practice the notorious corruption against the masses of the pop~lation,~ and arbitrariness at the lower levels of administration which most directly touched the life of the rural population,-all contributed to the development of the agrarian problems. Undoubtedly, in terms of administrative efficiency and the law and order situation the nineteenth century was an improvement on earlier periods. It is far from equally clear that this improvement meant a better milieu for agricultural production which continued to account for the overwhelming bulk of national output. Further, if peace and stability were factors favourable to growth, one must remember that the British conquest of India involved some sixty years of continuous warfare (1757-1818) followed by further mopping up operations ; some of these wars, like those with Mysore, had devastating effects on extensive territories. The shaking of the pagoda tree in the Bengal and Madras Presidencies, the demands under the Subsidiary Alliance on Oudh, theuneconomic spending of the revenue from Bengal on wars elsewhere in the sub-continent, produced similar results in other parts of the country. The improvements in the law and order situation thus came only in the wake of a long history of economic decay in many parts of the country. Any growth in output resulting from such improvements would, therefore, have to go a long way before the economic status quo ante bellurn was surpassed. Morris view that the level of peace and security was a major influence determining the level of output may thus have had a limited validity for certain periods and
18. The Disfricf Gazeffeersare full of accounts of agrarian disturbances. For a concise account of the pre-1857 peasants risings see S. B. Chaudhuri. CivilDisfurbances in India before the Mrriiny. 19. The British legal-judicial system seldom meant a positive change for the rural masses. For a case study of this problem, see B. Cohn. From Indian Status to British Contract. Joirrnd ofEconomic Hisfory, 1961.

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regions. This suggests certain possibilities which are worth exploring. Under the Mughal rule, the greater part of the sub-continent enjoyed a high level of peace and stability between 1575 and 1689 ;then began a continuous period of warfare which ended only around 1818, or rather 1823. From the later date, there was a steady and continuous improvement with a brief, but sharp, break in 1857. The following graph may, very crudely and ordinally, be taken to represent the changes in the level of peace and stability in the greater part of the territories once included in the Mughal empire.

If one assumes for a moment that per capita output moved more or less along a curve parallel to it, the level in 1900 might well be the same as in 1689 or even lower. I am not suggesting that such a simple hypothesis is correct. The simplistic proposition sketched above, however, does point to a definite possibility. The seventeenth century almost certainly witnessed a substantial improvement in Indias economic performance owing to developments not exclusively connected with the level of peace and security. As will be discussed below, the growth in the Indian economy in course of the nineteenth century was unlikely to have been spectacular and it came after a prolonged period of economic decline in several parts of the country. Hence it is by no means axiomatic that the level of per capita output around 1900 excelled all previous record.

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Whether the peaks reached earlier were surpassed or not, there is little reason to doubt that the nineteenth century witnessed an upward trend-in both total and per capita agricultural output. It would, however, be surprising if this growth was in any sense 'substantial'. Blyn's study of trends in agricultural output during the twentieth century shows that the growth rate just kept ahead of the very slow increase in population until 1921.'" During the three subsequent decades per capita agricultural output steadily declined, though the average annual increase in population was only 1.3%. There are no reasons to believe that the nineteenth century record for agricultural output was very much better. The famines of the 'sixties, and the 'nineties,-particularly their longterm negative effects on the crop pattern,-in fact suggest that it was worse. Gadgil points out that the increase in income in the agricultural sector was mainly the result of movement to higher value crops and every famine resulted in a large scale return to subsistence crops, especially the sturdier low-priced varieties.?O The available evidence does not suggest the possibility of any significant increase in productivity per worker or per acre. Again, if the twentieth century record is any indication, the average annual increase in productivity per acre was only .Ol% despite all the plus factors like regional specialisation, irrigation, introduction of better seeds etc.?' The reasons for such an unimpressive record are not obscure. Except for regional specialisation, the magnitude of the other positive developments, especially when balanced against the negative features of the situation, were extremely limited. For example, modern irrigation was concerned mainly with bringing new land under cultivation, little being done for the established agriculture in the greater part of the land area. Much of the traditional system of irrigation fell into disrepair,-a fact which must have seriously curtailed the net gains from the new investments in irrigation. Contrary to the generally held opinion, Morris suggests that there was substantial expansion in the area under cultivation. Only a technological revolution and/or a considerable increase in the size of the effective working force could have led
190. Blyo, op, cit., 247 f. 20. D . R. Gadgil, op. d t . , Chs. I1 and VII. 21. Blyn, op. cit., 151

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to such a result. No such revolution took place. Nor during the nineteenth century could the working force in agriculture have increased very substantially. The population increase was far too small and, on Morris own showing, there was hardly any net movement of workers from other sectors to agriculture. Further, Schultzs views regarding the absence of any disguised unemployment in Indian agriculture may or may not be correct for the twentieth century, but it has great relevance for a period when the land-man ratio was very favourable.22 Hence, very probably, there was no slack in the labour supply that could be picked up. In short, unless fresh evidence or analysis suggests a different conclusion, one has to accept the prevailing view : the area under cultivation was expanding, but slowly, more or less in proportion to the increase in population. As to the trends in output, very probably the limited positive developments resulted in a very limited increase over time. A series of inter-related factors likely to depress any possible upward trend in agricultural output developed during the nineteenth century. Surprisingly, while Morris attaches great importance to the growth of the market, he does not discuss its serious imperfections and their possible consequences for agriculture. The market for land use was queered by the tenurial systems which conferred proprietory rights in land either on non-producing classes or on an infinitesimal section of the agricultural producers who too soon emerged as renriers under these conditions. The imperfecttions of the capital market,-in a situation where agricultural production was becoming increasingly dependent on the supply of capital,-the nature of commercial organization, as also the sheer physical problem of access to the consumers, placed the producer a t the mercy of the village bania. The transition from a system of production based on custom to one determined by the market forces was taking place under conditions generally unfavourable to the producer and the much publicized rule of law was of very little help to him. The incentives generated by the expanding demand
22. T. W. Schultz, Transforming Traditional Agriculrvre. For a criticism of Schultzs thesis regarding disguised unemployment. see A. K. Sen, Surplus Labour in India : A Critique of Schultzs Statistical Test, The Economic Journal 1967. For a discussion of relative changelessness of the occupational structure since 1871, see J. Krishnamurty, Secular Changes in Occupational Structure, Indian Economic and Social History Review, 11. No. 1, and the literature cited in tbe paper.

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were thus greatly weakened. The pattern of income distribution was biased against the producers and in favour of the non-producing classes who hardly invested anything in agricultural improvement. Their savings were mainly in uneconomic forms of hoarding. Their high propensity to consume,-probably encouraged by their security of income,-helped expand the market for imports. Rural money-lending no doubt enabled agricultural production to continue, but its chief economic consequence was to siphon off an increasing proportion of the income from agriculture into the money-lenders pocket, and not any investment in improvements. The economic implication of the agrarian problems,-which largely explain and probably justify the popular belief regarding the steady decline in the living standard of the masses,-are best understood in the context of such facts. To repeat, Morris overestimates the likely impact of the feeble plus factors and totally ignores the emergence of built-in depressors which further hampered the very limited tendency towards growth. The view that the Indian handicrafts were destroyed by the competition of the British machine manufactures has long been questioned. As early as 1924, Gadgil pointed out that the cotton spinning and weaving industry suffered a serious decline only in the late 19th century-and that asa result of competition with the N.M. Joshis monograph, Urban HundiIndian machine crafts o f the Bombay Deccan (1936), identified the divergent careers of the different types of handicraft industries : some declined, others underwent mutations, while quite a few new ones came into existence using new types of factory-manufactured tools. The standard text-book on Indian economics by Jathar and Beri quoted statistics showing the steady growth in the production of handwoven textiles in the twentieth The fact that as late as 1950, the overwhelming bulk of employment in secondary production was in the traditional sector is itself enough to prove that the traditional handicrafts had not withered In this remarkable
23. D.R. Gadgil, Industrial Evolution of Indiu it1 Recent Times, 1st Edn. (1924). Chs. 111 and VI. He wrote, Thus the village weaver was more or less untouched by European competition. However, Gadgil did speak of the decline of handicrafts. though in terms of a complex causation. Morris view,that there was no net decline seems more acceptable to me. 24. Jathar and Beri, lndiun Econotnics, 9th edition, (1952). 11.23. 25. D.R. Gadgil, Indian Economic Organization in S. Kuznets el a1 (editors), Economic Growth :Brazil, Indio, &pan, 458.

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survival, and possible expansion, of Indias handicrafts Morris mainly finds evidence in favour of a steady rise in per capita income. He misses the other and far more important implication of this survival, viz., the stagnation of skills and hence of productivity in the secondary sector of production. He speaks of the nineteenth (and, presumably, the first half of the twentieth) century as a period of slow gestation. It is an odd form of gestation which, after hundred and fifty years, leaves the structure of the economy and the level of skills more or less what they were before. Like Theodor Morison and Mrs. Knowles before him, Morris emphasizes the growth of a modern sector,-the development of factory industries and the expansion of commerce. Impressed by the absolute magnitude of these developments, he does not consider their relative insignificance,-in per capita terms, in comparison with other countries, as also from the point of view of their impact on the rest of the economy. No one would seriously assert today that nothing positive happened to the Indian economy under colonial rule. It is in the relative quantitative insignificance of the growth phenomena and in the eventually stultifying character of the over-all change that one looks for an explanation of the countrys failure to industrialize.

IV
It is difficult, and perhaps somewhat unfair, to criticise Morris hypotheses as specimens of historical argument. For, as the author himself points out, the hypotheses are logically derived from certain general impressions and the relevant evidence is not discussed. The exercise is mainly of interest as a very simplified model explaining the process of development as well as economic backwardness in a colonial economy in the long period. It is precisely at this level that one finds the paper disappointing. The implications of Morris thesis for our understanding of economic under-developmen t are indeed striking. If traditional economies have, under colonial rule, grown steadily, if somewhat slowly, as a result of modern governments, improved law and order situation, development of social overheads and impact of the world market, and their growth.following the end of colonial rule is

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simply a continuation of the process, then there is little to distinguish between the long-term tendencies in the colonial economies and the process of sustained economic growth under totally different political conditions. For the extensive parts of the inhabited world which have enjoyed the benefits of colonial rule as also trade with the industrialized countries, underdevelopment, in the light of this analysis, ceases to be a problem : all that is necessary is to allow adequate time for gestation,-a process initiated and fostered by benign colonial administrations,-and industrialization will look after itself. The chief limitation of such an analysis is that it does not explain either the character or the origin of the specific features of economic underdevelopment,-the features which continue to inhibit growth. The origin of such features has been traced, not unconvincingly, to certain mutations in the traditional economies caused by their contact with the advanced industrialized nations.2s The latters quest for market and raw material, often accompanied by the establishment of their political control, did generate a limited growth in output,-both total and per capita,-for such reasons as are outlined in Morris paper. The mechanism of the process was, however, such as could permit only a limited growth and even that up to a point of time, beyond which the per capita income inevitably tapered off. The output increased mainly in the agricultural sector where production remained geared to traditional technique and the net investment in permanent improvement was very limited. The political-administrative set up under colonial regimes ensured a pattern of income distribution biased against the mass of producers limiting the possibilities of saving and investment and lowering the incentives to production in the agricultural sector. Besides an expansion in traditional agriculture, the colonial economies also developed a modern sector,-generally insignificant in relation to the total economic activity. Typically, such developments did not alter the structure of the economy. There was hardly any change in the proportion of national income and employment accounted for by traditional agriculture. The modern sectors contribution to increase in per capita income was generally insigni~-

26. For an elaboration of this argument see Hla Myint, On Interpretation of Economic Backwardness in S.P. Singh and A.N. Agarwala (cd.), Economics of Underdevelopment ; and his Economics oj. Developing Countries,

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ficant. The overwhelming bulk of foreign capital investment,accounting for the bulk of the total investment in modern industry, -was in transport and extractive or export industries. For the economy of the colonial country, such investment merely meant the growth of enclaves, their linkage effects being confined to a rninirn~rn.~The high cost of servicing the foreign capital, added to the expenses of maintaining a top-heavy civil administration and army, adversely affected the potential saving and capital formation. In the Indian case this was especially true, partly because the cost of railway construction under the guarantee system,-the most important field of foreign investment,-reached the fantastic figure of E 18,000 to E 20,000 per mile and the short fall in the guaranteed 5% profit had t o be met from the Indian revenue. Even more important than such leakages, were the implications of the enclaves for skill formation. In the industries owned and controlled by foreigners, appointment of natives to managerial and higher technical jobs were kept to a minimum.% Hence, the chief gain of the indigenous population from the development of such industries consisted in the growth of a cheap unskilled or semi-skilled working force. In India, as late as the 19OOs, the state policy was biased against technical education on the ground that the prevailing pattern of employment opportunities did not justify its e n c ~ u r a g e r n e n t . ~ ~ On the other hand, in contradistinction to the more familiar colonial pattern, there was some development of native capitalist enterprise in India. The fact that this development took place without any of the advantages of a congenial state policy usually enjoyed by latecomers in the field of industrialization indicate what potentialities for growth were frustrated by the fact of colonial rule. It is an elementary fact of history that the process of industrialization neither follows the same path nor involves an equal duration in every country. As Gerschenkron has pointed unequal levels of development as between different countries at a given time
27. See Charles Issawi, Egypt since 1800: A study i n Lop-sided Development, Journd of Economic Hisrory, 1961, 1-26, for a case study of limited linkage effects of an export sector in a colonial economy. 28. This issue is discussed below at greater length in connection with the question of the colonial countries gains from international trade. 29. See Aparna Basu, Indian Education and Politics, 1898-1920, (Unpublished Ph.D. thesis, Cambridge University), Ch. IV. 30. Gerschenkron, Economic Backwardness in Hisforical Perspective, Ch. I.

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and awareness of the possibility of development in the less developed countries generate tensions which, in their turn, produce special instrumentalities to assist in industrialization. The instrumentalities which shorten the process of industrialization include such intangibles as an ideology of industrialization and, more specifically, active state policies calculated to foster growth. The public demand for state action to protect the Indian industries going back to the eighties of the nineteenth century, the swadeshi movement which came about a quarter of a century later, the idolization of the new heroes of industry-all these indicate that the tension Gerschenkron speaks of as also an ideology of industrialization were not lacking in the late nineteenth century India. Only the appropriate policies which the situation called for did not emerge. The state followed a laissez-faire policy not out of any love of doctrines, but because the relevant decisions were ultimately determined by the interests of the British economy, British private capital in particular. The latter turned out to be seldom consistent with the long-term economic interests of India. In contrast to the career of their agriculture and industry, the backward economies often experienced a severalfold increase in the volume of their commerce. This paradox emphasizes the possibility that the backward countries did not secure a fair share of the gains from international trade, even though the discussion on this question is still by no means conclusive. The thesis that the terms of trade moved against the primary producing countries has been questioned. But, as Hla Myint points out, the terms of trade are a satisfactory measure of gain only if a country receives the whole of the export earning^.^? In the backward countries, a substantial part of these earnings accrued to foreigners and was remitted abroad,frequently as much as a quarter to a half of the total value of exports. In such circumstances, it is possible to have improving external terms of trade, while the relative share of incomes or even
31. See Helen Lamb, The State and Economic Development in India, in S. Kuznets el ol (ed). op. cif., S. Bhattacharya. Laissez-faire in India, Indian Economic and Social History Review, Vol. 2. No. 1 :Peter Harnetty. The Imperialism of Free Trade : Lancashire and Indian Cotton Duties 1859-1862, Economic History Revlaw, 1965 ; R.J. Moore, Imperialism and Free Trade Policy in India, 1853.54, Ibid, 1964. 32. H. Myint, The Gains from International Trade and the Backward Countries, The Review of Ecorioniic Studies, 1954-55.

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per capita income of the indigenous population falls. Owing to the complications introduced by conditions of foreign investment,monopolistic concessions, elements of monoposony in the labour market, conventions of low wages rendered possible by unrestrained exploitation,-a vicious circle of low wages and low efficiency developed and there was a lack of skilled labour because there was very little effective d:mand for it. Moreover, the productive facilities for export, largely a result of foreign investment, remained largely as outposts of the develpped investing countries where the multiplier effect in the form of cumulative additions to income, employment, capital, technical knowledge and growth of external economies was chiefly felt.33 Hence much of the foreign investment in underdeveloped countries were really domestic investments on part of the industrialized countries. For the backward countries, such investments which helped them develop as providers of food and raw materials, may have been even positively harmful in the long period. No doubt export industries are more productive than domestic agriculture and traditional handicrafts. But conceivably they are less productive than other industries which might have developed but for this high degree of specialization in one direction which mainly provided means for producing manufactured goods elsewhere with superior efficiency. The most striking feature of colonial economic development is the dichotomy between the traditional and modern,-as also between the subsistence and non-subsistence,-sectors of the economy.*4 The premodern subsistence sector accounts for the overwhelming bulk of economic activity and is characterized by a stagnation of skills, technology, social organization and attitudes. In more extreme cases, like those of Indonesia and some other South East Asian countries, the colonial market economy grew up in total isolation from the subsistence sector and at a heavy cost to it. In the Indian case, the picture was only somewhat different, Recent village studies reveal a marked pattern of socio-economic stagnation in rural India.a5 So far as one can see, there were hardly any significant changes until after World War I, and, very
33. H.W.Singer, *TheDistribution of Gains between Investing and Borrowing Countries, American Economic Review, 1950. 34. See J.H. Boeke, The Evolution of !he Nelherlands Indies Economy. 35. See Mckim Marriot (ed.), Village India.

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often, until aftcr 1947. The only possible consequence of the socio-economic changes described above was a very low level of income for the indigenous population. It might or might not be higher than the peak reached in the pre-colonial period, but it permitted only of very limited saving and investment. As improved medical facilities reduced the mortality rate and population began to increase steadily, per capita income declined and the subsistence needs of a vast and increasing population eliminated all possibilities of any significant saving in the economy. The vicious circle of economic underdevelopment thus emerged inevitably from the socio-economic changes characteristic of the colonial era.

V
Morris implies throughout his paper that a correct assessment of economic change in the nineteenth century India is simply a matter of applying universally accepted tools of analysis to a given body of data. Such a view ignores (1) the relative weakness of all available theory as tools for the study of over-all economic change in the long period and (2) the strong ideological bias which marks much of the theoretical literature on economic underdevelopment. Controversies in history have a particular tendency to get coloured by current political passions. The loss of empires and the struggle against colonial rule have generated attempts to rehabilitate the historical past of the imperial powers, to project an image of beneficence and progress. It is difficult to consider such theses as the unprofitability of the colonies to the mother countries, absence of economic motives behind imperialism, long and continuous policies calculated to foster self-government in the dependencies etc. as exercises in analysis uncoloured by political emotions,though that fact does not necessarily invalidate them. The intellectual penumbra of the cold war and the earlier attacks on the theoretical basis of Marxism have included efforts to challenge all theses implying exploitation of class by class and of country by country,in fact the very concepts of exploitation and class. The criticism of anti-colonial positions has been subsumed by this much wider and vigorous academic exercise. It is.neither my purpose nor within

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my competence to assess the value of the various intellectual positions cited above, and if I have not mentioned their opposite numbers, often much cruder in character, it is because they are not relevant to the school of thought to which the paper under discussion belongs. The point of my digression is a very Iimited one. The three comments on Morris thesis published in this number raise serious doubts as to its value or validity. Yet, one feels, the thesis has been and will continue to be taken seriously mainly because it constitutes one more link in the chain of arguments in defence of lost empires, though, very obviously, this was farthest from the authors intention%. Morris thesis opens a line of investigation which may in due course produce a fair body of literature seeking to establish in detail the fact of sustained growth generated by the nineteenth century liberal state of British India. One purpose of this paper is to suggest that the available studies of economic backwardness, both theoretical and empirical, indicate other and possibly more fruitful lines of enquiry.

36. It may be pointed out that practically everything else Morris has published, -particularly his major work on Indian textile labour,-have implications which contradict the favoured assumptions of tbe pro-imperialist school of thought.

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