Unit I. P. Parthasarathy DSE Economic History.pptx

This is a ppt about unit 1 of economic history of Indian in SEM 3 DSE.

1. Unit I India and the Global Economy & Modern Industry in Early Nineteenth-century India Prasannan Parthasarathy

2. Content India and the global economy, 1600–1800 (Ch.2) Introduction The global trade in cotton textiles The appeal of Indian cottons Bullion in the global economy Modern Industry in Early Nineteenth-century India (Ch.8) The debate on the nineteenth-century Indian economy Industrialization in early nineteenth-century India State and economy in nineteenth-century India

3. India and the global economy, 1600–1800 (Ch.2) Introduction Europe lay at the centre of the world economy of the seventeenth and eighteenth centuries Immanuel Wallerstein summed up several generations of thinking when he wrote, “The modern world-system took the form of a capitalist world-economy that had its genesis in Europe in the long sixteenth century . . . Since that time the capitalist world-economy has geographically expanded to cover the entire globe.” This captures three assumptions on Europe: Europe was dynamic while the rest of the world was static. Europe gave rise to capitalism and brought the rest of the world under its economic ambit. Europe was at the core of the early-modern trading system

4. Key positions of India and China : Flows of silver and manufactures between 1600 and 1800 K . N. Chaudhuri and others also demonstrated that Asian merchants did not fade away with the coming of the Portuguese, Dutch and English . Subsequent research has shown that Asian mercantile capital was in a secure position into the nineteenth and even twentieth centuries. On the Indian landmass itself, a number of historians have argued that European merchants and traders, rather than dominating their Indian counterparts, had to adapt and fit into the vigorous commercial order, which is testimony to the power and acumen of Indian merchants. Economic vibrancy in other parts of Asia: flows of rice, manufactures, spices, precious metals and other goods between Southeast Asia and China.

5. Andre Gunder Frank “The two major regions that were most ‘central’ to the world economy were India and China,” a status they claimed because of the volume of their exports of manufactured goods, which they exchanged for silver. China exported porcelain and silk across the globe . The Indian subcontinent produced a seemingly endless variety of cotton textiles that “clothed the world,” according to a title on the subject. Frank argued that China was more critical than India in the Asia- centred global economy because it possessed a greater capacity to export and, as a consequence, monopolized the bulk of the world’s output of silver. Blinded by the brilliance of the Chinese universe, they fail to appreciate the magnitude of the global trade in Indian cotton textiles , which had been the major export of the subcontinent for many centuries, and which were exchanged for silver, gold and other commodities that served as money. “Bullion for goods” is how Om Prakash labeled this trade.

6. The Global Trade in Cotton Textiles Cotton textiles of the Indian subcontinent were demanded across the world in the seventeenth and eighteenth centuries : Cotton reigned supreme because it yields a cloth Cotton was lighter than wolleen Available in many designs, along with easily available Cotton also takes and holds dyes and designs better than linen and wool the prices of cotton cloths were lower Before the seventeenth century the major export markets for Indian cotton cloth were in the Indian Ocean . Indian cottons were also exported to Southeast Asia , where they were exchanged for spices , and East Africa , where they were sold for slaves . The East African demand for Indian cottons made possible the slave armies that were fielded by the Islamic kingdoms of the Deccan in early-modern times.

7. The entry of European traders into the Indian Ocean opened three new markets for Indian cloth . The first was in Europe itself where from the sixteenth century small quantities of Indian painted and embroidered cloth were imported into Portugal, Holland and England setting off what contemporaries labeled the “ calico craze”. Indian cotton cloths found ready buyers: Upper class and poor. The second major new market for Indian cloth in the seventeenth and eighteenth centuries was West Africa . In sixteenth century cotton textiles became a linchpin in the Atlantic slave trade. In the eighteenth century, two-thirds of British exports to West Africa consisted of textiles. Indian cottons were also essential for the French slave trade. The third and final new market for Indian cloth was the Americas . Indian cottons were exported to the Americas via two channels . The first was an export trade from north-western Europe to the islands of the Caribbean and North and South America . The second route for Indian cloth went across the Pacific from the subcontinent to Spanish America via Manila.

8. By the eighteenth century Indian cottons found buyers in Southeast Asia, East and West Africa, the Middle East, the Eastern Mediterranean, Europe and across the Americas. The magnitude and reach of Indian cotton cloth has led several historians to call it the most important manufactured good in world trade in the seventeenth and eighteenth centuries The insatiable appetite for Indian cottons in markets around the world was also the reason why silver flowed from America, Europe and the Middle East to the Indian subcontinent . Since Indians had a limited demand for imports, Europeans and others had no choice but to bring silver and gold, as well as other commodities that were valued as money, to purchase cotton cloth.

9. The Appeal of Indian Cottons Indian cottons were objects of desire because of their great beauty, their fashionability and their remarkable qualities of color and weave . Aesthetics and fashion: In the seventeenth and eighteenth centuries, the bulk of the cotton textiles exported from India were printed and painted cloths , which came to be known as chintz in Europe Smaller proportions of the Indian exports were plain cloths , typically dyed blue with indigo, or striped or checked cloths woven from dyed yarns white cotton cloth from India began to be used as the “ raw material ” for European printing industries, which grew rapidly in the eighteenth century In the nineteenth century the reputation of chintzes suffered as machine-printed cloth of low quality and poor design became ubiquitous.

10. Bullion in the global economy Between 1600 and 1800 Indian cotton cloth was consumed in markets around the world and in exchange enormous quantities of silver (28,000 tons of bullion in silver equivalents roughly a fifth of the world’s production of 142,000 tons) , gold, copper and other forms of money flowed into the Indian subcontinent . A number of historians have argued that most of the world’s output of the precious metal in the seventeenth and eighteenth centuries made its way to China . (Frank declared that China was the “ultimate ‘sink’” for the world’s silver) Bullion came into India via a number of routes in the seventeenth and eighteenth centuries. Seventeenth century (Middle East): Persian Gulf and the Red Sea Eighteenth century ( Central Asia, Southeast Asia and Europe) : Cape of Good Hope.

11. Frank: the bulk of the silver that was imported into India was re-exported to China . China absorbed half the world’s silver. China had a voracious appetite for the precious metal as it shifted from a disastrous late Ming experiment with paper currency to a monetary order based on silver . there was enormous demand for the porcelains, silks and other goods for which China was renowned throughout the world, Frank and others are mistaken in assuming that the bulk of the silver that entered India was re-exported to China. The figures available on this trade are fragmentary. Richard von Glahn , between 1600 and 1640 the Portuguese carried less than four tons of silver a year from the Indian Ocean to Macao. The English East India Company also entered this trade, but it appears to have been on a small scale before the British conquest of Bengal in the late eighteenth century. The other route by which silver could have gone to China from India was via Southeast Asia for the purchase of spices, but the principal Indian medium of exchange for cloves, nutmeg, mace, cinnamon and other spices was not silver but cotton cloth . Some silver was taken from India to China where it was traded for gold used as money in several parts of the Indian subcontinent high-value gold coins, known as the muhr and ashrafi (Northern India), pagoda (Southern India).

12. The Manila to India : additional routes, which Frank and others have missed, by which silver was brought to India. Om Prakash : in the late seventeenth century more than a million florins of silver , the equivalent of about nine tons, was transported every year from Manila to South India K. N. Chaudhuri : in 1693–94 the price of silver dropped in Madras because of the “arrival of a considerable quantity of Spanish silver from Manila ” and in 1712, 1715 and 1727 Madras suffered shortages because the Manila ships had brought very little silve r Ashin Das Gupta : the expansion of English private trade with Manila translated into considerable quantities of American silver entering the subcontinent via the Pacific route Silver was exported from China to Central Asia from where some of it flowed to the Indian subcontinent. And the Dutch East India Company carried Japanese silver for sale in Bengal

13. According to data compiled by Najaf Haider , (exclude southern India and the important commercial centres of the Malabar and Coromandel Coasts) between 1588 and 1602 an average of 136 tons of silver were imported every year into the Mughal Empire 1630 to 1645 this figure fell to 93 tons per year , 1679 to 1685 increased to 145 tons per year Late sixteenth to the late seventeenth centuries: average import into Mughal India of 120 tons of silver per year Seventeenth century: silver import total of 12,000 tons the average imports of silver into the Indian subcontinent come to 138 tons per year or 13,800 tons in the seventeenth century . Between 1600 and 1800 : almost 28,000 tons of silver and gold, in silver equivalents, imported into India, which represents a fifth of total global silver production .

14. The precious metals – gold and silver – were not the only commodities used as money in India. The subcontinent imported vast quantities of copper and the trade in this metal from Japan to India generated sizable profits for the Dutch East India Company Claims that China absorbed the bulk of the silver that circulated in Asia are, therefore, incorrect. Until the nineteenth century, the Indian subcontinent continued to be a major importer of not only silver but also gold, copper, cowries and badams . The Indian subcontinent held this position in global trade – and was therefore able to claim large quantities of bullion – because of an insatiable appetite for Indian cotton textiles in markets across the world . As a consequence, the subcontinent was awash in money and a highly commercialized economic order emerged from the late sixteenth century.

15. Modern Industry in Early Nineteenth Century India (Ch.8) The early nineteenth-century governments of continental Europe shared a tradition of direct participation in industrial and technological development. From the late eighteenth century the industrialization of Britain transformed the economic landscape of the world . The literature on early French industrialization, for example, is replete with stories of espionage, recruitment of British skilled workers, transfer of British know-how and the importation of British inventions. Modern industry , as exemplified by British manufacturing, came to be desired because it was seen as essential for the exercise and consolidation of state power. New techniques  were critical for the production of modern armaments . Industrial methods of manufacturing vastly expanded output and therefore the revenue potential of emerging nation-states

16. Modern industry came to be highly sought after in the nineteenth century due to political power. Industrialization in Europe and Asia was not a simple replication of a British model. The advanced regions of India and China – which were in the eighteenth century major global economic centres – were unable to follow France, Belgium and Germany and emulate British successes. Despite economic capacities, nineteenth-century India descended into levels of poverty that were unprecedented, the most striking evidence for which is the estimated 12 to 29 million Indians who died in famines in the quarter-century between 1876 and 1902.

17. The Debate on the Nineteenth-century Indian Economy For more than a hundred years the reasons for the limited industrial development of nineteenth-century and twentieth century India have been debated. Externalists place primary responsibility upon British colonialism in the subcontinent. Internalists give primacy to social, cultural or economic conditions within India . Tirthankar Roy : has criticized the emphasis on British colonialism and argued that resource endowments were the crucial constraint on economic development in modern India Niall Ferguson : Immense sums of British capital were being invested in a range of new industries: cotton and jute spinning, coal mining and steel production The colonial state had a powerful impact on the Indian economy . Trade policies  channelled into less fruitful lines failure to invest in public goods such as education and institutions to promote and expand technical knowledge The highly skilled and knowledgeable workers of the eighteenth century were dissipated and not capitalized upon .

18. New industrial techniques in the Indian subcontinent Writings on Indian industrialization in the nineteenth century focus primarily on the period after 1850 : disproportionate attention given to the cotton mills of Bombay and Ahmedabad and the jute mills of Calcutta, all of which were only established from the 1850s Morris D. Morris’s : Cambridge Economic History of India , “The Growth of Large-Scale Industry,”(The Prelude: 1800–1850). D. R. Gadgil’s : Industrial Evolution of India in Recent Times Amiya Bagchi’s : Private Investment in India and Rajnarayan Chandavarkar’s : Origins of Industrial Capitalism in India

19. The decades between 1800 and 1850 were a pivotal period in the industrial development of the Indian subcontinent but.. The booming early-modern textile-exporting regions – Gujarat, Bengal and South India – made the painful adjustment to lower overseas demand for their wares . The establishment of British power eliminated numerous Indian kings both large and small, and the closing down of royal courts and political centre s with their elaborate rituals of consumption – along with sizable military forces – meant a sharp fall in demand for manufactures of all kinds. Finally, from the 1820s British-made cotton yarn, cloth and iron produced with new industrial techniques began to invade Indian markets themselves . The Porto Novo Iron Works (quietly closed down in the 1860s) found it difficult to sell their good locally because by the 1830s , substantial quantities of British pig iron were flowing into India . Swedish iron paid a tariff of over 6 pounds per ton when imported into Britain, but the Indian market was kept completely free for imports of British iron

20. Industrialization in early nineteenth-century India Observations about the potential for modern industry in the early colonial period/ early nineteenth-century in India: Indian entrepreneurial ability was not in short supply: Gujarati cloth merchants out-competed Portuguese and British traders because of their superior information and better connections to the sources of cloth Indian entrepreneurs interest in new techniques of production and introduced new technologies and methods . There was also no lack of skilled and knowledgeable workers and mechanics. Over time, Indian workers were also trained to repair a variety of the instruments Said Mohsin was given the title of “Mathematical Instrument Maker,” and he assembled a “valuable team” of workmen that included carpenters, turners, filemen , firemen and hammermen , who formed a field workshop.

21. No shortage of capital in the first half of the nineteenth century besides the English East India Company, as well as the French in Pondicherry, supplied private individuals with capital for their enterprises “The Bank of Bombay was obliged to increase its share capital from Rs . 3,000,000 to Rs . 5,225,000 to meet the wishes of its numerous applicants.” In the early 1820s, money was plentiful in Bengal and the government borrowed as much as it needed at 4 per cent, which increased to 5 per cent in 1825 with the onset of the Burmese war and the greater government demand for funds Trade policies have received the most attention and, since the nineteenth century, the British colonial state has been criticized for its failure to protect Indian manufacturing The other great state economic enterprise was the military . Armaments production had stimulated economic activity across Europe and Asia in the seventeenth and eighteenth centuries and had been pivotal for technological progress as well as the expansion of manufacturing.

22. State and Economy in Nineteenth-Century India The state made crucial contributions to the advance of technology and the creation of new industrial enterprises in Belgium, France and Germany in the early nineteenth century Protection of local manufacturing , the establishment of institutions for technical education , the recruitment of skilled workers from foreign territories , the deployment of technical missions abroad to learn of technological advances and the formation of state enterprises were used in various combinations to propel the development of industry and manufacturing In British India, however, such state policies were conspicuously absent The patronage of Indian rulers maintained the high pitch of agricultural production and supported institutions for the generation and transmission of knowledge The Company made no attempt to protect the new industries that were being formed in the early nineteenth century. Rather than protecting local manufacturing, the structure of taxes in the early nineteenth century gave an advantage to imported goods . From 1813, locally made cloth in Bengal paid an internal transit duty of 15% when carried to Calcutta, Dacca or other towns and cities in the province.

23. British and Indian exports were treated differently in other parts of the empire as well. In Australia, Indian goods paid a duty of 5% while British goods were imported duty-free . In Ceylon, Indian goods paid 10%, British 4%, while in the Cape of Good Hope the duties were 10% and 3%, respectively . The Company state also took little interest in expanding the technological capabilities of Indians . In 1812 Lord Minto , the Governor-General of India, noted the British disinterest in building libraries or schools and the deleterious impact of this policy on scientific and technical knowledge Twenty years later little had changed, but: South Indian region of Coimbatore : population of about 800,000, the British were spending 400 rupees per year on two schools . Revenue collections in the district ranged from 2 to 3 million rupees per year, which translates to 0.013 to 0.02 per cent of revenues dedicated to education In Bombay : a former Member of Council revealed that there were 1,705 schools in the British possessions in the region, for a population of nearly 4.7 millio n. Only 25 of these schools were set up by the British . As a consequence, the fraction of the population in schools was 1 in 133 while in Britain it was 1 in 16.125 .

24. The British disinterest in investing in materials for developing technical capabilities extended to their own facilities. The British destruction of Indian political centres , therefore, had profound consequences for the technological capacity of the subcontinent . The full ramifications – social, cultural, economic, technical scientific – of the dismantling of Indian states and the loss of their powers of patronage have yet to be fully explored . The neglect of iron left the operation unprepared for the manufacture of steel guns from the mid-nineteenth century. As a consequence, the making of big guns in India was more or less at a standstill from the Rebellion of 1857 to the early twentieth century There were a number of reasons for British disinterest in developing Indian industry or expanding Indian technological capability. The reluctance to expand the technological capabilities of Indians was also rooted in a British desire to monopolize knowledge

25. The English East India Company undertook little industrial development in the first half of the nineteenth century because the Indian economy was subordinated to the needs of an industrializing Britain . For India to serve as an auxiliary to British industry, the Indian market had to remain free to receive exports from Britain, which ruled out tariff protection for Indian manufacturing . Nineteenth century the Indian market remained among the freest and the most open in the world . In the first half of the nineteenth century, Britain was protected from Indian manufactured exports (ships, cotton textiles, etc.), while India was subjected to a regime of free trade .

26. Conclusion (8 ch. ) In nineteenth-century India where the British colonial state had little desire or interest in promoting industrial development In the early nineteenth century, the Indian subcontinent possessed some of the most economically and commercially advanced regions in the world . Merchant and entrepreneurial abilities and artisanal and craft skills were highly developed and continued to be so for several decades. In these early days of colonial rule, the skill and knowledge possessed by Indian artisans and mechanics were far closer to those of their counterparts in Europe than was to be the case later in the century. The first half of the nineteenth century represented a missed opportunity for economic life in the subcontinent . By 1900, the knowledge gap had widened and Indian technical skills had fallen far behind the standards of Europe Variety and scale of manufacturing activities in India was sharply reduced. Without shipbuilding, iron smelting, gun making, cloth dyeing and so on, skills disappeared, and without the rise of new manufacturing enterprises, they were not translated into new forms of production

27. In the early nineteenth century a primary education was sufficient to make seminal technical contributions. Within a few decades, however, the educational background of inventors ratcheted up The supply of capital was also more plentiful in the early part of the nineteenth century than in later decades Economic decline in nineteenth-century India was intimately connected to colonialism and state policies which discriminated against the economic well-being of Indians . Since the late eighteenth century Smithian and later neoclassical economic thinking has opposed state activism and intervention they imply that economic performance would have been superior if state action, save the minimal enforcement of the rules of the market and property rights, had been absent The modern economy is an effect of the development of the modern state.