Financing India’s Imperial Railways
discussed. Even Keynes had seen the terms o trade moving in avour o India’sagricultural base over time.
Modern globalization theory has stressed the ben-ets o rigorous international specialization. Victorian railways in India wereconstructed to accelerate that process but, uniquely, India became a major rail- way power without beneting rom the normal accelerator and multiplier eectso capital investment. Te cataclysmic amines o the 1870s and 90s were themost dramatic evidence o the ailure o the Raj to create economic growth andcombat extreme poverty in India. Over 1875–1913, or example, China gener-ated comparable economic growth to India, without a railway network, whileboth countries underperormed the average or developing nations.
At thesame time, the British ocus on overseas capital exports, o which Indian railwaybonds and equities made up a signicant share, created longer term problems orthe UK economy, which suered rom the opportunity cost o capital directedat ‘rentier’ empire pursuits, rather than new domestic industries like electricity,chemicals and motor cars.
During the late nineteenth century the British were prepared to questionthe benets o rail investment at public committees and commissions. However,by 1909, in a memorandum detailing the achievements o the Raj in the hal-century since the Mutiny, sel criticism had ceased. Railways were emphasizedas one o the great achievements o the period since the abolition o the EastIndia Company (the Company). Aggregate gross earnings were £30 millionand the benets o the railways were estimated at a spectacular £100 million perannum, incorporating savings in transport ares per mile travelled but excluding additional benets o spared time. Te railway network employed some 525,000 people o whom 508,000 were Indians. Railways had produced a return that yearo 4.33 per cent. Like modern scholars o the Imperialist school, the report ailedto consider alternative uses o the enormous capital expended. Indeed, the report pointed to returns o some 8 per cent on more recent irrigation expenditureon an aggregate capital programme o only £32.5 million. Tese were returnsunheard o in the Indian railway sector, outside the Bengal regional monopoly,the East Indian Railway (EIR). Te India O ce/GOI had over previous yearschannelled ten times as much capital into the lower yielding railway businessin a policy which ignored considerations o market-based returns.
One aim o this monograph is to explain the strength o support or this railway investment programme across large sections o British decision-makers without resorting toa partisan view o the rights or wrongs o the project.
o do so it is necessary tolook in detail at debate surrounding the three rationales used by the British to justiy prioritization o Indian railways: trade and commerce, amine protectionand relie, and military/strategic benets or the deence o India. Te triumvi-rate o early rail enthusiasts, W. P. Andrews, Macdonald Stephenson and JohnChapman used all three aspects in promoting Indian rail projects.