Economy Under British Crown

Md. Abdullah Shihab

Content:

1. Demolition of Local Trade

2.Indigo Resistance Movement
3.Sepoy Mutiny
4.Government of India Act of 1858
5. Introduction of Banking
6. History of Indian Currency
7. Indian Finance, Genesis of The
Indian Debt
1.Demolition of Local Trades
Bolts, William(1740-1808): Bolt has
mentioned two examples of how EIC ruin
the local merchanters
1) They tortured the maker of moslin,
even cut their fingers
2) They looted different Armenian
factories, and prisoned their labours.

(evsjv‡`ki A_©bxwZ: AZxZ eZ©gvb fwel¨Z)

1.Demolition of Local Trades
Local manufacturing was harmed due to:
1) British Industrialization:
2) Change of Demand of local Buyers:

1) British Industrialization:

Industrial Revolution, in modern history, the process of change

from an agrarian and handicraft economy to one dominated
by industry and machine manufacturing.
The first industrial revolution began in Great Britain in the 1700s and
1800s and was a time of significant innovation. Around 1760-1840.
Working for businesses during the Industrial Revolution paid better
wages than agricultural work; so migration of Labour.

(evsjv‡`ki A_©bxwZ: AZxZ eZ©gvb fwel¨Z)

1.Demolition of Local Trades
Flying Shuttle-1764,Spinning Gin- 1764,Steam
Engine-1768,Power Loom-1758.

Utilizing those inventions in to Business

purpose created the process of industrialization
but that need some conditions:
A) Huge Capital Stock
B) Strong local market with open international
market
C) Available supply of raw materials
(evsjv‡`ki A_©bxwZ: AZxZ eZ©gvb fwel¨Z)
1.Demolition of Local Trades
After 1757, EIC made excessive profit
that helped them to built capital stock.
They made subcontinent a free market
where they could sell their industrial
products and
A market where they can extract raw
materials
1.Demolition of Local Trades
2) Change of Demand of local Buyers:

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1.Demolition of Local Trades
According to Sir Henry Cotton, Moslin
export was totally stopped in 1817.
In 1790: Population 2 lac whereas in 1840
it 30 to 40 thousand. (evsjv‡`ki
A_©bxwZ: AZxZ eZ©gvb fwel¨Z)

(evsjv‡`ki A_©bxwZ: AZxZ eZ©gvb fwel¨Z)

2.Indigo Resistance Movement
British were interested in producing cash
crops rather than food crops.
With the progress of textile Industry,
demand for indigo rose so high in
England in order to dye cloths.
Indigo cultivation started in Bengal in
1770 to 1780.
2.Indigo Resistance Movement
Indigo Resistance Movement (1859-62)
peasant agitation against INDIGO
PLANTERS who
forced RAIYATS (cultivators) to
produce INDIGO for the world market.
Historical records suggest that indigo was
produced in Bengal for use as a dye even
in ancient times.
2.Indigo Resistance Movement
Dadon System:
the planters forced the ryots or peasants to
sign an agreement, so that they could get
loans / advances {called Dadon} from
planters to grow Indigo.
The loan made the people indebted and
resulted in a rebellion in 1859-60 in
Eastern Parts of Bengal.
2.Indigo Resistance Movement
All kinds of Laws were against the labors. According
to Indian factory Commission report, labors could be
hired from 7 to 14 years old and daily working hour
was 11 hours.
Even local factory owners were exploit the labors; A
manager of Bangla Lankhi factory told “ We strongly
oppose any curtailment of working hours”
And a news paper Amrito Bazar “A Large death rate
among our operatives is far more preferable to the
collapse of this rising industry…we can after the
manufactures are fully established seek to protect
operatives.
(evsjv‡`ki A_©bxwZ: AZxZ eZ©gvb fwel¨Z)
2.Indigo Resistance Movement
Leaders and Revolt
The revolt began as the peasants stopped paying rents. In
March 1859, the revolt became more organized when
thousands of Ryots in Bengal refused to grow indigo. They
attacked the Indigo factories with whatever weapons they
had. Women joined the revolt and fought with pots, pans etc.
The resistance was met with pressure from planters but
farmers took pledge that they would not take advance and
would not be bullied by the lathiyals of planters.
The key leaders of this revolt were Biswas Brothers of Nadia
{Digambar Biswas and Bishnu Biswas}, Kader Molla of
Pabna, in Jessore there were two brothers Nabin Madhob
and Beni Madhob,
2.Indigo Resistance Movement
The resisting raiyats received sympathetic support from
the CHRISTIAN MISSIONARIES.
 NAWAB ABDOOL LUTEEF, a Deputy Magistrate in Jessore
district, gave a number of legal verdicts against the planters.
A drama called Nildarpan (1860, mirror of indigo)
by DINABANDHU MITRA and some newspaper comments
of KISHORI CHAND MITRA and HARISHCHANDRA
MUKHERJEE had helped mould public opinion in favour of the
resisting raiyats.
 All these factors persuaded the government to set up a
commission in 1860 to look into the problem. With the publication
of the INDIGO COMMISSION Report an Act was passed
prohibiting coercion of raiyats for indigo cultivation and the
measure led to the end of the movement.
3.Sepoy Mutiny
Sepoy Mutiny or First War of
Independence, widespread but
unsuccessful rebellion against Britis
rule in India in 1857–58. 
 In India it is often called the First War of
Independence and other similar names.
 3.Sepoy Mutiny
The Doctrine of Lapse was introduced by Lord Dalhousie. According to this doctrine, if
any Indian ruler dies without leaving a male heir, his kingdom would automatically
pass over to the British.  The company took over the princely states
of Satara(1848), Jaitpur and Sambalpur(1849), Bhagat(1850), Udaipur (1852), Jhansi (
1854), Nagpur (1854), Tore and Arcot (1855) under the terms of the doctrine of lapse.
The Enfield rifle: To load it, the sepoys had to bite off the ends of lubricated
cartridges. A rumour spread among the sepoys that the grease used to lubricate the
cartridges was a mixture of pigs’ and cows’ lard; thus, to have oral contact with it was
an insult to both Muslims and Hindus.
The sepoys also gradually became dissatisfied with various other aspects of army life.
Their pay was relatively low the soldiers no longer received extra pay
(batta or bhatta) .The junior British officers became increasingly estranged from their
soldiers, in many cases treating them as their racial inferiors. In 1856, a new Enlistment
Act was introduced by the Company, which in theory made every unit in the Bengal
Army liable to service overseas. The junior British officers became increasingly
estranged from their soldiers, in many cases treating them as their racial inferiors
3.Sepoy Mutiny-the rebellion

In late March 1857 a sepoy named Mangal Pandey attacked

British officers at the military garrison in Barrackpore. He was
arrested and then executed by the British in early April. Later in
April sepoy troopers at Meerut refused the Enfield cartridges, and,
as punishment, they were given long prison terms, fettered, and
put in jail.
It created serious tension throughout Bangladesh. The resistance in
Chittagong and Dhaka and skirmishes at Sylhet, Jessore, Rangpur,
Pabna and Dinajpur had left Bangladesh in a state of alert and
excitement. On 18 November 1857 the Native Infantry of
Chittagong rose in open rebellion and released all prisoners from
the jail. They seized arms and ammunition, ransacked the treasury,
set the Magazine House on fire and proceeded towards Tippera.
3.Sepoy Mutiny
The Mutineers occupying Delhi and and
declared Mughal emperor Bahadur Shai II
as the emperor of India.
Nana Shahib at Kanpur, queen of Jhansi
Laxmi Bai, Moulovi Ahmadullah and
other native feudal lords also took part in
this war.
3.Sepoy Mutiny
Mughal emperor Bahadur Shai II was
exiled in Rengun.
Queen Laxmi Bai was killed and Nana
Shahib was disappeared.
Defeated soldiers were faced inhuman
tortures.
3.Sepoy Mutiny
Summary trials by local Judges of the captured and disarmed
sepoys took place in Sylhet and Jessore. Hanging and
deportation were common features of these summary trials.
The landed aristocracy were decidedly opposed to the
sepoys and some of them rendered logistic support to the
Company authorities by supplying carts, carriages and
elephants; informing the movements of the fleeing sepoys
and finally organising local volunteer corps to resist the
sepoys. The government acknowledged such services of the
landed aristocracy with thanks and subsequently awarded
them titles of Nawab, Khan Bahadur, Khan Shaheb, Rai
Bahadur, Rai Shaheb etc and rewarded them with all sorts of
worldly gains.
4.Government of India Act of 1858
The Company's Charter was once more
renewed; but the Act of I 8 5 3 did not fix
any definite term for the renewed Charter.
It declared, simply, that the Indian
territories should remain under the
Company in trust for the Crown until the
Parliament should other- wise direct.
4.Government of India Act of 1858

Government of India Act of 1858

India Act, 1858 had abolished the rule of the EAST INDIA
COMPANY and replaced it by direct control of the Home Government. It
was the upshot of the SEPOY REVOLT of 1857. The revolt itself failed,
but it succeeded in producing momentous changes in the administrative
system of the Indian colonial state.
British Government felt the need of establishing direct control of
parliament over the British Indian government. Striking such a change was
not difficult, because slow transfer of power from the company to
parliament was taking place ever since the REGULATING ACT of 1772.
Thus parliament resolved to take over Indian administration in its hand
immediately after the revolt. On 2 August 1858 parliament enacted the
Government of India Act under which Crown's rule was established
abolishing that of the East India Company. The Act put an end to the dual
authority exercised by the BOARD OF CONTROL and the COURT OF
DIRECTORS.
5.Introduction of Banking
The Presidency Banks were set up as quasi-Government institutions. They
were incorporated under Charter from the local Government, who
contributed a part of their share capital; Government Directors were
appointed on the Boards of these banks.
The first Presidency Bank to be established was the Bank of Bengal, which
was set up originally as the Bank of Calcutta in 1806, and in 1809 and came
to be called the Bank of Bengal.
The Bank of Bombay was set up in 1840 with a capital of and the Bank of
Madras in 1843.
The three banks were amalgamated in 1921 to form a new bank, which
came to be known as Imperial Bank of India. In 1955, this bank acquired the
name of State Bank of India.
 The Reserve bank of India, which served as the central bank of the country,
was established in 1935. Establishment of the chain of commercial banks in
the cauntry helped to promote the money and the market system.
 (HISTORY OF THE RESERVE BANK OF INDIA , Chapter-1)
6.History of Indian Currency
Although the Directors of the East India Company had given their approval for
the introduction of a uniform currency in India in 1806, the era of such currency
began only in 1835 when, in terms of Act XVII of that year, the silver rupee was
declared the sole legal tender throughout British India;
 It was declared that gold coins would not be legal tender, but, the public
Treasuries, in terms of a notification issued in 1841, were to accept the coins on
the basis of Rs. 15 for one gold mohur, in payment of taxes and other public
dues.
Besides the silver and gold coins, currency notes were also in circulation, these
being issued mainly by the Presidency Banks -of Bengal from 1809 and those of
Bombay and Madras from 1840 and 1843, respectively. These notes were not,
however, legal tender and their circulation was practically confined to the
Presidency towns.
Paper Currency Act, 1861: Mr. James Wilson introduced the Paper Currency
Bill, but did not live to see it enacted. This was carried out in 1861 by Mr. Laing.
In terms of this Act, the sole right to issue notes rested with Government.
(HISTORY OF THE RESERVE BANK OF INDIA , Chapter-2)
7.Indian Finance. Genesis Of The Indian
Debt

R. C. Dutt; Vol-2;Book-1;Ch:13
7. Indian Finance. Genesis Of The Indian Debt

Itwill be seen from these figures that in the first year of

Queen Victoria's reign India showed a surplus, even after
paying over two millions as Home Charges. This was due to
the careful administration of Lord William Bentinck, and to
the reforms and retrenchment effected by him.
Home Charges: Home Charges refer to the expenditure
incurred in England by the Secretary of State on behalf of
India. The main constituents were:
Dividend to the shareholders of the East India Company.
Interest on Public Debt raised abroad. Expenses on India
Office establishment in London. Pensions and furloughs
payments of British officers in the Civil and Military
departments in India. Payments to the British war office.
R. C. Dutt; Vol-2;Book-1;Ch:13
 7. Indian Finance. Genesis Of The Indian Debt

The Sikh wars of the two next Governors-General, Hardinge and

Dalhousie, made matters worse; and it was not until the conclusion of the
last Sikh War, and the annexation of the rich province of the Punjab, that
India once more showed a surplus in 1849-50. But the young Imperialist
who ruled the destinies of India soon lost the surplus.
Before the close of Dalhousie's administration the gross expenditure of
India went up by leaps and bounds to over thirty millions in1853-54; and
in spite of Dalhousie's annexations of Nagpur and other rich states, India
continued to show a deficit up to the year of his departure, 1855-56.
Lord Canning showed a surplus in the first year of his administration,
owing mainly to the annexation of Oudh, which had been effected
immediately before his arrival. But the surplus was changed into a heavy
deficit of ten millions in I 8 5 7-5 8, the year of the Indian Mutiny.
R. C. Dutt; Vol-2;Book-1;Ch:13
7. Indian Finance. Genesis Of The Indian Debt

The steady increase of the expenditure in England-the Home

Charges. Great Britain and India were equally gainers by the
establishment and maintenance of the British Empire in India, and
the cost of the Empire should have been shared by the two
countries.
It shows a excess of the income over the expenditure incurred in
India during the first twenty-one years of the Queen's reign from
18 3 7 to 1 8 5 8. Therefore, if India had been relieved of Home
Charges from the commencement of British rule, India would have
had no Public Debt when she was transferred from the Company to
the Crown in I 8 5 8, but a large balance in her favor. The whole of
the Public Debt of India, built up in a century of the Company's
rule, was created by debiting India with the expenses incurred in
England, which in fairness and equity was not due from India.
R. C. Dutt; Vol-2;Book-1;Ch:13
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