Book III, Chapter 8: Trade and Manufacture

CHAPTER VIII

TRADE AND MANUFACTURE

ALL the old industries, for which India had been noted from ancient times, had declined under the jealous commercial policy of the East India Company; and when Queen Victoria ascended the throne in 1837 agriculture was left the only national industry of the people. Little was done to foster new industries after the Crown assumed the administration of India in 1858; and the last decades of the century still found the Indian manufacturer and artisan in a state of poverty and decline. A few experiments were made from time to time, but not on an adequate scale, and not in a manner commensurate with the vast interests at stake.

Cotton.—Spinning and weaving were the national industries of India down to the commencement of the nineteenth century. The spinning-wheel and the hand-loom were universally in use; and it is scarcely an exaggeration to state that nearly half the adult female population of India eked out the incomes of their husbands and their fathers by the profits of their own labour. It was an industry peculiarly suited to Indian village life. There were no great mills and factories; but each woman brought her cotton from the village market, and sold her yarn to the village weaver, who supplied merchants and traders with cloth. Vast quantities of piece goods, thus manufactured, were exported by the Arabs, the Dutch, and the Portuguese; and European nations competed with each other for this lucrative trade with India. But when the East India Company acquired territories in India, they reversed this policy. Not content with the carrying trade between India and Europe, British manufacturers sought to repress Indian industries in order to give an impetus to British manufactures. Their great idea was to reduce India to a country of raw-produce, and to make her subservient to the manufacturing industries of Great Britain. How this policy was pursued, and how it ultimately succeeded, has been narrated in another work.¹

Later on, when power-looms had entirely supplanted hand-looms in Europe, Indian capitalists began to start cotton mills in their own country. This, again, aroused the jealousy of Lancashire manufacturers; and the fiscal policy pursued by the Indian Government in 1874 to 1879 has been told in a previous chapter. And the sad story will be continued to the close of the century in the succeeding chapter.

But hand-looms still survive in India to some extent, in spite of power-looms. The reasons are not far to seek. India is pre-eminently a country of small industries and small cultivation. Land in England belongs to great landlords; the agriculturists are mere farmers and labourers. But land in India belongs primarily to small cultivators who have their hereditary rights in their holdings; the landlord, where he exists, cannot eject them so long as they pay their rents. In the same manner, the various industries of the country were carried on by humble artisans in their own villages and huts; the idea of large factories, owned by capitalists and worked by paid operatives, was foreign to the Indian mind. And despite the great results which are achieved by capital, it is nevertheless true that the individual man is at his best,—in dignity and intelligence, in foresight and independence,—when he works in his own fields or at his own loom, rather than when he is a paid labourer under a big landlord or a wage-earner in a huge factory. And every true Indian hopes that the small cultivation of India will not be replaced by landlordism, and that something of the home industries will survive the assaults of capitalism.

Endeavours have been made to help the handloom weavers who still carry on their hereditary profession. Their methods are susceptible of improvement, and their output could be largely increased by the use of improved looms. Experiments are being made in different places, and specially in Madras. It is too early yet to say what the result will be; but it is confidently believed that, with necessary improvements, hand-looms will be found to answer, at least for certain descriptions of goods. Such a result would help millions of poor weavers, Hindu and Mahomedan, who have sunk to the lowest depths of poverty, and are the earliest victims of famines. And a civilised Government has no more sacred duty than to help these submerged classes, and revive one of the most ancient industries of India.

Silk.—Silk manufactures have declined from the days of the East India Company, and their export is insignificant. Tussur silk is grown in most parts of India, and quantities of fabrics are produced both for home use and for export. In Assam, silk still continues to be the national dress of women, and the industry is entirely a home one, each family weaving Sarees for its own use. Finer silks, produced by the mulberry-feeding worms, are obtained in Bengal districts, and some improvement has been effected by the adoption of scientific methods of testing the “seed” and rearing the worms. In the Punjab, however, the endeavour to reintroduce the cultivation of silkworms has ended in failure. In Kashmir, the industry is indigenous, and the State is endeavouring to develop it by the importation of sound “seed” from Europe. “The silk-weavers of India possess the very highest skill in their craft, and it is probable that under competent and energetic direction, with the assistance of capital, the industry could be revived and extended.”²

Wool.—The manufacture of coarse blankets, used by the poor, is carried on in many parts of India. The Shawl industry of Kashmir is practically extinct, so far as elaborate and artistic products are concerned; and such shawls are produced in only very small quantities, generally to order. The Punjab is still, however, the seat of a considerable woollen manufacture, and specially of woollen carpets. And the carpet industry of Madras is also important.

Woollen mills, conducted mainly by European capital and under European management, nearly doubled their production within the last decade of the century; and there were 594 looms and 22,986 spindles in 1901. The output of the mills is chiefly used for the army and the police.

Jute.—Bengal has virtually a monopoly of the cultivation of jute, the average yield of the crop being about twenty million cwt. One half of this produce is exported to Europe, while the other half is used either for the making of home-spun cloths or bags, or in the jute mills. There were 35 mills, 8218 looms, and 171,148 spindles in 1901, and the number of looms and spindles nearly doubled in the succeeding year.

Hands Employed.—But altogether mill industry in India is still in its infant stage, and the number of people who find employment in these industries is insignificant. In the year 1901 the cotton mills of India employed 173,708 hands; the jute mills employed 64,700 hands; and apart from indigenous home industries there was no other manufacturing industry which employed as many as 20,000 hands.

In the preparation of agricultural staples for the market, indigo factories employed 173,000 workers; jute presses, 20,000; cotton ginning, cleaning, and pressing mills about 52,000; timber mills, 8000; coffee works, 5000; and oil mills, 4000.

Iron and brass foundries employed 18,000 persons; tile factories, 10,000; printing presses, 13,000; lac factories, 5000; silk filatures and silk mills, 14,000; and paper mills about 5000. The numbers employed in woollen mills increased only 16 per cent. in the ten years ending in 1901.

Paper.—There were nine mills in 1901, and the amount of paper produced was 47 million pounds. The Government of India obtains from these mills most of its foolscap, blotting-paper, and note-paper, but imports about £15,000 worth of paper from Europe.

Brass and Copper.—The household vessels of the Hindus are generally made of brass, though Mahomedans often use copper. The brass industry is about the only indigenous industry which is still safe from foreign competition, though large quantities of enamelled iron ware, imported from Europe, are coming into use in Hindu households. It is satisfactory to learn from an official historian of Indian industries that “the continuance of the internal demand for brass and copper ware is assured; and the skill of the artificers is so great that, with proper direction and energetic development, a large expansion of exports to Europe is possible.”³

Wood Carving.—Apart from the work of the carpenter who exists in every Indian village and town, there is a large trade with Europe in small articles as toys, boxes, and the like, carved with artistic skill. Inlaying is also a notable art in India.

Tea.—The area under tea, of which nine-tenths lies in Assam and Northern Bengal, expanded 45 per cent. within the ten years ending in 1901. There was indeed over-production, and it has latterly become necessary to restrict the area under cultivation, and to reduce the quantity of leaf taken from the plant. The total yield of the crop in 1900 was over 197½ million lbs., while that in 1901 was 191½ million lbs. The export by sea from British India in the year 1901-2 is shown in the following figures:—

It will thus be seen that the world, outside the British Empire, does not favour Indian tea.

The “slave law” of India, by which labourers, imported to Assam, are bound by penal clauses to serve out their term of contract, continues to mark the tea industry of that Province with an indelible stain. Much oppression and many acts of cruelty are reported from time to time; but the Government of India does not care to brave the wrath of capitalists by withdrawing these penal clauses, and leaving the labour market free as in other industries. The condition of the labourers in the gardens is often wretched; and an endeavour made by Sir Henry Cotton, late Chief Commissioner of Assam, to raise the wages by one rupee a month, evoked the opposition of tea-planters, and did not receive adequate support from Lord Curzon. A compromise was effected; the proposed increase was reduced to half a rupee; and it was to come into operation after two years. The planters, on the other hand, suggested the imposition of a cess on the exported tea, the proceeds of which were to be used to promote the sale. The Government of India descended from its dignity by accepting this proposal, and thus constituting itself agents of tea-planters for the sale of tea.

The number of persons employed in tea industry in 1901 was 606,835 permanently, and 90,946 temporarily.

Indigo.—The competition of artificial indigo threatens this industry with extinction. This will necessarily be an economic loss to India; but there has been so much of oppression and coercion by indigo planters in connection with the growth and production of indigo, that the people of India view its extinction with perfect indifference, and even with satisfaction. The value of the indigo exported in 1895–6 was £3,569,700; in 1891–2 it fell to £1,234,800.

The number of indigo factories in 1901 was given as 898, besides some 3000 vats in Madras. The number of persons employed was given as 173,000, but this is not a complete record.

Sugar.—The large imports of bounty-fed beet sugar from Germany and Austria induced the Indian Government to impose a countervailing duty in 1899,—mainly in the interests of cane sugar from Mauritius and other British possessions. This checked the bounty-fed sugar for a time, but only for a time, as the following figures will show:—

It will appear from these figures that in the last year, 1901–2, imported beet sugar once more exceeded the cane sugar from Mauritius and other places. This was owing to developments in the Continental sugar-trade, and the rise of the “cartel” system. It was decided, therefore, to enact a further law to countervail the “cartel” bounty. Its effects have still to be seen.

Opium and Salt.—The Government continued to retain its monopoly over these articles. The revenue derived from opium declined within the last ten years of the century, while the salt revenue showed rather an increase.

It has been stated in a previous chapter that the salt revenue is derived firstly from a duty imposed on the manufacture of salt in British India, and secondly, from a duty imposed on salt imported from Europe or from the Native States of India. The task of levying a duty on salt imported by sea was easy enough. But in order to realise the duty on salt imported from the Native States, it was necessary to maintain an Inland Customs Line. In 1870 this Indian Customs Line extended itself across the whole of British India, from a point in the north-west of the Punjab to the northern frontiers of Madras. It was a huge material barrier, 2500 miles long, consisting of thorny trees and bushes, stone walls and ditches; and it was guarded by an army of 12,000 officers.

The first steps towards abolishing this system were taken by the Government of Lord Mayo. Mr. A. O. Hume negotiated an amicable arrangement with the Native States of Jaipur and Jodhpur, under which the sole right of manufacturing salt at the Sambar Salt Lake was made over to the Indian Government. The Government of Lord Northbrook then entered into an arrangement with Jodhpur, by which all important salt sources of that State were transferred to British management. The Government of Lord Lytton took further measures to abolish the Inland Customs Line, firstly, by making the duties approximately equal in the different parts of India, and secondly, by agreements with Native States in Rajputana and Central India, under which the British Government obtained leases and control of all the important sources of salt manufacture. The work was finally completed by the Government of Lord Ripon, which equalised the salt duty throughout India at the reduced rate of 2 rupees the maund, i.e. 2s. 8d. on 82 lbs. Unfortunately the salt duty was again raised to 2½ rupees the maund in 1888, and it remained at that high figure for fifteen years. In March 1903 it was reduced once more to 2 rupees.

Coal.—Coal is found over a very extensive area in India, and mines are worked in different parts of the country, mostly with European capital. The rapid increase in the industry, and in the annual output in recent years, is shown by the figures on the next page.

“These figures,” writes the official chronicler whom we have quoted before, “look very small if compared with the 219 millions of tons produced in the United Kingdom in 1901; but the amount is sufficient to meet the present Indian demand for coal.”⁵ The Indian railways use Indian coal almost exclusively; and less than 1 per cent. of the coal they used in 1902 was drawn from abroad. Iron and steel industries are largely helped by the Indian coal, and mills all over the country depend upon it. Coal is also largely used in towns as fuel for domestic purposes. The coal mines and quarries under the Mines Act, i.e. those which are not less than 20 feet in depth, gave employment to 85,361 persons in 1901.

Gold.—The production of gold in India is practically confined to Mysore, which produced 529,782 ounces in 1901; and this represents 99 per cent. of the Indian yield for the year. The labour employed amounts to 21,000 hands. A very small amount of gold is obtained by sand-washing in Northern India and Burma. The Wynaad fields of Madras have proved a failure; and the amount produced in the Nizam’s territory is small.

Iron.—The principal sources of ironstone are the Salem ores in Madras, the Chanda ores in the Central Provinces, and the Barakar ores in Bengal. Inquiries made by private and public agency have established both the quantity and quality of the Salem ore; but no large industry has yet commenced. The Barakar Works were started in 1865. After the failure of two companies, the Government ran the business at a loss, and then handed it over to the present company. Things are looking up; the production of pig iron has increased, and a steel plant has been set up. Negotiations are in progress for the development of the Chanda ore. The production of iron in India was 63,000 tons in 1901, of which 57,000 were produced in Bengal.

Petroleum.—Burma supplies 98 per cent. of the mineral oil produced in India, and the remainder is almost all obtained from Assam. The total production was only 5000 gallons in 1892, while in 1901 it had risen to 633,000 gallons. There is, however, a large demand for foreign oil in India; and the Russian product has displaced the dearer American product in the Indian market. Ninety-nine millions of gallons, valued at 2½ millions sterling, were imported in 1901–2, showing that the Burma produce does not supply even a hundredth part of the total Indian demand.

Rubies.—The far-famed ruby mines of Burma have as yet yielded little profit. In 1901 the Ruby Mines Company produced gems, rubies, sapphires, and spinels of the total value of £104,500. Jade to the value of £29,000 was exported in 1901–2.

Manganese, Mica, and Tin.—Manganese to the value of £100,000 and mica to the value of £70,000 were exported in 1901–2. Tin is found in Tavoy and Mergui in Lower Burma, and also in the Shan States in Upper Burma.

A vast deal of attention is naturally directed to the mill industries of India, to tea, indigo, and coffee, and to mining industries, as European capital is largely employed in India in these forms. From the figures given above, it will, however, be seen that the number of labourers employed in these industries bears no appreciable proportion to the population of India. The problem of improving their condition finds no solution in the encouragement given to British companies in India, or in a system of emigration. Where is the country on earth which could receive, in the next ten years or twenty years, even a tenth of the Indian population of three hundred millions? The real solution of the Indian economic problem lies in relieving agriculture from excessive and uncertain taxation; in fostering those indigenous industries in which millions of Indian artisans find employment in their villages; and in helping those nascent manufactures which the people are starting with their own capital in towns. The people of India welcome the employment of British capital for the development of the mineral resources and the new industries of India. But British statesmen view things through a false perspective when the interests of British capitalists in India loom larger in their eyes than the interests of agriculture, and of those humbler industries on which the Indian nation, as a nation, depends for its existence.

We now turn to the subject of India’s external trade; and the following table, compiled from Statistical Abstracts relating to British India, shows the total imports and exports of India during the last twenty-four years of the century.

The difference between the total imports and the total exports is the distressing anomaly of the Indian commerce. The difference mounted up to about thirty millions of tens of Rupees, equivalent to twenty millions sterling, between 1891-2 and 1896-7. It represents the annual Economic Drain from India, the amount she paid from her food supply and for which she received no commercial equivalent. Famines during the closing years of the century, and the price which England paid for using the Indian army in South Africa, reduced this Economic Drain to some extent; but even during the last four years of the century the average annual Economic Drain from India was about twenty million tens of Rupees, equivalent to thirteen millions sterling.

Trade of India with all Countries in Tens of Rupees.⁶

The character of India’s trade with the world will appear more clearly by an examination of her principal imports and exports. The table on the next page shows the principal imports.

Imports into India from all Countries, in Tens of Rupees.

In examining this table it is necessary to remember the varying value of ten rupees between 1885 and 1897. Ten rupees represented about sixteen shillings before 1885, and it only represented less than twelve shillings in 1895 and 1896. The large increase in the import of cotton manufactures between 1885 and 1897, as shown in tens of rupees, does not therefore represent a proportionate real increase. On the other hand the value of ten rupees has been fixed at 13s. 4d. since 1898; and the increase in cotton imports, and the decrease in machinery and mill works, since that year, are real. They show the baneful effects of the excise imposed on the mill manufactures of India, which will be fully described in the next chapter.

When every civilised Government on earth is endeavouring to help home manufactures, the Indian Government has cruelly repressed the infant mill industry of India under the mandate of Lancashire, even in respect of coarse cotton fabrics with which Lancashire does not compete. The results broadly stated are—a decline in cotton manufactures, a decrease in the demand for machinery and mill-work, and an increase in the import of cotton manufactures from 23 millions to over 27 millions of tens of rupees within three years.

Silk manufacture continues to decline in India in spite of the experiments which have been referred to before; and the import of manufactured silk increased from a million to 1½ million tens of rupees between 1898 and 1901. The import of woollen manufactures nearly doubled within that period.

Reference has been made to the legislation undertaken to repress the import of bounty-fed sugar into India. Its success is seen in the decline of sugar imports in 1898–99 and 1899–1900. But it has failed in the long run, and the import of 1900–1901 exceeded the import of any previous year in the history of India.

The import of hardware, cutlery, and plated-ware shows a steady increase. But India imports raw metals in larger quantities. In 1900–1901 she imported iron and steel to the value of over three millions sterling, and brass to the value of over six hundred thousands sterling.⁷ The only other large item of import, exceeding two millions sterling in value in 1900–1901 is mineral oil, mostly from Russia. The import of liquors exceeds a million.⁸

We now turn to India’s exports, and the following table shows the principal articles.

In examining the figures of this table it is necessary to bear in mind once more the varying value of the rupee. The apparent increase in the export of cotton and cotton goods, in grains, seeds, and other articles in the early ’nineties, is largely owing to the fall in the value of the rupee. We are on more safe ground from 1898 when the value of 10 rupees was raised to 13s. 4d. and ultimately fixed at that sum; and the increase in exports shown in the last four years of the table is real.

Cotton manufactures show only a slight increase. The unjust excise tax imposed on the rising mill industry of India retarded the natural progress of the cotton manufactures. Raw jute shows a steady increase from seven to nearly eleven millions of tens of rupees during the last three years of the century. The export of jute manufactures also increased from 5¾ millions to 7½ millions of tens of rupees.

The export of indigo has steadily decreased owing to the invention of artificial indigo in Europe; while the export of tea has steadily increased to nearly 10 million tens of rupees, or 6½ millions sterling.

Silk and wool are minor items, and have not been shown in the following table. The export of raw silk was only £354,102, and of manufactured silk only £119,203, in the year ending with March 1901. Raw wool to the value of £819,748, and wool manufactures to the value of £227,681, were exported in 1900–1901.

The export of rice, wheat, and other grains showed the most remarkable variations during the last four years of the century. The export was 14 million tens of rupees, or 10 millions sterling, in 1897–98, and it went up to 27 million tens of rupees, or 18 millions sterling, in 1898–99. Our readers, who have perused the previous chapters on trades and manufacture in the present work, will not be at a loss for an explanation. The trade of India is not natural but forced; the export of food grains is made under compulsion to meet an excessive Land Revenue demand. The year 1897–98 was a year of widespread famine in India, and millions of people died of starvation. Nevertheless, the Land Revenue was collected to the amount of 17 millions sterling; and cultivators paid it largely by selling their food grains, which were exported to the amount of 10 millions sterling in that calamitous year. In the following year the crops were good. The agriculturists sold large quantities of their produce to replace their plough cattle, and to repair the losses of the previous famine year. Unfortunately, too, the Government realised the arrears of the Land Revenue with a vigour as inconsiderate as it was unwise; and vast quantities of the new produce had to be sold to meet this pressing Land Revenue demand. Both these causes operated to increase the export of food grains to a figure which it never reached before. Those who judged the prosperity of India by its revenue collection were jubilant. A Land Revenue collection of over 18 millions sterling gave them the evidence they relied upon. The usual misleading statements were made in India, and in the House of Commons, about the recuperative power of India. Few cared to inquire if the enormous exports and the enormous Land Revenue collection had left any stores of food among the people.

The Nemesis followed soon. The following years were years of scanty harvests. Bombay and the Central Provinces had been denuded of their food resources. And those Provinces suffered from a three years’ continuous famine, which is unparalleled in the history of modern times.

Nature set a limit which the cultivators had not obtained from the moderation of their rulers. Population decreased in Bombay, and still more in the Central Provinces. Miles of cultivated land became waste. Jungle grew on homesteads, wheat lands, and rice lands. The Land Revenue demand of the Government could no longer be collected. Then, with a reluctant confession of blunder,⁹ the demand was revised. Both in Bombay and in the Central Provinces the demand was reduced in District after District. The Land Revenue in the years immediately succeeding did not reach 18 millions sterling. The export of the food grains has never reached 18 millions sterling since.

But the relief is only temporary. There is nothing to restrain Settlement Officers from screwing up the Land Revenue demand again on the first signs of prosperity. There is nothing to give an assurance to the people as to the limits of the State demand from the produce of their fields. A system which is virtually one of adjusting the demand to the utmost paying capacity of an agricultural population demoralises the nation, and makes any permanent improvement in their condition impossible. The people ask for some rule limiting Land Revenue enhancements to definite and specific grounds. The Marquis of Ripon granted them such a rule, but it was withdrawn the month after his departure from India. Lord Curzon has declined to grant them such a rule, as we have seen in the last chapter.

The facts stated above also show the unwisdom of judging the condition of the people of India by the volume of India’s foreign trade. Englishmen find this a fairly correct test in their own country, and make the natural mistake of applying it to India. Englishmen live to a large extent on their commerce and manufacture. The sale of their manufactures enables them to buy food from foreign markets. The profits of commerce and of the carrying trade add to their wealth. The volume of trade is a fairly correct index of their national income.

But the circumstances are different in India. The external trade is carried on by foreign merchants with foreign capital. The profits of the trade come to Europe and do not remain in India. The earnings of the foreign trade are not the earnings of the people. The volume of the foreign trade is not an index to their national income. In the year 1881–82, under Lord Ripon’s reign of peace and comparative prosperity, the total imports and exports of India were 83 millions sterling. In 1900–1901, a year of famines and distress, the total imports and exports were 122 millions. Who that knows India, or has heard anything of India, will say that India earned more, or was better fed, and was more prosperous, in 1900–1901 than in 1881–82?

Commerce, even when carried on by foreign capital and foreign merchants, is beneficial to a country. It brings in articles cheaper than the country can produce. And it also brings a higher price for the home-produce than can be obtained at home. In both these ways commerce is beneficial, even though the profits of trade go to other lands. But in India, even this benefit is restricted because her foreign trade is forced, not natural. The excise imposed on cotton manufactures restricts the production of articles which the country could produce. And the Land Revenue system of India, as well as the Home Charges, forces the export of food grains, much of which the country needs for its own population. Thus large imports of cotton goods into India are secured by restrictions on the Indian industry. And large exports of food are compelled by a heavy Land Tax and a heavy Tribute.

Footnotes