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ENGLAND’S DEBT TO INDIA

A Historical Narrative of Britain’s Fiscal Policy in India

By LALA LAJPAT RAI Author of “Young India”

“The toad beneath the harrow knows Exactly where each tooth-point goes. The butterfly upon the road Preaches contentment to the toad.”

NEW YORK B. W. HUEBSCH 1917

PRINTED IN THE UNITED STATES OF AMERICA

AS A MARK OF THE AUTHOR’S DEEP RESPECT

AND

INDIA’S GRATITUDE, THIS BOOK IS DEDICATED

THOSE BRAVE, HIGHMINDED, AND HONEST ENGLISHMEN AND ENGLISHWOMEN WHO HAVE NOT HESITATED TO SPEAK THE TRUTH ABOUT THE EFFECTS OF BRITISH RULE IN INDIA THOUGH BY DOING SO THEY EARNED THE DISLIKE OF THEIR COUNTRYMEN,

AND

ON WHOSE TESTIMONY, PRINCIPALLY, THIS BOOK IS BASED.

LAJPAT RAI.

“ India will not remain, and ought not to remain content to be a hewer of wood and a drawer of water for the rest of the Empire.”

—J. Austen Chamberlain, Secretary of State for India, in the London Times, March 30, 1917.

PREFACE

THIS book is a kind of companion volume to my other book, “Young India.” In “Young India,” I have discussed British rule in India, from the political standpoint. In this volume, I have discussed its economic effects. There is not a single statement in this volume which is not supported by the best available British testimony, official and non-official. My own opinions and personal knowledge have been mentioned only incidentally if at all. Similarly the opinions of other Indian publicists have been kept in the background. It is a sad commentary on the prevailing moral code of the world that those who succeed in imposing their rule upon less powerful nations should also brand the latter as unworthy of credit. Thus every Britisher believes that an Indian critic of British rule is necessarily affected by the “inevitable racial and political bias” of his position, while he in his turn is entirely free from it!

In the ordinary course of nature, the man whom the shoe pinches is the best person to know about it but in politics the laws of nature are reversed. In judging of governments and rulers, it is they whose word is to be accepted and not that of the governed and the ruled.

Consequently to avoid that charge I have chosen to speak from the mouths of the English themselves.

Looked at from that point of view the volume lays no claim to originality. It is more or less a compilation from British publications, government and private. The case for India has before this been most eloquently put forth by Mr. Digby in his monumental work ironically called “Prosperous British India.” Particular phases have been dealt with by Messrs. Hyndman, Wilson and others from whom I have profusely quoted. My own countrymen, Messrs. R. C. Dutt and Naoroji, have done valuable work in this line. The works of the former,—“Early History of British Rule,” “India in the Victorian Age,” “Famines in India,” and “England and India,” published by Messrs. Kegan Paul, Trench, Trôbner and Co., of London, are monuments of his industry, research and moderation. Mr. Naoroji’s “Poverty of India” is a collection of the economic writings of that veteran Indian nationalist during half a century of his active political life. These works of Messrs. Digby, Dutt and Naoroji must for a long time continue to be the classics of Indian economics and no student of the latter can afford to neglect them. My obligations to them are unlimited.

I have made free use of the books of Messrs. Digby and Dutt, though I have refrained from quoting Mr. Dutt’s own language. At one time I thought of taking up the subject, from where they had left it in 1901; but in developing my ideas I decided that a change of arrangement also was needed to bring the matter within the grasp of the lay reader. Mr. Dutt has arranged his books chronologically, dealing with the same matter in several chapters, scattered all over the two volumes of his “Economic History of British Rule.” I have tried to include everything relating to one subject in one place, thus avoiding repetitions otherwise unavoidable. For example, I have given a complete history of the cotton industry from the earliest times to date in one chapter and so also with shipping and shipbuilding. Similarly everything relating to drain has been included in one chapter and so on. The book is thus, in my judgment, an improvement on those referred to above. It brings the whole subject up to date and makes it easily understandable by the ordinary lay reader. I would like to have added chapters dealing with finance and currency, famine insurance, banking, railway rates, etc., but the size which I fixed for this volume having already been exceeded, I must reserve these subjects for another volume, if needed.

There is talk of great adjustments being made in the British Empire, after the war. India also is on the tiptoe of expectations. The Jingo Imperialists in England and India are already making proposals which if accepted, are sure to cause further economic loss to India. Some want India to take over a part of the British war debt; others are looking with jealous eyes at India’s “hoarded wealth” — the existence of which is known only to them. What will happen no one can foretell; but one of the reasons which have impelled the writer to publish this volume at this juncture is to remind the Anglo-Saxon public how India has so far fared economically under British rule. Any fresh burden might tend to break the proverbial camel’s back. We know that the English will do what they please; yet we have dared to say: perchance it may fall on fruitful ground. The book is not written in a spirit of hostility to British rule. It is not my object to irritate or to excite. What I aim at is to give matter for thought and reflection and to supply a reason for the exercise of restraint in the determination of the fiscal policy which British statesmen may decide to follow towards India after the war. Great Britain has suffered huge losses in the war. As soon as war is ended, there will be a cry to make them up. No other part of the Empire offers such a field as India. She has the largest area and the largest population. She has no voice in her government and is helpless to make herself heard. She can neither check nor retaliate. What can be easier than to make her pay for the war? What this is likely to mean to India may be gathered from this volume. What feeling it will create in India may be imagined. The world is anxious to know how Great Britain is going to reward India’s loyalty and devotion. If the decision rests with men of the type of Lord Sydenham it is already given. He recommends the immediate and final rejection of all the demands made by India for post-war reforms as embodied in the memorandum of the elected members of the Viceroy’s council. These demands are extremely moderate. They fall far short of even home rule. Their rejection will be very distressing to India. We hope that wiser counsels will prevail and the statesmanship of England will prove that India did not pin her faith to British justice in vain. India has stood by England magnificently and some of the nationalist leaders have had a hard time in resisting the advances made by the enemies of Great Britain. Let us hope that they were not labouring under vain illusions and that Great Britain was sincere when she professed to stand for right and justice in international dealings. In the meantime British statesmen are very assiduously engaged in impressing on the neutral world that India is happy, prosperous, and the most lightly taxed country on earth.

For the benefit of the reader I reproduce the following interview which the Finance Minister of India is said to have given to a correspondent of the Associated Press:

“FINANCE MINISTER DENIES THAT INDIA GROANS UNDER TAX. TOTAL REVENUE, DISTRIBUTED AMONG 244,000,000 PEOPLE, SEVEN SHILLINGS PER CAPITA

“Simla, India, Dec. 20. (Mail correspondence to the Associated Press.) — So far from the people of India groaning under an enormous burden of taxation, India is one of the most lightly taxed countries on the face of the earth, according to Sir William Meyer, minister of finance for India, in response to the charges of over-taxation preferred by so-called extremists.

“The total revenues, imperial and provincial, for the current year, during which some additional taxation was imposed, amounted to £86,500,000, Sir William said, and this sum distributed among the 244,000,000 people of British India gave a resultant contribution per capita of only seven shillings. He pointed out that in three other Asiatic countries, Japan, Siam, and the Dutch Indies, the rate per head was much higher, being 23 shillings in Japan, 13 shillings 4 pence in Siam and 11 shillings 3 pence in the Dutch Indies.

“The finance minister said the land revenue has been one of the points upon which opponents of the government have been most bitter, it being claimed that the farmer was kept in poverty by taxation. Sir William stated that of the total revenue of £86,500,000 for this year, about £22,000,000 was derived from the land, India being mainly an agricultural country.

STATE TAKES UNEARNED INCREMENT

“According to immemorial traditions in India the state has always claimed a share in the produce of the soil, he continued. At the close of the eighteenth century the state share was commuted for a fixed money payment in various tracts, mostly in Bengal, but over the greater part of India we revise the money value of that share every 30 years or so with reference to the increase, or possible decrease, if that should occur, in the value of the agricultural produce. The state thus takes to itself a share of what is known to economists as the unearned increment, a policy that ought to find favour with enlightened socialists. Theoretically, after making liberal allowance for cultivation expenses, the state share is one-half of the resultant net profit, but as a matter of fact our recent settlements have been in practice much more lenient than this, and the amount we take is much less than was exacted by previous native rulers. Liberal remissions are also given when crops suffer from drought, flood or other calamities.”

Let the reader study this pronouncement in the light of the facts disclosed in this volume. We will not forestall his judgment nor point out to him the misstatements with which the interview bristles. Let him only, judge of a statesman, giving the incidence of taxation without stating the figure of income. The burden of taxation always goes with the capacity to pay. If a man earning $10 a year pays about $2 (7s.) in taxes can he be said to be the most lightly taxed person in the world? Yet it was only last year that this finance minister added to the burden of taxation and raised the tax on one of the great necessities of life — salt. This he did in spite of the universal opposition of the country and the results as reported by the press are most disheartening. The price of salt has risen considerably beyond the means of the people to pay, and there is a general cry of pain.

Will the people of England, with whom the ultimate responsibility for the government of India rests, look up and compel their statesmen to put into practice the principles for which they say they have been fighting this war? We will wait and see.

I tender my acknowledgments to the numerous writers whom I have quoted as also to the publishers of books and magazines referred to by me. The manuscript has been very kindly read for me by Professors E. R. A. Seligman and H. R. Mussey of Columbia University, New York, as also by my friend Dr. Sunderland. Professor H. R. Mussey has also read the proofs. My acknowledgments are due to them for valuable suggestions. The writing of this book has been made possible only by the courtesy of the librarians of Columbia University, whose uniform kindness I cannot sufficiently admire.

LAJPAT RAI.

New York, 10th February, 1917.

A WORD ON REFERENCES

It will be observed that no uniformity has been maintained in the spelling of Indian names. The reason is that we have not altered the original spellings of the different quotations given. With regard to the following names, use of a single work is indicated when the author’s name is used instead of the work by title.

Mill always means “The History of British India,” by James Mill. Torrens always means “Empire in Asia,” by W. M. Torrens, M.P. Thorburn always means “The Punjab in War and Peace,” by S. S. Thorburn. Blunt always means “India under Ripon,” by Wilfred Scawen Blunt. Loveday always means “The History and Economics of Indian Famines,” by A. Loveday. Morison always means “Economic Transition in India,” by Sir Theodore Morison. Baines always means “Baines’ History of Cotton Manufacture.”

It may be stated generally that italics in quotations from other authors are ours unless the context shows otherwise.

With regard to Indian currency, it must be kept in mind that a rupee consists of 16 annas, an anna being equivalent to an English penny or two cents in American money. Three rupees are thus approximately a dollar in American money, and fifteen rupees make one English pound sterling.