Colonial India                                                                                                                               Back to History Page
Plunder of India and the Industrial Revolution
Based on and with excerpts from India Today by R. Palme Dutt, People's Publishing House Pvt., Ltd. Bombay 1949.

During the middle ages, Indian products, in particular its famed textiles, were exported to Europe chiefly by the overland route through western India. At that time India was universally recognized for its high industrial development relative to the contemporary world standards. But with the capture of Constantinople, the bustling East-West trade center, by Turks in 1453 A.D., the overland trade was severely disrupted and the prices of Eastern commodities in the European markets soared. This led to the desperate European search for a sea-route to India. Year after year Europeans explored the west coast of Africa until in 1487 the Portuguese rounded the Cape of Good Hope. Ten years later, Vasco da Gama set out on a voyage and after picking up an Indian pilot on the African coast sailed for India. The way was open now and by the middle of the sixteenth century, Portuguese had established trading posts along the western Indian Coast. Soon to follow were the English merchants who, under the East India Company, secured permission from the Moghul emperor in 1612 to establish a trading depot at Surat.

The problem that faced East India Company from the outset was that England, at the time, had nothing of value to offer India in the way of products comparable in quality or technical standard with Indian products. In the middle of the eighteenth century England was still mainly agricultural. In 1750 the Northern Counties still contained less than one-third of the population; Gloucestershire was more thickly populated than Lancashire. The woollen industry was the main industry; in 1770 woollen exports, according to Baines' History of the Cotton Manufacture comprised between one-third and one-fourth of all exports. But wool was of no use to tropical India. Therefore precious metals had to be taken out to buy the goods in India. This had historically been the case of most of India's trading partners till the middle of the eighteenth century. Pliny reports that Roman trade with India, as far back as 31 B.C. put a heavy drain on the Roman reserves of precious metals.

The drain on precious metals that resulted from East India Company's early trade with India could not continue for ever. The English traders were thus beset with the problem of finding something that India would be willing to take in exchange for the goods they bought there. One of their first devices was to develop a roundabout trade to utilize the plunder from Africa and America, in particular the silver obtained by the sale of slaves in the West Indies and the Spanish America, to meet the costs of purchases in India.

By the middle of the 18th century, the Mughal Empire in India was disintegrating and the central authority was weakened as it faced challenges from local regional powers. In the course of a normal evolution this could have paved the way for the rise of bourgeois forces in India, whose foundations had been laid amongst the powerful manufacturing, trading and shipping interests in India. The English traders had been in India at that time for almost 200 years and they seized this opportunity to fight and intrigue for the territorial domination of India. In 1757 they declared war on the regional power in Bengal and their victory at battle of Plassey in 1757 brought a vast area in the east under their control.

As soon as the Company domination began to be established in India, the Company merchant was able to throw the sword into the scales to secure a bargain which abandoned all pretense of equality of exchange and the age-old problem of trading with India had been solved. The Company rule began with outright plunder and the wealth of India began to flood England in an ever-growing stream.

Immediately after, the great series of inventions, such as spinning-jenny and the steam engine, began in Europe which initiated the Industrial Revolution. The development of the age of inventions depended, not simply on "some special and unaccountable burst of inventive genius," as the leading authority on English industrial history, W. Cunningham, writes in his Growth of English Industry and Commerce in Modern Times, but on the accumulation of a sufficient body of capital as the indispensable condition to make possible the large-scale outlay for their utilisation. Previous inventions of Kay's fly-shuttle in 1733 and Wyatt's roller-spinning machine in 1738 came to naught because they couldn't be used for lack of capital. It was the plunder of India that thus set into motion one of the greatest revolutions of history - the Industrial Revolution. In his Law of Civilization and Decay, the American writer, Brooke Adams describes how it happened:

"The influx of the Indian treasure, by adding considerably to the nation's cash capital, not only increased its stock of energy, but added much to its flexibility and the rapidity of its movement. Very soon after Plassey, the Bengal plunder began to arrive in London, and the effect appears to have been instantaneous; for all the authorities agree that the 'industrial revolution,' the event which has divided the nineteenth century from all antecedent time, began with the year 1760. Prior to 1760, according to Bains, the machinery used for spinning cotton in Lancashire was almost as simple as in India; while about 1750 the English iron industry was in full decline because of the destruction of forests for fuel. At that time four-fifths of the iron used in the kingdom came from Sweden.

Plassey was fought in 1757, and probably nothing has ever equalled in rapidity of the change which followed. In 1760 the flying shuttle appeared, and coal began to replace wood in smelting. In 1764 Hargreaves invented the spinning jenny, in 1776 Crompton contrived the mule, in 1785 Cartwright patented the powerloom, and, chief of all, in 1768 Watt matured the steam engine, the most perfect of all vents of centralising energy. But though these machines served as outlets for the accelerating movement of the time, they did not cause that acceleration. In themselves inventions are passive, many of the most important having lain dormant for centuries, waiting for a sufficient store of force to have accumulated to set them working. That store must always take the shape of money, and money not hoarded, but in motion. Before the influx of the Indian treasure, and the expansion of credit which followed, no force sufficient for this purpose existed; and had Watt lived fifty years earlier, he and his invention must have perished together. Possibly since the world began, no investment has ever yielded the profit reaped from the Indian plunder..."

The spoliation of India was thus the hidden source of capital accumulation which played an all-important role in helping to make possible the industrial revolution in England. Once the industrial capital was established in England, it needed markets to sells its products to. It was again India which was forced, to absorb these goods to enable the industrial revolution in England to sustain itself. India had to be de-industrialized in order to achieve this. After the victory of English industrial capital over its mercantile capital, India's textile industry was destroyed leading to the destruction of its urban economy and the subsequent overcrowding in the villages and pushing India hundreds of years behind in its economic development.