Demand and supply are the driving forces behind any consumer-based/market economy. The significance of generating demand and supply is paramount to understanding the metrics of economic growth. Sugar was one of the primary exports of the Dutch West India Company, and this enterprise was very much based on stimulating and satisfying the demand for sugar back home in the West Indies. The British Empire was built around the idea of trade, in fact, the seminal formulation of the concept of an Empire, for the British, was based on the context of trade, as opposed to governance. My focus in this article is to investigate the economic motivations for the British to come and stay back in India.
The British were stimulated by an admiration for the unknown, a yearning to experience the exotic, and most importantly, affordability and profitability. Spices were considered to be a status symbol in Britain, and for a long period in time, they were restricted to the upper-class. They were characterized to have a magical aura about them, which was in virtue of their origin from beyond the known world. The significance of that can be expounded by the relative value possessed by these spices. After the place of origin for pepper had been located, the East India Company (EIC) was chartered in 1601. By 1603, the EIC under James Lancaster brought a million pounds of black pepper (1/4 the total demand in Europe) back to London, making spices no longer just limited to the rich and wealthy, but present in surplus amounts. Black pepper became a household staple. This could be demonstrated through its pairing with salt, which is still evident in the contemporary world. This relative value of spices can be demonstrated through the re-exportation business. The domestic British market could not satiate the supply of black pepper that was imported into the country via the EIC, and this gave rise to the re-exportation sector that came to become a significant aspect of Britain’s economy. Not only did the British now get access to spices without the mediation of the Arabs or the Dutch, but this also enabled them to capitalize on pre-existing trade routes and create new ones for their profitability.
Apart from black pepper, cloves and nutmeg, which were spices been historically traded between India and Indonesia, were also coveted by the British. Black pepper grew in southwest India, but cloves and nutmeg came from islands in Indonesia, and in order for the British to acquire nutmeg and cloves, they had to conform to these pre-existing patterns of trade. Indian textiles were a prized possession in Indonesia, hence the British established a system by which they bought textiles in exchange for bullion from a range of commissioned tailors in British factories in Surat (West) and Masilputanam (East), and further traded these textiles for nutmeg and cloves in Indonesia. The surplus black pepper, cloves and nutmeg (and other spices such as saffron) were re-exported from London, as mentioned before, to the Baltic countries and Eastern Europe, introducing new trade routes.
Through this, we can understand how the British increased their economic productivity, both in terms of the consumer market and in their export business by virtue of their interaction with spices in Indonesia and India, along with textiles exclusively in India. Without the trade of Indian textiles, the British would not be able to, effectively and economically speaking, acquire nutmeg or cloves and more importantly have a leg up in marketable goods to trade. A reason why the British came to India clearly was for its spices, but is that really all it took to get them to remain? Profits are clearly a motivating factor in the context of the points I have made above, but another factor was affordability. These ventures were ultimately chartered in order to make products by their colonialistic enterprises more affordable back home, therefore increasing domestic British demand.
Spices brought the British into India, but textiles convinced them to stay. This is significant in order to understand the diverse nature of value associated with Indian textiles, as they were prized possessions to many: the aforementioned Indonesians for one, followed by the British themselves in a manner that was greater than domestic consumption. Europe as whole valued Indian textiles due to their appeal in domestic decoration. Moreover, the affluent developed a taste for chintz, calicoes or muslin textiles, which were lightweight cotton fabrics with floral and baroque patterns donned over it. The slower perishability and ease of handling these fabrics also outweighed those of woollen fabrics, which were commonplace in Britain at the time and perished faster, while also being trickier to clean. Based on this, the middle and lower classes found Indian fabrics more appealing in contrast to indigenous woollen fabrics or Chinese silk ones. Silk, while having a more luxurious feel to it, was very hard to come across since the Chinese were very cautious when it came to dealing with the British, and mandated a limited amount of stock to be sold to them. Unlike India, the British were not allowed to set up their own factories in China. Furthermore, Indian textiles were also cheaper compared to silk and were embroidered and weaved to the liking of the British.
The most shocking utility of Indian textiles (in a present-centred view) was its exchange for Western African slaves by the Royal African Company (RAC) in the 1700s. This demonstrates the strange utility of Indian textiles in terms of trade, especially in the context of something like slavery, which at that point in time was considered to be moral and “normal”. For the British at that point in time, it was a smart manipulation of trade channels to optimize their profits. Through this, we can further understand the relative value of Indian textiles and how these fabrics had a two-fold effect on trade. The high relative value and profits from Indian textiles made slaves in West Africa and spices in Indonesia more affordable, and the value saved from this as well as through profits from ventures like slave trade in the Atlantic basin and the re-exportation of spices and textiles were compelling enough reasons for the British to stay in India and utilize its resources.
The 1783 loss of the American colonies at the hands of the British compelled them to find a new source of income. This enabled them to look towards China to increase trade. Tea was a primary export from China, which, between the years of 1700-1744, took over textiles as the EIC's primary trading commodity. The rationale for this was based on the increased permeation of colonial goods among the middle and lower classes in Britain, which enabled the spike in demand of two goods that were complementary to their manifestation as colonial commodities: sugar (from the West Indies) and tea (from China). Liberally sweetened tea was a hallmark of British consumption, therefore the demand for this combination was very high. However, the British did not have any commodity that could be directly traded for tea, aside from Indian textiles and certain marine goods. There were a limited amount of commodities that the Chinese were interested in, which were not enough to meet the demand of 15 shiploads of tea per year as posed by Britain.
Based on this, the British looked at the consumption patterns of Chinese people living in Indonesian and Malay ports. They noticed that Chinese traders had a steady demand for opium. Based on this, they formulated their new trade policy with China, focusing on opium. The Chinese affluent, much like the affluent in Britain with their tea accessories, would have a range of prized accessories ranging from boxes to store their opium, to pipes with fancy designs to smoke it. In fact, smoking pure opium was considered to be a sign of prosperity in China at that point in time. This Chinese liking for opium also had an effect on the growth of opium production in the Indian region of Patna.
The peasant population in India was already involved in the production of cash crops to sell to the EIC, such as indigo and cotton for example. Each September, the EIC issued licenses for poppy production, which is significant to understand the production and distribution process. Along with licenses, the company also issued a line of credit of 5-6 million rupees, in 1773, to fund the production of poppies. The cultivation of poppies was a very labour-intensive process; it required small incisions to be made on the head of the plant, following the collection of the paste that is secreted in bowls. Along with this, there was a market limit set for the cultivation of poppy at 5 rupees per seer (5 oz). This rendered the crop-growing peasants into a cash-based economy, while also preventing them to profit from any rise in the price of the poppy. The establishment of an export price detached from the market value allowed the British to exploit the labour-intensive production of poppy to their profit. This can be further corroborated by the price at which the British sold poppy: a chest of poppy, in 1881, was auctioned for 1362 rupees, while its cost price was 370. Through this, we can understand how the British profited from this venture.
Before assigning licenses to merchants to trade with China legally, private merchants were made to sign agreements that obliged them to pay the product of their trade to the company’s Canton treasury. This move can be considered as crafty economic manipulation by the British to maximize their profits, by exploiting both India and China. Opium was exchanged for silver - this was significant, as the same silver was also used to buy tea. The British were reluctant to spend their own silver on tea, as not only did they not have enough, but it was also considered as a bad practice. In exchange for silver, Merchants were issued credits of exchange by the Canton board. These credits could be cashed in with the company in Bengal or the company court in London. Canton receipts were registered in the Spanish dollar, which had a very generous exchange rate to the Sterling Pound. Through this proxy currency and exchange, we can understand how the British siphoned back the money earned in India back to their home base. A similar system was put in place for cotton too. Therefore, the product of Indian labour was cashed in by the British by virtue of this system, ranging from setting a fixed price to the proxy currency that siphoned the monetary gains of the trade back to London.
Through the aforementioned narrative, we can understand that the economic justifications of the British choosing to come and remain in India ranged from affordability to profitability. They came for spices, stayed back for the textiles, and profited off the sale of opium in order to sustain their demand for tea. However, this is not to say that the colonial goods mentioned in this article were exclusively the only ones traded, there were also other goods available. The yearning to experience the exotic and explore the unknown faded away after the discovery of the “world beyond”. Then came the time to profit, exploit and set the foundation for the British Raj.
References
Collingham, L. (2018). The Hungry Empire: How Britan’s Quest for Food Shaped the Modern World. 1st ed. London: Penguin Random House.
Kwat, N. (2019). Colonial Exploitation in India: Forms and Consequences. [online] Economics Discussion. Available at: http://www.economicsdiscussion.net/india/colonial-exploitation/colonial-exploitation-in-india-forms-and-consequences/19005 [Accessed 31 Jul. 2019].
Thakur, K. (2013). BRITISH COLONIAL EXPLOITATION OF INDIA AND GLOBALIZATION. Proceedings of the Indian History Congress, 74, 405-415. Retrieved from http://www.jstor.org/stable/44158840
Image Credit: Spices, Opium, Textiles and Tea