Summary
Chapter-3
The East India Company: From Trader to Diwan
In a pivotal moment on August 12, 1765, the Mughal emperor bestowed upon the East India Company the title of Diwan of Bengal. Though the actual event was likely modest, depicted in a grandiose manner in commissioned paintings, it marked a significant shift in British rule. Transitioning from a mere trading entity to the chief financial administrator, the Company assumed responsibility for managing the territory’s finances. This included organizing revenue resources to meet escalating expenses while ensuring a steady supply of essential goods for trade. As an outsider wielding authority over indigenous territories, the Company treaded cautiously. It recognized the need to pacify local rulers and elites while consolidating its own power. Striking a balance between control and cooperation became imperative.
Colonizing the Countryside: Strategy and Implementation
The Company embarked on a strategy of colonial expansion, gradually extending its influence over rural areas. This involved redefining land rights, imposing taxes, and regulating agricultural production to suit its commercial interests. To sustain its burgeoning empire, the Company exploited local resources and labor. It imposed revenue systems that extracted wealth from the land, often at the expense of indigenous communities. The focus shifted from trade to territorial control and economic dominance.
The Company faced resistance from indigenous elites and peasantry alike. Balancing coercion with co-option, it sought to neutralize dissent while preserving its hegemony. Collaboration with local power brokers became essential for maintaining stability and control.
Revenue Challenges and Economic Crisis
The East India Company, despite holding the position of Diwan, prioritized its trading interests over establishing a systematic revenue collection system. Its focus was on maximizing revenue and acquiring textiles at low costs. This approach led to a doubling of goods purchased within five years, financed by Bengal’s revenue.
Introducing the Permanent Settlement
Facing economic turmoil and a devastating famine in 1770, the Company realized the need to stabilize agriculture. After lengthy debates, it implemented the Permanent Settlement in 1793. This settlement recognized zamindars as revenue collectors, fixing their payments permanently to ensure revenue stability and incentivize land investment.
Cornwallis was the Governor- General of Bengal when the Permanent Settlement was introduced.
Challenges of the Permanent Settlement
The Permanent Settlement, implemented to establish revenue stability, encountered unforeseen hurdles. Zamindars struggled to meet the fixed revenue demands, leading to many losing their estates through Company-organized auctions. Despite rising market prices benefiting zamindars by the early 19th century, the Company couldn’t adjust its fixed revenue demands, causing financial stagnation and discontent among landowners and cultivators alike.
The Emergence of the Mahalwari Settlement
In response to the inherent flaws of the Permanent Settlement, Holt Mackenzie devised the Mahalwari system in the North Western Provinces around 1822. This innovative approach aimed to preserve the village as a social and economic unit. Under the Mahalwari system, revenue collection underwent periodic revisions instead of permanent fixes, allowing for adjustments based on changing agricultural conditions and market dynamics. Additionally, the responsibility for revenue collection shifted from zamindars to village headmen, fostering a more equitable and flexible revenue administration. This shift aimed to alleviate the oppressive burden on cultivators while ensuring a steady revenue stream for the Company.
The Introduction of the Ryotwari System: Munro System
In the British-controlled regions of South India, a departure from the Permanent Settlement led to the establishment of the ryotwari system. Initially experimented with by Captain Alexander Read in areas acquired after conflicts with Tipu Sultan, this system was further developed and implemented by Thomas Munro across South India. Unlike in the north, where zamindars traditionally managed revenue collection, Munro believed in direct settlement with the cultivators, known as ryots, who had cultivated the land for generations. Each ryot’s fields were meticulously surveyed before revenue assessments were determined, with the British aiming to play a paternalistic role in safeguarding the interests of the ryots.
Challenges and Discontent
Despite noble intentions, the implementation of the ryotwari system faced significant challenges and generated discontent among the rural populace. Revenue officials, driven by the desire to boost land revenue, often set excessively high demands that the peasants could not afford to pay. This led to widespread unrest as ryots fled their villages, leaving many areas deserted. Contrary to optimistic expectations of transforming peasants into prosperous farmers, the reality painted a grim picture of economic hardship and disillusionment. The envisioned prosperity remained elusive as the new system failed to deliver the promised benefits to the ryots, exacerbating their plight instead of alleviating it.
Expanding Crop Cultivation for European Markets
The British administration recognized the potential of Indian agriculture not only for revenue generation but also for supplying crops in demand in Europe. Starting from the late eighteenth century, the East India Company endeavored to promote the cultivation of opium and indigo. Over the ensuing century and a half, various regions of India were coerced or convinced to produce crops tailored to European preferences, including jute in Bengal, tea in Assam, sugarcane in the United Provinces, wheat in Punjab, cotton in Maharashtra and Punjab, and rice in Madras.
Meeting European Demand: The Story of Indigo
The British employed diverse strategies to expand crop cultivation to meet European demands. Taking the example of indigo, a crucial dye used in textile production, reveals the intricate dynamics at play. Indigo, sourced primarily from India, was vital for its rich blue color, preferred over the paler hue produced by woad, a European alternative. European cloth dyers, facing competition from Indian indigo, lobbied their governments to restrict its import. However, by the seventeenth century, relaxed import bans led to increased cultivation of indigo in colonies like St. Domingue, Brazil, Jamaica, and Venezuela. As British industrialization boomed in the late eighteenth century, the demand for indigo surged further, prompting a quest for new sources as existing supplies faltered.
The Rise of Indian Indigo
Indian indigo, known for its superior quality, had been used in European cloth manufacturing since the thirteenth century. Despite its high price and limited availability, it gained popularity due to its vibrant color compared to the dull hue of woad. European cloth dyers eventually convinced their governments to lift import bans on indigo, leading to its widespread cultivation in colonies. By the late eighteenth century, Britain’s growing textile industry drove up the demand for indigo, intensifying efforts to secure new sources amidst supply shortages from the West Indies and America.
The Search for Alternative Sources
With a booming demand for indigo, European cloth dyers sought new avenues for procurement. India emerged as a primary source due to its established indigo cultivation and superior quality. British traders capitalized on India’s indigenous knowledge of indigo production, fostering its expansion to meet European needs. Despite initial resistance from domestic producers, India’s indigo production flourished, cementing its status as a crucial supplier in the global textile market.
Indigo Expansion in Bengal
The East India Company, responding to the surging demand for indigo in Europe, sought to increase indigo cultivation in India. From the late eighteenth century, Bengal witnessed a rapid expansion of indigo cultivation, with Bengal indigo dominating the global market by the early nineteenth century. Initially, only about 30% of imported indigo in Britain was from India in 1788, but this figure soared to 95% by 1810.
Investment and Expansion
Commercial agents and Company officials ventured into indigo production, with many leaving their positions to focus on indigo business. Scotsmen and Englishmen, enticed by lucrative prospects, migrated to India to become planters. Those lacking funds could secure loans from the Company or emerging banks. However, the expansion of indigo cultivation faced significant challenges.
Nij and Ryoti Cultivation
Indigo cultivation was carried out through two main systems: nij and ryoti. Nij cultivation involved planters directly controlling land, either purchased or rented, and employing hired laborers. However, expanding nij cultivation posed challenges due to limited availability of fertile lands and conflicts with existing land occupants.
St Domingue, August 1791, painting by January Scuhodolski. Photo Source: Wiki
Challenges of Nij Cultivation
Planters struggled to acquire large contiguous plots for nij cultivation as fertile lands were already densely populated. Attempting to lease surrounding lands often led to conflicts with peasants. Additionally, mobilizing labor was difficult as it clashed with the timing of rice cultivation, requiring substantial investment in ploughs and bullocks, which were scarce during peak cultivation seasons.
Ryoti System
Facing constraints in nij cultivation, planters turned to the ryoti system, wherein ryots (cultivators) were coerced into signing contracts to cultivate indigo on their lands. These contracts obligated ryots to allocate at least 25% of their land for indigo cultivation in exchange for cash advances from planters. Under this system, planters provided seeds and equipment while ryots managed cultivation tasks.
The Cycle of Exploitation
Upon delivering the crop to the planters after harvest, ryots received new loans, perpetuating the cycle of debt. However, they soon realized the harshness of the system as they received low prices for their indigo and found themselves trapped in endless debt cycles. Planters dictated that indigo be cultivated on prime soils preferred by peasants for rice, further exacerbating the situation. Additionally, indigo cultivation depleted soil fertility, rendering the land unsuitable for rice cultivation after harvest.
The “Blue Rebellion” and Its Causes
In March 1859, a widespread rebellion erupted among indigo ryots in Bengal, fueled by discontent and oppression. Ryots refused to grow indigo, withheld rent payments, and launched attacks on indigo factories armed with traditional weapons. Women joined the resistance, employing household items as makeshift weapons. The rebellion stemmed from intense oppression and exploitation under the indigo system, exacerbated by the coercive tactics employed by planters and the depletion of soil fertility due to indigo cultivation.
Support and Sympathy
The rebellion gained momentum as ryots felt supported by local zamindars and village headmen who mobilized them against planters. Zamindars, resentful of planters’ encroachment on their power and land, urged ryots to resist. Moreover, ryots believed that the British government, concerned about potential uprisings after the 1857 Revolt, would back their cause. Government actions, including a tour by the Lieutenant Governor and a notice by magistrate Ashley Eden, were interpreted as signs of support for the rebellion.
Government Response
To quell the rebellion, the government deployed the military to protect planters and established the Indigo Commission to investigate the indigo system. The Commission condemned planters’ coercive methods and declared indigo production unprofitable for ryots. While ryots were directed to honor existing contracts, they were also granted the right to refuse future indigo cultivation, marking a significant victory for the indigo peasants and the end of the oppressive indigo system.