British Imperial Railways in 19th Century India

Very good paper about the contribution of railways to the development of India
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  British Imperial Railways in Nineteenth Century South AsiaAuthor(s): Laxman D. SatyaSource: Economic and Political Weekly, Vol. 43, No. 47 (Nov. 22 - 28, 2008), pp. 69-77Published by: Economic and Political Weekly Stable URL: . Accessed: 09/07/2014 09:34 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at  .  . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact  .  Economic and Political Weekly  is collaborating with JSTOR to digitize, preserve and extend access to  Economic and Political Weekly. This content downloaded from on Wed, 9 Jul 2014 09:34:59 AMAll use subject to JSTOR Terms and Conditions  British mperial Railways in Nineteenth Century outh Asia LAXMAN D SATYA The massive redatory nd exploitative ature f he imperial ailway roject nder he facade of Britain's benevolence o the people of ndia ould not have been further rom he reality f he material ondition of he masses under olonial hegemony. his paper undertakes comprehensive nalysis f he British imperial ailways uring he second half f he 19th century. uch related spects as the development of he colonial conomy, he role f finance apital, the comparative pread ffect, ritish onopoly nd colonisation f he ndian conomy, abour n the railway rojects, olonial orestry, amine nd disease, etc, re dealt with t some length. Laxman Satya s at the Department f History, ock Haven University f Pennsylvania, S. 1846, the revenue commissioner f Bombay, homas Williamson wrote to the chairman of the Great ndian Peninsular ailway ompany n London tating hat, The great runk-line, unning y he Malseje Ghaut n the direction f Nagptir, ould be most direct which ould possibly e selected o connect ombay o Calcutta. Commercially, t would be best for he cotton f Berar, while for he first 20 miles from ombay e would proceed n the mmediate irection f he military tations f Ahmed- nuggur, aulna nd Aurangabad.1 Nothing ould be more bvious han he win urpose f olo- nial railways tated o early nd so clearly bove, e, commercial and military. hese two objectives et the tone for he mperial railway roject ntil he end of the British aj. Four years ater, the same company ndertook he construction f he very irst 20-24 miles railway ine from ombay o Thana completed nd opened n April 853. By 1900, over 4,000 miles f racks ad been aid.3 his normous roject as financed ntirely y British private nvestment apital. 1 Imperial Finance and the Colonial Railway Project Private ritish ompanies with he trong acking f he govern- ment f ndia not nly uilt ailways ut lso owned hem. here were n average ,405 miles under onstruction very ear ntil the end of the century.4 ome 150 million ounds-sterling as invested n ndian railways y the end of he 19th entury. his became he ingle argest nvestment n the British mpire. he government f ndia became he guarantor o the railway hare- holders ho were mostly ritish. rivate ompanies ould uild and operate heir espective ines n different egions f he ub- continent ith guaranteed per cent return n their tock- holders' nvestment ssured y he ndian evenues f he mpire. And between 1869 and early 1880s, the government f ndia itself uilt ailroads or rivate ritish ompanies. ifty million pounds-sterling rom ndian revenues were set aside by the colonial state to meet the guarantee irrespective f the company osses.5 The guarantee ystem romised ts hareholders hat f he companies erformed oorly, he taxpayers f ndia would pay for he oss. Thus he ntire rofit ent o the railway ompanies and their nglish hareholders hile he oss was borne y the Indian eople. imply ut, his was a heads-I-win, ails you-loose proposition .6 he deployment f British apital n uch manner was an example f private nvestment t public isk . y 1870s, the outflow f interest ctually xceeded the inflow f fresh capital nto ndia.7 And by he end of he 19th entury, he otal 69 Economic Political weekly H5EQ November 22, 2008 This content downloaded from on Wed, 9 Jul 2014 09:34:59 AMAll use subject to JSTOR Terms and Conditions  SPECIAL ARTICLE - - - - - ~~=~ - - - -= cost f ndian ailways mounted o 350 million ounds-sterling, the argest utlet or he xport f British apital.8 Under he guarantee ystem, ll contracts ere given nly o British ompanies.9 he government f ndia provided ree and and other facilities ncluding ecruitment f cheap labour.10 Almost ll private apital pent n ndian ailroads as raised n Britain. he railway hares for ndian investments ould be traded nly n London tock markets. pparently, It was the pol- icy f he railroad ompanies, he East ndia Company, nd the British overnment o hire contractors nd discourage ndian enterprise .11 he absolutely isk ree ature f he British nvest- ment meant hat, The ailway rofits, hich ould have financed India's wn development, ent nstead nto he pockets f nves- tors n Britain .12 he annual ribute f ndia o Britain mounted to about 5 million ounds-sterling nd Britain's mpire n ndia became great sset o the rown.13 ith reliable ebt ervice, the railway apital market n London hrived lthough nvest- ment n rrigation ould have been far more roductive han his kind f ailway xpansion.14 The guarantee ystem ontributed ubstantially o the drain of funds from he subcontinent. t naturally rompted more spending n construction er track kilometre han ocal condi- tions warranted. t also created profitable onditions or ven wasteful onstruction hat urther ncreased he ubsidy nd the drain. The unprofitable ines depended or heir ery xistence upon the guarantee, hich ncreased he drain. Had the drain not xisted, t s unlikely hat rivate apital n such large cale would have ever been invested n Indian railway roject. he money aid out f ndian ax revenues o British nvestors n ub- sidies was substantial. t is estimated hat between 1849 and 1900, total f Rs 568 million as paid out.15 Recurring rade surpluses for which the people of India received no return marked he steady ncrease n the drain throughout he 19th century. or example,, ust for the year 1882-83, he balance of payment based on railways lone amounted o 4.14 per ent f he ndian national ncome. What appens o country hich ear n and year ut oses uch sizeable art f ts np o nother, s ndia id uring he ntire eriod 1858-98 and, n fact, ight rom 757)? he act hat ndia ad o have a rate f aving f per ent f ts national ncome ust o pay he tribute.... uch ontinuous oss f avings ad crippling ffect n he economy. here would nvestments ome from o stimulate ny expansion f he conomy, hen he ulk f he ossible avings as annually ost.16 India was a captive economy made to serve Britain's economic eeds. 2 Colonial Economy nd Railways The foundations f his olonial conomy ere aid well before the ntroduction f railways. he railway nly trengthened his foundation. If we can cheapen arriage, e may reatly ncrease the mports f foreign rticles nto he nterior; nd in a corre- sponding egree, xport otton nd other gricultural roduce. 17 This observation ade by n East ndia Company gent n mid- 18405 aptly ums up the fundamental haracteristic f the colonial conomy f ndia n the 19th entury. t s not urprising that he cotton arons of Lancashire were the most vehement supporters f the ndian railway roject.18 hey had a double objective: irstly, o sell their heap machine made cloth o the millions f ndian masses nd secondly, o ecure more eliable source f. aw cotton han he United tates. Karl Marx n 1853 prophesied, . the nglish millocracy ntend o endow ndia with railways with the exclusive iew of extracting t diminished expenses the cotton and other raw materials for their manufactures .19 The railways ushed ndia nto n era of lassical olonialism. This was characterised y Indian exports f agricultural aw materials nd imports f British manufactured roducts. ndia's economy was twisted to fit this classical colonial pattern. Throughout he 19th entury, ritain njoyed trade urplus with ndia. But t had a growing eficit n ts verall nternational trade with ther ations, hich were offset y ubstantial ndian export urpluses. hese exports rimarily onstituted gricul- tural raw materials uch as cotton, ute, tea, coffee, heat, il seeds, pium, ugarcane, obacco, tc, while mports ere made up of mostly lothe from nglish mills,20 ailway nd military hardware. Thus Indian economy xclusively erviced British economic nterest. The British evised rather lever way o transfer uge ums of money rom ndia to England. Each year funds were trans- ferred o pay ff ebt n secure nd profitable apital nvestments on the railways.21 ut this was just the tip of the ceberg. he colonial ystem equired he annual transfer f funds rom he colony o the metropolis o meet n array f home harges .22 These were funnelled hrough ndia's rising xport urplus. Home charges ncluded he cost of the ecretary f tate's ndia office n London, osts f wars at home nd abroad, urchase f military tores, ensions or ritish ilitary nd civilian fficials and for ervicing he guarantee ystem. y the end of the 19th century, he visible ome harges nnually mounted o between 17 nd 18 million ounds sterling. he chief tems n the bill n order f magnitude ere guaranteed ailway nterest, ilitary expenses, nterest n ndia debt, urchases f government tores and pensions. n addition o this, here were private emittances made by British fficials erving n ndia nd transfers f profit y British erchants nd invisible harges or ervices, ncluding shipping, anking nd nsurance.23 ll of his was extracted rom the ndian peasants hrough eavy axation n the form f and revenue, aking way resources hat therwise ould have been used for nvestment n the conomic evelopment ithin ndia.24 During he same period by contrast, eiji Japan egistered re- mendous conomic rowth nd ts ailroads ere ll ndigenously financed nd served he economic nterest y helping o build modern ation.25 onsequently, he ndian nationalist riters f the 19th entury ike Dadabhai Naoroji, C Dutt, G V Joshi nd others efused o believe hat ndia could not be industrialised without oreign apital.26 3 Comparative Spread Effect f Railways By he nd of he 19th entury, ndia had become he hief xport market or ritish oods ncluding extiles, ron nd steel goods, and other roducts eflecting ritain's ndustrial trength. ndia in return upplied Britain with raw materials n the form f 70 November 22, 2008 E3329 Economic Political eekly This content downloaded from on Wed, 9 Jul 2014 09:34:59 AMAll use subject to JSTOR Terms and Conditions  - - - - - = - - SPECIAL ARTICLE unprocessed gricultural oods. The economy rimarily ecame agrarian s the proportion f those dependent n agriculture grew o over 0 per cent. And he government f ndia ensured that the British usiness nterests enefited rom avourable arrangements or and nd capital n ndia. Commercial griculture as made possible by the transportation infrastructure rovided bove all by the railway. y the end of the century ndia possessed he fifth ongest ailway ystem n the world. The pre-eminence f British xport nterests as clear n ayout hat focused n routes o the ports nd a rate tructure hat isadvantaged inla'nd ransportation.27 The railroads lso became a captive nd publicly ubsidised market or nglish teel-makers nd ocomotive uilders. ritish obsession nd priority or railroads neglected ll other public works rojects. he railroad ystem onsumed 3 times s much investment s all hydraulic orks p to 1880. During 877-78 famine, he pro-irrigation obbyists ir Arthur Cotton and Florence ightingale aised heir oices gainst he utter orth- lessness f railways n relieving istress, hile t cost he poor f India 160 million rupees. n the 20th century Gandhi also denounced he railroads s the main killer f traditional ndian handicrafts nd depleting ood tocks rom he ountryside. mpe- rial nvestment n irrigation omplemented he railways n pro- moting ommercial rops or xports ather han rain rops.28 The government f ndia did ittle o aid or timulate he devel- opment f heavy ndustry r management kills within ndia. The colonial tate nd the railway ompanies ollowed olicies from which British ndustry nd financial nstitutions ere the primary eneficiaries. ndeed, he government f ndia urged he railway ompanies o buy British . ndia also failed o reap he benefits f the spread effects o industry hich would have occurred. nstead, he spread effects timulated he British economy. 29 or example, fter he railways ad depleted he reserves f wood o make harcoal, oal became he major ource of nergy sed to run he railways. he needs of railways timu- lated oal production ut did not ead to the development f oal industry ike t did in England nd otfter ountries. xpensive transport osts kept the delivered price of coal very high. Consequently, he pread ffects rom he ncreased roduction of oal remained imited.30 his hindered he ndustrialisation f the conomy. Any ocal ndustry sing oal as a major ource f nergy ound itself mmediately andicapped. ndian oal became very xpen- sive, not because of the costs of coal production ut because of the East Indian Railway company's monopoly ver access to major oalfields. he company made t o expensive o transport coal by rail hat mports rom ritain ould ompete with ndian coal in ndian market. he high price f coal had a dampening effect n the expansion f industries ince so many of them required t s a source f nergy.31 his was more articularly o n the ase of ron nd steel ndustries. n Britain, he railways rig- gered he development f heavy ndustries uch s iron nd steel. But n ndia, his id not happen ecause he railways ecame n instrument f xtracting aw material ather han riggering ndus- trialisation.32 o the major project ike the railways nstead f becoming he eading ector ailed o generate he multiplier effect eeded for ndia's ndustrialisation. he layout f the track upported he extractive nd market ocus f British co- nomic nterests, inking he hinterland o the olonial ort ities and those cities o each other. he classic hape of a colonial economy as only ossible y he way the British uilt ailways in India.33 ndia's oss from he purchasing olicies f the rail- ways blocked ts progress n developing eavy ndustries. he spread effect f the railways nstead stimulated he British economy. he British fficial olicy lso did not support he development f ndustry n ndia nd the ailways ailed o act s a stimulant or heavy nd machine-building ndustries s they did elsewhere n the world.34 Unlike n Europe nd United tates, he colonial ailways n India did not ead to the growth f urban entres. he railways just redistributed he urban population eading o the decline f old cities nd commercial entres. or xample, he major Mughal trading ity f Mirzapur n the Ganges eclined nd the popula- tion imply oved o colonial ort ities utting ll the raditional industries ocated n such inland centres t a disadvantage.35 The railways n particular rought bout this new process f de-urbanisation n the 19th entury.36 The British ndustrial conomy ominated very acet f the Indian colonial conomy utting he atter n a disadvantaged position. lanned nd constructed o serve he trategic nd eco- nomic eeds of he metropolis, he railways acilitated he move- ment f roops, ispersal f British anufactured oods, nd the extraction f raw materials rom interlands o port ities. he railways ailed o stimulate he growth f other ncillary ndus- tries ecause most f he quipment nd hardware as mported from ritain.37 olid rails, bridge irders nd work ngine were all bought nd brought rom ritain.38 ocomotives, olling tock, and other ron oods were lso mported rom ritain.39 India. became pre-eminently he land of large iron railway-bridges whose ironworks were] argely prefabricated n Britain nd then ssembled nd erected t the ndian bridge ites. This, f course, imited he technology nd economic benefits ndia received rom ailway onstruction. 40 ot ust bridges, more then 20 per cent of all British-made ocomotive ngines were exported o India.41 n addition o railway machinery, latelay- ers, fishplates, oints, ails, nd sleepers, he colonial tate lso invited British killed abour, management, quipment, nd financial apital.42 Two fifths f the capital aised for he rail- roads were pent n Britain. killed workers, oremen nd engi- neers were brought rom ritain nd paid twice he home rate, plus free assage, medical are and allowances. 43 he planning and overseeing he xecution f railway onstruction n ndia was entrusted lmost xclusively o British ivil nd military ngineers. This gave he ndian ailways colonial haracter.44 hus, ndian railways enerated mployment nd industry or Britain ather than or ndia. ndian eople paid for hese olonial ailways ith their axes while he profits enefited he English. 4 Monopoly over Railways Indian ailways id not xperience ny erious ompetition rom alternative odes of ransport. either he government f ndia nor private ompanies howed much nterest n building anals, Economic Political eekly 13321 November 22, 2008 This content downloaded from on Wed, 9 Jul 2014 09:34:59 AMAll use subject to JSTOR Terms and Conditions
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