Was India impoverished by industry or by imperial rule?

The short answer

• Steam and cable shrank distance. Steamships and undersea cables cut the cost of moving goods and messages so far that distance stopped protecting local markets. Compound engines, which used their steam twice, cut the coal a steamship burned, iron and later steel hulls made ships larger, and coaling stations from Gibraltar to Singapore refuelled them. Undersea cables, insulated with gutta-percha, a latex from Malayan trees, carried telegraph messages beneath the oceans. Bulky goods such as grain and cotton could now be traded profitably across the world, the global version of what railways had done for Britain.
• Industry demanded raw materials. Factories in Europe and the United States consumed cotton, jute, wool, rubber, copper, tin, palm oil and grain on a scale no local supply could meet. Lubricants and soap for industrial Europe came from West African palm oil, sacks for the world’s grain from Bengal jute, tyres from Congo and Amazon rubber. The search for these materials pulled distant regions into the industrial economy as suppliers, on terms they rarely set.
• Free trade backed by force. Britain preached free trade, commerce with few barriers, and, where rulers refused it, imposed it. The Opium War, fought after China tried to stop British opium sales, opened China in 1842, treaties forced low import taxes on the Ottoman Empire, Egypt, Persia, Siam (now Thailand) and Japan, and the colonial government kept India’s import taxes low on British goods. The historians Gallagher and Robinson called this the imperialism of free trade, meaning control through trade and treaties where possible and conquest where necessary. Open markets for industrial goods were often the first demand a gunboat made.
• Capital from London. London’s capital shaped what the rest of the world built: British investors held about £4 billion of overseas assets by 1914, much of it in railways, ports, mines and government bonds, or loans to governments. In India the colonial government guaranteed railway companies a return of about five per cent, paid from Indian taxes, so British investors bore little risk. Capital went where profits and political security lay, so it built the railways and ports that carried raw materials out, and few of the factories that might have competed with Britain’s.

What it changed

Nationalism grows from economic grievance. Economic grievance gave Indian nationalism its sharpest argument. The Indian nationalist Dadabhai Naoroji argued that British rule drained India’s wealth, and the Indian National Congress, a party of educated Indians founded in 1885 that later led the independence movement, took up the charge. In 1905 the swadeshi movement in Bengal, whose name means ‘of one’s own country’, boycotted British cloth and urged Indians to buy Indian goods. The cloth that had once marked India’s loss became a weapon of its resistance.

A world of migrants. Steamships made mass migration cheap, because a voyage that had taken six weeks under sail now took about ten days. Tens of millions of Europeans crossed the Atlantic, and Indian and Chinese workers moved to plantations and mines across the tropics, many under indenture, a contract binding them to an employer for years. The epilogue’s arrows trace these movements and ask who gained from them, and who was carried away from home by debt and coercion. Cheap passages let labour move to wherever capital needed it, which redrew the population of whole continents.

The Great Divergence hardens. The Great Divergence, the gap between the West and the rest, became part of the world economy’s structure: by 1900 Europe and the United States made about 85 per cent of the world’s manufactured goods, and the income gap between the industrial core and most of Asia and Africa had widened enormously. Historians still debate how much of it came from industrial competition and how much from empire. A gap that had been modest in 1750 now separated the countries that made goods from those that supplied them, and it would take a century to begin closing.