Number of words: 794

What was the economic background of India when all these far-reaching political changes were taking place? V. Anstey has written that right up to the eighteenth century, ‘Indian methods of production and of industrial and commercial organization could stand comparison with those in vogue in any other part of the world.’ India was a highly developed manufacturing country exporting her manufactured products to Europe and other countries. Her banking system was efficient and well organized throughout the country, and the hundis or bills of exchange issued by the great business or financial houses were honoured every- where in India, as well as in Iran, and Kabul and Herat and Tashkent and other places in central Asia. Merchant capital had emerged and there was an elaborate network of agents, jobbers, brokers, and middlemen. The ship building industry was flourishing and one of the flagships of an English admiral during the Napoleonic wars had been built by an Indian firm in India. India was, in fact, as advanced industrially, commercially, and financially as any country prior to the industrial revolution. No such development could have taken place unless the country had enjoyed long periods of stable and peaceful government and the highways were safe for traffic and trade.

Foreign adventurers originally came to India because of the excellence of her manufacturers which had a big market in. Europe. The chief business of the British East India Company in its early days was to trade with Indian goods in Europe, and very profitable trading it was, yielding enormous dividends. So efficient and highly organized were Indian methods of production, and such was the skill of India’s artisans and craftsmen, that they could compete successfully even with the higher techniques of production which were being established in England. When the big machine age began in England, Indian goods continued to pour in and had to be stopped by very heavy duties and, in some cases, by outright prohibitions.

Clive described Murshidabad, in Bengal, in 1757, the very year of Plassey, as a city ‘as extensive, populous, and rich as the city of London, with the difference that there are individuals in the first possessing infinitely greater property than in the last.’ The city of Dacca, in eastern Bengal, was famous for its fine muslins. These two cities, important as they were, were near the periphery of Hindustan. All over the vast land there were greater cities and large numbers of big manufacturing and trading centres, and a very rapid and ingenious system of communicating news and market prices had been evolved. The great business houses often received news, even of the wars that were going on, long before despatches reached the officials of the East India Company. The economy of India had thus advanced to as high a stage as it could reach prior to the industrial revolution. Whether it had the seeds of further progress in it or was too much bound up with the rigid social structure, it is difficult to say. It seems quite possible, however, that under normal conditions it would have under- gone that change and begun to adapt itself, in its own way, to the new industrial conditions. And yet, though it was ripe for a change, that change itself required a revolution within its own framework. Perhaps some catalytic agent was necessary to bring about that change. It is clear that however highly organized and developed its pre-industrial economy was, it could not compete for long with the products of industrialized countries. It had to industrialize itself or submit to foreign economic penetration which would have led to political interference. As it happened, foreign political domination came first and this led to a rapid destruction of the economy India had built up, without anything positive or constructive taking its place. The East India Company represented both British political power and British vested interests and economic power. It was supreme and, being a company of merchants, it was intent on making money. Just when it was making money with amazing rapidity and in fantastic quantities, Adam Smith wrote about it in ‘The Wealth of Nations’ in 1776: ‘The government of an exclusive company of marchants is perhaps the worst of all governments for any country whatever.’

Though the Indian merchant and manufacturing classes were rich and spread out all over the country, and even controlled the economic structure, they had no political power. Government was despotic and still largely feudal. In fact, it was probably more feudal than it had been at some previous stages of Indian history. Hence there was no middle class strong enough, or even consciously thinking of seizing power, as in some western countries.

Excerpted from pages 308-310 of ‘Jawaharlal Nehru The Discovery of India, by Jawaharlal Nehru