Indian Trade, Colonialism and the Global System
Vaidahi was going to the bank.
Her money was being transferred to her account from a different country and bank.
This process was just so systematic and easy she thought.
The banks provide service throughout the globe at your fingertips.
They loan out money and keep your deposits safe.
But then she wondered why did the need of banks come up and that also on a global level.
This kind of banking started with Globalisation
When the traders and officials needed money to be transferred across seas they came up with new systems.
Two of the well known names in this 19th century global banking were Shikaripuri Shroff and Nattukottai Chettiar
These two were amongst the bankers who gave money for agriculture in Central and South Asia.
They gave the money from their own funds or by borrowing from European Banks.
They had a well organised system of sending and receiving money even then.
Some Indian traders and money lenders also followed the Europeans into their colonies in Africa.
From 1860s they had established a worldwide network and started to also sell and import antiques.
This was possible with the help of faster and safer ships and cargoes.
Historically India had healthy trade relations.
India produced fine cotton which was exported to Europe.
After Industrialisation, the British also started producing cotton.
To grow their business, they put high taxes on import of cloth.
Export of Indian fine cotton began to decline.
Now British also wanted to enter the global market of cloth.
Indian traders now faced a big competition in the global market after losing the British market.
People now started shifting their businesses.
On one hand the market of buying finished cloth declined. On the other hand demand for Indian raw cotton grew very fast.
From 1800s to 1870s the share of cotton cloth in market went from 30% to less than 3%.
On the other hand, the demand for raw cotton from 1812 to 1871 went from 5% to 35%.
After decline of market for cotton cloth, many people went into the Indigo production.
Many more went into the trade of producing Opium.
Opium became India’s largest export by 1820s.
The income from Opium trade was used to buy tea from China and take it to Britain.
Under the British producers, India now exported food grains and raw materials.
Even though India exported a lot, the cost of their goods produced was low.
On the other hand Britain imported high cost goods in India.
When we balance it we see that Britain gained a lot more than India through exporting.
This extra gain of Britain is trade surplus.
The Trade surplus helped Britain to cover the losses they had in other countries.
Therefore although India herself went into loss, she played an important role in the world economy.
Britain’s trade surplus was also used to send money back home for families of officers.
They also used it to pay interest of India’s foreign debts and pension of British officials in India.
In the end India had a direct and indirect role in shaping the world economy in the 19th century.