This document discusses the colonial exploitation of Bengal by the British East India Company. It begins by defining colonialism and explaining how the Company gained control of Bengal's economy in 1765 by obtaining the right to collect land taxes, known as diwani rights. This allowed the Company to amass wealth from Bengal and fuel Britain's industrial revolution. The document also examines how British policies, like granting free trade access, disrupted Bengal's economy and forced commercialization of agriculture through exploitative means like plantation slavery. Overall, it analyzes how the Company exploited Bengal for economic gain and Britain's benefit.

1. COLONIAL EXPLOITATION
AND THE ECONOMIC
CONDITION OF BENGAL
DEPARTMENT OF HISTORY AND PHILOSOPHY
COURSE: HIS 101
Instructor: Muhammad Asiful Basar (Mab2)

2. Meaning of Colonialism
Colonialism is a distinct form of imperialism in which a
colonizing nation exerts direct controls over a colonized
state by military, economic, and political means. The
forceful widespread intrusion of a colonizing nation
naturally causes an irreversible change in all dimensions
of the colonized state, the lives of the people, and the
social architecture. To achieve the primary objective of
colonialism, creating wealth for the colonizing nation
and its people, many different groups, including women
and children acting synergistically, must contribute.

3. Colonialism and imperialism are often used interchangeably, but
they are two different words having different meaning. As both
colonialism and Imperialism means political and economic domination
of the other, scholars often find it hard to differentiate the two.
Edward Said distinguishes the difference between imperialism and
colonialism by stating; "imperialism involved 'the practice, the theory
and the attitudes of a dominating metropolitan center ruling a distant
territory', while colonialism refers to the 'implanting of settlements
on a distant territory.”
Colonialism is where one nation assumes control over the other and
Imperialism refers to political or economic control, either formally
or informally. In simple words, colonialism can be thought to be a
practice and imperialism as the idea driving the practice.

4. Colonialism is a term where a country conquers and rules
over other regions. It means exploiting the resources of the
conquered country for the benefit of the conqueror.
Imperialism means creating an empire, expanding into the
neighboring regions and expanding its dominance far.
In Colonialism, one can see great movement of people to
the new territory and living as permanent settlers. Though
they lead the life as permanent settlers, they still maintain
allegiance to their mother country. Imperialism is just
exercising power over the conquered regions either through
sovereignty or indirect mechanisms of control.

5. Types of Colonialism
1. Settler Colonialism, e.g. North and South America,
Australia etc.
2. Economic/Exploitation Colonialism, e.g. Africa, India
and South east Asia.
3. Surrogate Colonialism e.g. Palestine

6. Inspirations
Behind
Colonial
Expansion

7. Mercantilism > Renaissance > Scientific revolution > Age of
Enlightenment > Industrial Revolution / French Revolution > Colonialism

8. Growth of Mercantilism in Europe and the Establishment
of East India Company
The development of mercantilism and individual trade in
Europe (especially, Italy, France and Mediterranean world)
transformed the European economy so rapidly. It increased the
demand of foreign raw materials in Europe and also expanded
European export markets to other parts of the world.
Spices, Cotton, Silk, Jewelry, Opium and minerals became the
major trading commodities during 14th and 15th centuries. India
along with South-east Asia and China supplied the major
portion of European demand.
However, in 1453 an important event caused the end of
European trade with Asia. Eastern Roman Empire (Byzantine
Empire) came under the control of Ottoman empire.

9. Indian Ocean trade During the 14th Century

10. Vasco Da Gama and his new Trade Route

11. Foundation of East India Company
British imperialism was more pragmatic than that of other
colonial powers. Fundamentally, the nature of British
colonialism was different. Christian fanaticism did not play any
influential role in the development of British colonial power in
Bengal.
The British East India Company was formed to share in the East
Indian spice trade. This trade had been a near monopoly of
Spain and Portugal until the Dutch moved into the region in the
1600s; after which they maintained the same control by trying
to keep out other nations. The British were relative latecomers
to the East Indies trade; the first British pilot to sail to India via
the Cape of Good Hope, did so in 1582—almost a century after
Vasco da Gama made the journey for Portugal.

12. British interests were of several kinds. At first the main purpose
was to achieve a monopolistic trading position. Later it was felt
that a regime of free trade would make India a major market
for British goods and a source of raw materials.
India also provided interesting and lucrative employment for a
sizeable portion of the British upper middle class, and the
remittances they sent home made an appreciable contribution
to Britain's balance of payments and capacity to save.
Finally, control of India was a key element in the world power
structure, in terms of geography, logistics and military
manpower.
Reasons Behind the Formation of East India Company

13. Elizabeth I of England James Lancaster

14. The East India Company (EIC) was incorporated by royal charter
in 1600. The charter granted a monopoly of all English trade in all
lands washed by the Indian Ocean (from the southern tip of
Africa, to Indonesia in the South Pacific). Unauthorized (British)
interlopers were liable to forfeiture of ships and cargo. The
company was managed by a governor and 24 directors chosen
from its stockholders.
The Company’s ships first arrived in India, at the port of Surat, in
1608. In 1615, Thomas Roe reached the court of the Mughal
Emperor Jahangir, as the emissary of King James I, and gained
for the right to establish a factory at Surat. Gradually the British
eclipsed the Portuguese and over the years they saw a massive
expansion of their trading operations in India.

15. Upon which assurance of your royal love I have given my general
command to all the kingdoms and ports of my dominions to receive all the
merchants of the English nation as the subjects of my friend; that in what
place soever they choose to live, they may have free liberty without any
restraint; and at what port soever they shall arrive, that neither Portugal nor
any other shall dare to molest their quiet; and in what city soever they shall
have residence, I have commanded all my governors and captains to give
them freedom answerable to their own desires; to sell, buy, and to
transport into their country at their pleasure. For confirmation of our love
and friendship, I desire your Majesty to command your merchants to bring
in their ships of all sorts of rarities and rich goods fit for my palace; and that
you be pleased to send me your royal letters by every opportunity, that I
may rejoice in your health and prosperous affairs; that our friendship may
be interchanged and eternal.
— Nuruddin Salim Jahangir, Letter to James I.

16. Company Structure

17. 5 Important facts about the East India Company
1. It was one of the first joint stock companies in the world (the first one was
Muscovy Company, 1553)
2. The EIC fiercely competed with the French in India
3. The EIC private Military force was twice the size of the British Army.
4. East India Company illegally sold opium to China to finance its purchases
of Indian tea and other goods.
5. East India Company promoted slave trade and trafficked million of slaves
from West and East Africa to India and South East Asia and vis-versa.

18. What is India like prior to the arrival of the Europeans?
India was large territory with a giant and growing population. The
population was around 300 million (assumption).
Combinedly, Indian economy was the second largest economy in the
world. The per capita income of the Indians was higher than the many
European countries.
Ruled by a changing group of Hindu / Muslim rulers: The Mughals in
the North-Western territory, The Marathas in the West, The Nawab in
the East and other independent kingdoms in the surrounded territories.
There was no political entity called India before 1947. There were a
large number of city/states to start with - mythology lists 56 in
numbers.
There was cultural commonality between different parts but India as
a nation did not exist before 1947.

21. The acquisition of diwani rights meant that the Company
could now tap the wealth of local rulers, zamindars and
merchants in the rich province of Bengal and use them to buy
the goods that would be shipped to Britain for sale. Large
quantities of wealth, including illegal incomes of company
officials, made its way to Britain from Bengal. Company
officials amassed huge fortunes before they returned home,
and they were referred to as ‘nabobs’ in Britain, on account of
their flashy lifestyles. A lot of this money was used to fuel the
Industrial Revolution in Britain. The greed for incomes from
land revenue also led the Company to pursue an aggressive
policy of territorial expansion in India.
The Impact of Diwani

22. The ‘Free Trade’ facility changed the nature of the Indian
colony completely, through a dual strategy. Firstly it threw
open Indian markets for the entry of cheap, mass-produced,
machine-made British goods, which enjoyed little or almost
no tariff restrictions. The passage of expensive, hand-crafted
Indian textiles to Britain, which had been very popular there,
was however obstructed by prohibitive tariff rates. And
secondly British-Indian territory was developed as a source
of food stuff and raw material for Britain, which fuelled rapid
growth in its manufacturing sector, crucial to the emergence of
a powerful capitalist economy. These changes reversed the
favourable balance of trade that India had enjoyed earlier

23. COMMERCIALIZATION OF AGRICULTURE
The so called process of commercialization, which was
supposed to lead to capitalist agriculture, was often carried
out through very exploitative and almost unfree forms of
labour. Tea was grown in plantations in Assam, owned by
whites, and they used unfree labour, which was almost like
slavery. White planters had to force farmers to grow indigo
because it yielded low profits and upset the harvesting cycle.
Farmers were forced to grow cash crops also because they
had to pay the high revenue, rents and debts in cash. The shift
away from food crops like jowar, bajra and pulses to cash crops
often created disaster in famine years.

24. In 1853, Lord Dalhousie took the
decision to construct railways in India.
Very often the railways have been seen
as a marker of the modernization that
took place under British rule. But the
construction of the railways in India
only further strengthened the colonial
nature of India’s economic
development. The railway network
made it easier to penetrate the
interior markets and sources of raw
material in the colony and linked them
to port cities, instead of linking internal
markets to each other.

25. The railway network was thus primarily geared to serve the
interest of foreign trade. Railway lines built in frontier regions
would facilitate army movement and some “famine lines” were
built in scarcity areas. Moreover, the whole project was built
with British capital, and investors in Britain were
guaranteed 5% interest, which was paid out of Indian
revenue. Most of the high level expertise and railway
equipment like machinery, railway lines and even coal to an
extent, was imported from Britain. This ensured that the
‘multiplier’ effects of constructing the railways also remained
absent in India.

26. The main forms of colonial exploitation in India were:
(i) Trade policies with the objective of developing a colonial
pattern of trade in which India became an exporter of primary
products like raw materials and food stuffs and an importer of
manufactures;
(ii) Encouragement of British Capital to participate in direct
investment in Indian consumer goods industries;
(iii) Encouragement of finance capital in the country through
Managing Agency System for appropriating a major portion of the
profits through various malpractices; and
(iv) Forcing India for paying the costs of British administration
and also to finance the wars and expeditions conducted by the
British Government.

27. (i) Exploitation through Trade Policies:
Various trade policies enforced in India by the East India Company and
then by the British Government resulted huge drain of wealth from
India so as to facilitate the growing British industry with the supply of
raw materials from India and also encouraging commercialisation of
Indian agriculture in order to transform Indian economy into a British
colony.
The major trade policies which resulted huge exploitation of India were as
follows:
1. Colonial Exploitation of Indian cultivators by the East India
Company through its indigo planters to boost indigo exports from
Bengal.

28. 2. Colonial Exploitation of artisans through the agents of East India
Company for delivering cotton and silk fabrics at a price much below
the market price. Under that situation, artisan had to work in inhuman
condition like bonded labour.
3. Colonial Exploitation through manipulation of import and export
duties by the British rulers so as to destroy the supremacy of the
Indian goods, especially cotton and silk fabrics over the British goods
and then to succeed ultimately in penetrating into the Indian market
through its machine made goods. Heavy import duties were imposed
on Indian goods excluding raw materials and foodstuffs but a very
nominal rate of import duties were imposed on British manufactures
into India.

29. (ii) Exploitation through Export of British Capital to India:
The second form of colonial exploitation of India by the
British was through investment by exporting British Capital
to India.
The main three reasons for exporting British Capital into
India were—development of efficient system of transport
and communication; developing public utilities like generation
of electricity and water supply works for exploiting natural
resources; and to promote foreign trade through quicker
disposal of goods by linking railways with major parts and
marketing centres or mandis.

30. Two major forms of British investment in India were:
(i) Private foreign direct investment in mining, mills and plantations
and
(ii) Sterling loans given to British Government in India and public and
semi-public organisations for undertaking infrastructural and public
utility projects.
Following are the three important estimates of foreign capital in India:

31. British investments in India during pre-independence
period thus revealed that British took a lot of interest in
developing economic infrastructure, maintaining
administration and promotion of trade. Moreover, the
British investments never promoted any basic and heavy
industries rather these investments were mostly made
consumer goods industries and also for processing primary
produce for its export.
Finally, British tried to keep the ownership and management
of its industries in their hands and Indians were placed in
all low level and maintenance jobs.

32. Consequences of Colonial Exploitation:
1. The first important consequence of colonial exploitation was
that India remained primarily an agricultural country with
a scope for commercialisation of agriculture so as to serve the
interests of Great Britain.
2. Although India was an industrially advanced country
during the 16th and 17th century but the British policy never
permitted those industries to modernise its structure
during the 18th and 19th century. This led to destruction of
Indian handicrafts and transformed the country into an
importer of manufactured goods from Britain.

33. 3. The British developed some forms of economic infrastructure
such as electricity work, railways and irrigation with the
objective of promoting foreign trade and also for exploiting
natural resources of India to their own advantage. No direct
British investment was made for the development of heavy and
basic industries rather all investments were made in plantation
and consumer goods industries.
4. The new land system in the form of Zamindari and Ryotwari
system introduced by the British created a class of absentee
landlords making way for exploitation of the peasants and
concentration of economic power in the hands of the few. This
had resulted total depression in agriculture and industry.

34. 5. The colonial exploitation through the entry of British
capital and finance capital and through the payment for the
costs of administration via Home charges and for meeting the
costs of War led to a huge economic drain of India weakening
the base of Indian economy.
Thus the British rule in India was a long history of
systematic exploitation of Indian people by the
imperialistic Government which led to stagnation and poverty
of Indian economy.