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Frederic Clairmont, "The Rise and Fall of Economic Liberalism": The 1860's were fat years for British speculators, contractors and engineering suppliers. Between 1857 and 1869 about £70.2 million flowed to India, exclusively in railways. The first 6,000 miles up to 1872 cost £100 million, or over £16,000 per mile. "There was a kind of understanding," declared a government auditor of railway accounts at the 1873 enquiry "that they were not to be controlled very closely.. . nothing was known of the money expended till the accounts were rendered." Enormous funds were squandered, reported former Finance Minister W.N. Massey: contractors had no motive whatever for economy. All the money came from the English capitalists, and so long as he was guaranteed his 5% the revenues of India, it was immaterial to him whether the funds he lent were thrown into the Hoogli or converted into bricks and mortar" Skullduggery, corruption and kickbacks, however reprehensible, were part of an immutable order of things. "There is no doubt," testified General Strachey, "that this is the unfortunate result of having a despotic government, managed in the sort of way that the Government of India is, and, for myself, I do not exactly see there is any remedy for it." Apart from bloating the public debt, railways served the dual purpose of widening the markets for the British iron and steel industry and eradicating the last vestiges of Indian manufactures. The steel of the railways, it has been said, pierced the older India by the heart and the blood ran out. The last and final wedge had been driven. "India in the Eighties," said Gadgil, "afforded the spectacle of a huge country with decaying handicrafts, with any other form of organised industry almost non-existent and a falling back upon the land." Instead of creating the preconditions of balanced growth, the railways consigned old towns to oblivion or resurrected them as mere distribution centres, hastened the disintegration of the old economic order without compensating the loss by creation of new industrial areas. As late as 1928 the Linlithgow Report admitted that "most of the 500,000 villages have not yet been touched by metalled road or railways." One of the central weaknesses in railway planning was that they were developed in one direction only, linking big cities with ports, chiefly to stimulate India foreign trade. Inland trade, which accounted for the bulk of trade was hamstrung. Moreover, in areas where they were developed, railway construction was given priority to the cheaper and more productive investments in navigable canals. Testifying before the 1878 Railways Committee, irrigation specialist Sir Arthur Cotton stated that railways were no famine bulwarks. "I am afraid we must reckon that out of the 40 million affected by the famine in Madras, Mysore, Hyderabad and Bombay, four or five millions have perished, after spending 120 millions on railways besides incurring of 50 million sterling." "Why did not the Indian Government develop irrigation and navigation canals" asked the Chairman. "Because." riposted Sir Arthur, "it would stultify the railways, that is the sole point. Only think of the Eastern Bengal Railway which some 200,000 tons and a canal by the side of it carrying 2,000,000 swarming with passengers and goods. What a terrible affront to a railway that must be." Corruption and scandalous financial malpractices partnered inefficiency. The authors of the Acworth Report advocating nationalisation on the Swiss and German model, declared "that railway development and therefore the economic development of India has been starved, is not the only charge which we are compelled to bring against the system of financial control to which the railways have been subjected. It might have expected that control purely from the financial point of view would at least have resulted in correct and unimpeachable financial orthodoxy. This has not proved so in practice." The Acworth Committee uncovered that subordinate railway officials were able to capitalise on the shortage of railway cars by exacting bribes from Indian businessmen in return for prompt service, whereas the British businessmen were promptly served. It was not too much to continued the authors of this report, that bribery "had grown into a system of organised blackmail." But in 1937 the Wedgewood Report admitted that these discriminatory practices continued to prevail. Summing up the disruptive effects of British railway policy, one server recently remarked that "after all, the prime concern of British railway policy in India was to make India useful to Britain, not to make Britain useful to India." The coming of the railway, coupled with the influx of British capital, failed to usher in that age of industrialisation of which men doctrinally different as Clark and [LP: the early] Marx had dreamt, and India continued on the road to social degradation and economic stagnation. In a paper read to the Royal Statistical Society in 1911, Sir George Paish estimated total British capital investments in India and Ceylon at £365 million. Thus 97% of investments in the pre-1914 period went into Government bonds, transport, plantations and finance -- i.e. precisely those economic sectors tributary to the commercial penetration of India, enlarging the market for Indian raw materials and British manufactured goods. Notwithstanding these massive investments the only gains that were passed on to India in jute and textile mills, gold and coal mines, tea plantations and leather factories were "the wages received by the Indian Coolies for their bodily labour." The investment effect was inadequate to spark and sustain a cumulative expansionary momentum. ________________________________________________ Send list submissions to: [email protected] Set your options at: http://lists.econ.utah.edu/mailman/options/marxism/archive%40mail-archive.com
