UNIT 17 IMPERIALISM

Structure
17.1 Introduction
17.2 Definitions of Imperialism
17.2.1 Empire Versus Imperialism
17.2.2 Imperialism Versus Colonialism

17.3 Modes of Imperialism

17.4 Theories of Imperialism
17.4.1 The Economic Explanations
17.4.2 Non-Economic Explanations

17.5 Stages of Imperialism

17.5.1 Mercantilism and Early Trading Empires
17.5.2 Industrial Capitalis m -----Imperialism of Free Trade
17.5.3 Finance Capitalism

17.6 The Empire on Which the Sun Never Set

17.7 Summary
17.8 Exercises

17.1 INTRODUCTION
This Unit attempts to explain imperialism both as a concept and historical phenomenon.
Various scholars have attempted to explain imperialism from various perspectives but
also differentiate it from terms like colonialism. The stress is also on the ways in which
imperialism adopted different forms at different historical junctures. The Unit begins by
looking at some of the definitions of imperialism. It will then go into the theories of
imperialism and examine different explanations of imperialism that have been offered by
scholars over the last century. The Unit will also focus on the stages of imperialism and
see how these stages correspond with the rise and expansion of capitalism. It will finally
take up Great Britain as a case study of the largest imperial power of the 19th and the
20th centuries.

17.2 DEFINITIONS OF IMPERIALISM

There is no one standard definition of imperialism. Let us look at some often used ones.
Imperialism refers to the process of capitalist development which leads the capitalist
countries to conquer and dominate pre-capitalist countries of the world.
OR
Imperialism is the system of political control exercised by the metropolis over the domestic
and foreign policy and over the domestic politics of another polity, which we shall call
the periphery (countries at the margins of the economic hierarchy).
OR
The term imperialism is used to designate the international practices and relations of
the capitalist world during the distinct stage of mature capitalism that begins in the last
26 quarter of the 19th century.
All these definitions, their differences notwithstanding, firmly establish imperialism as a Imperialism
modern phenomenon and distinctly different from pre-modern forms of conquests and
political domination. In this context four important characteristic features of imperialism
are:
• sharp increase in international flow of commodities, men and capital,
• interdependent set of relations between countries at different levels of industrial
development,
• advanced and superior technology in imperialist countries, and
• competition between advanced capitalist countries
17.2.1 Empire Versus Imperialism
It is important to distinguish between empires and imperialism. There were many
empires in history but empire in the era of capitalism is imperialism.
What was new about imperialism in the modern era? What made it different
from earlier expansions of empire? In earlier eras the motive was exaction of tribute.
Under capitalism the economies and societies of the conquered or dominated
areas were transformed, adapted and manipulated to serve the imperatives of
capital accumulation in the imperialist countries placed at the centre of the economic
hierarchy.

17.2.2 Imperialism Versus Colonialism

The distinction between imperialism and colonialism is equally important. The history of
imperialism is different from the history of particular colonies. Imperialism is a
specifically European phenomenon whereas colonialism is the system prevalent in
the colonies. It can also be argued that since European imperial history had a basic
unity – therefore to study an empire in isolation would be pointless.
When we study imperialism we examine the impact of empire on the
metropolis, whereas colonialism refers to the impact on the colony. The advantages
of the empire to the mother country ranged from the colonial wealth which
financed the industrial revolution to the evolution of superior military technology,
mechanisms of control such as the army and bureaucracy and disciplines such as
anthropology.

17.3 MODES OF IMPERIALISM

Imperialism can be both formal and informal. Formal imperialism involves annexation
and direct rule while informal empire means indirect rule by local elites who are
independent legally but politically dependent on the metropolis. Similarly, there are
three broad types of empires which have either existed in a linear chronology, one
succeeding the other, or also co-existed with each other at a particular historical juncture.
These types are:
1) trading empires which took the initiative in early conquests but eventually lost out
in the era of industrial capitalism, such as Portugal and Spain
2) industrial empires with full-fledged colonies, such as Britain and France
3) industrial empires without, or with few, formal colonies, such as Germany
At the same time, it is important to remember different historical stages through which
capitalist expansion took place leading to the formation of empires. The changing nature 27
Expansion of Europe of imperialism was dependent upon the stages of capitalist development. Broadly
speaking capitalism may be said to have gone through five stages, mentioned below:
1) end of 15th to mid 17th Century — rise of commercial capital and rapid growth of
world commerce
2) mid 17th to latter 18th Century — commercial capital ripens into a dominant
economic force
3) late 18th Century to 1870s — the era of industrial capital
4) 1880 to World War I — rise of monopoly capital, division of globe, etc.
5) Post World War I — socialism, decolonization, rise of multinational corporations
In this sense stages of imperialism coincide with stages of capitalism
Stage of capitalism Imperial Powers
1) Merchant capitalism Portugal and Spain
2) Industrial capitalism Britain, France and Netherlands
3) Finance capitalism Britain, USA and Germany
The history of the European colonial empires falls into two overlapping cycles. The first
began in the 15th Century and ended soon after 1800, the second in the late 18th
Century lasting into the twentieth. During the first cycle America was important as a
colony—in the second Africa and Asia.

17.4 THEORIES OF IMPERIALISM

The theories of imperialism can be grouped into two broad types, economic (J.A.
Hobson, Hilferding, Rosa Luxembourg and Lenin) and political (Schumpeter,
Fieldhouse, Gallagher and Robinson). They can also be distinguished as metrocentric
(Schumpeter, Lenin, Hobson) and pericentric (Gallagher and Robinson, Fieldhouse).
Let us look at these separately.

17.4.1 The Economic Explanations

The economic explanations offered by Hobson, Hilferding, Rosa Luxembourg and
Lenin had a common feature — a political agenda.
Hobson’s purpose was to alert the British public to “the new plutocratic phenomenon
that was hijacking British foreign policy” — to the expansionist agenda that was extracting
a heavy price from the ordinary people merely to satisfy the financial capitalists who
cared for nothing except maximizing returns on their investments. Hilferding was a
German Social Democrat who was Finance Minister and paid with his life for being anti
Nazi. Rosa Luxembourg, born in Poland, was a fiery revolutionary Social Democrat
leader in Germany. Vladimir Lenin, the prominent Bolshevik leader and maker of the
Revolution in Russia in 1917, wished to convince the Russian people that World War I
was an imperialist war which they would do best to stay out of.
In Imperialism (1902) Hobson explains imperialism as an outcome of the capitalist
system. The key concept used is underconsumption. Industry looked for foreign
markets as it cannot find domestic markets for its goods, wages being low. With major
industrial powers competing for foreign markets there was a race for colonies which
would serve as captive markets. Underconsumption also leads to oversaving as domestic
28 investment does not make sound economic sense when there is little purchasing power.
Here again colonies serve as channels for investment. Imperialism

Thus Hobson concluded that “..the dominant directive motive” behind imperialism “was
the demand for markets and for profitable investment by the exporting and financial
classes within each imperialist regime.” He dismissed other motives as secondary, be it
power, pride and prestige or “trade follows the flag” or the mission of civilizing the
natives.
Rudolf Hilferding, in his work, Das Finanzkapital, (Finance Capital) published in
1910, demonstrated how big banks and financial institutions in fact control industrial
houses in this last stage of capitalism, better known as finance capitalism. Monopoly
capitalists looked to imperialist expansion as a way of ensuring secure supplies of raw
materials, markets for industrial goods and avenues for investment. As each big European
power was a monopoly capitalist, economic competition soon became political rivalry,
which in turn escalated into war.
Rosa Luxembourg’s study titled Accumulation of Capital (1913) highlighted the unequal
relationship between the imperial powers and the colonies. The European powers
gained captive markets and secured profitable avenues for investment. In contrast, the
colonies were merely suppliers of raw materials and foodstuffs.
In Imperialism, The Highest Stage of Capitalism (1916) Lenin argued that advanced
capitalist countries invest in backward countries because the limits of profitable domestic
investment have been reached. To invest at home would require development of the
economy and better standard of living for workers, neither of which was in the interest
of the capitalists. Lenin’s argument was that imperialist interests lay behind the rivalries
between European powers that culminated in World War I. His intention was overtly
political – to expose the capitalist designs and convince the people of Russia that they
should not participate in the War.
17.4.2 Non-economic explanations
Schumpeter’s Imperialism and the Social Classes (1931) broke away from the leftist
paradigm which located imperialism and capitalism on the same grid. In his scheme,
imperialism and capitalism were seen as clearly separate phenomena. Imperialism was
atavistic, generated by pre-capitalist forces (pre-modern in essence). In contrast,
capitalism was modern, innovative and productive and did not need control on a territory
in order to prosper.
Whereas the writers on the left saw imperialism as an economic system, for Schumpeter,
“Imperialism is the objectless disposition on the part of a state to unlimited forcible
expansion.” However, the problem with the usage of a conceptual attribute like
‘disposition’ is that it can not be empirically tested and can, therefore, never be proved
or disproved. Gallagher and Robinson (Africa and the Victorians) questioned the
common interpretations of modern imperialism on two counts. They understood the
distinction between pre 1870 and post 1870 imperialism to be invalid. Also, imperialism
of free trade or informal imperialism was seen to be as important as formal imperialism.
Political expansion was a function of commercial expansion - “trade with informal control
if possible; trade with rule when necessary.”
Gallagher and Robinson’s explanation of imperialism was pericentric. In their view
imperialism was a process driven by pressures from the peripheries - Asia, Africa and
Latin Africa. The scramble for colonies was a preemptive move by European powers
to occupy whatever territory they could in Asia and Africa so as to keep out rival
nations. This view questioned the traditional Eurocentric explanation of the scramble
for colonies in terms of the great conflicts of European diplomacy or the great thrusts of
expansionary financial capitalism. 29
Expansion of Europe Fieldhouse advanced a political explanation for imperialism. The new imperialism was
the extension into the periphery of the political struggle in Europe. At the centre the
balance was so nicely adjusted that no major change in the status or territory of any
side was possible. Colonies became a means out of this impasse. For the British this
“impulse” meant protecting the route to India through Egypt and the Suez Canal which
necessitated control over the headwaters of the Nile and a predominant position in
North Africa. For the French and Germans the impulse meant acquiring “places in the
sun” to demonstrate national prestige. Fieldhouse concluded: “In short, the modern
empires lacked rationality and purpose: they were the chance products of complex
historical forces operating over several centuries and more particularly during the period
after 1815.”

Colonialism, according to AJP Taylor, became a “move” in the European game of

balance of power. Doyle uses the term ‘colonialization of the diplomatic system’ to
describe the developments between 1879 and 1890. Bismarck acquired colonies in
the early 1880s in the hope that a colonial quarrel with England would establish German
credibility in France. France had to be compensated with colonies and overseas
adventures in lieu of her loss of Alsace Lorraine. Competition for colonies led to a rift
between England and Italy and Italy went over to the side of Germany.

To sum up this section, a whole range of theories and explanations have been offered
for imperialism and are now available with us. These can broadly be classified into
economic and non-economic explanations. The economic explanation includes the factors
pertaining to overproduction and underconsumption (Hobson), requirements of finance
capitalism (Hilferding ), unequal exchange between the imperial powers and the colonies
(Rosa Luxembourg), and the highest stage of capitalism (Lenin). The non-economic
explanations have looked at imperialism as a pre-modern atavistic force (Schumpeter);
or have offered a pericentric view concentrating on the developments in the colonies
rather than the metropolis (Gallaghar and Robinson); or have seen it merely as an
expression of political struggles within Europe (Fieldhouse).

17.5 STAGES OF IMPERALISM

The previous section was a discussion of the different ways in which imperialism has
been understood and defined by scholars. In this section let us examine its development
through various stages.

17.5.1 Mercantilism and Early Trading Empires

What enobled Europe to become the world leader? If we looked at the world in 1500
Europe’s dominant position could not be taken for granted. The Ottoman Empire,
China under the Mings and India under the Mughals were at the same stage of
development. They suffered from one major drawback, however, and that was their
domination by a centralized authority which did not provide conditions conducive to
intellectual growth. In contrast, the competition between different European powers
encouraged the introduction of new military techniques. For example, the long range
armed sailing ship helped the naval powers of the West to control the sea routes. This
increased military power combined with economic progress to push Europe
forward and ahead of other continents.

The growth of trans - Atlantic trade was spectacular. It increased eightfold between
1510 and 1550 and threefold between 1550 and 1610. Trade was followed by the
30 establishment of the empires and churches and administrative systems. The Spanish
and Portuguese clearly intended their empires in America to be permanent. The goods Imperialism
obtained from America were gold, silver, precious metals and spices as well as ordinary
goods like oil, sugar, indigo, tobacco, rice, furs, timber and new plants like potato and
maize. Shipbuilding industry developed around the major ports of London and Bristol
in Britain, Antwerp in Belgium and Amsterdam in the Netherlands. The Dutch, French
and English soon became keen rivals of the Spanish and Portuguese. This competition
encouraged the progress of the science of navigation. Improved cartography, navigational
tables, the telescope and the barometer made travel by sea safer. This strengthened
Europe’s technological advantage further. The story of science and technology enabling
European domination in trade with other areas has been told in the previous two Units
of this Block.
The discovery of America and of the route to the Indies via the Cape of Good Hope
had great consequences for Europe. It liberated Europe from a confined geographic
and mental cell. The medieval horizon was widened to include influences from Eastern
civilizations and Western peoples.
Discoveries, trade and conquests, which followed them, had practical consequences.
Every colony or trading centre was a new economic stimulus. America was a market
and American bullion increased the supply of money circulating in Europe and intensified
existing economic and social developments. The volume of trade with America increased.
For four centuries America satisfied the hunger for land among Europeans. Gold and
silver stimulated exploration and conquest and attracted immigrants, who were followed
close on their heels by missionaries. American colonies were set up by individuals; the
state, patriotism and missionary impulse played little part.
Before 1815 Spain and Portugal were the pre-eminent imperial powers. Their primacy
lay not only in the fact that they were the first discoverers but that they worked out four
of the five models for effective colonization which were typical of the first colonial
empires. Both made huge profits from their colonies.
Portugal had a huge empire in Asia and then in America and Brazil. Colonial revenues
brought in the equivalent of 72,000 pound sterling in 1711. This was almost equal to
metropolitan taxes. One special feature of the Portuguese empire was that she made no
distinction between her colonies and the metropolis. No separate colonial department
was set up till 1604.
France, like Spain and Portugal, carried out expansion in the Americas – in the regions
of Canada and Latin America. This was undertaken by individual Frenchmen supported
by the Crown with the aim of ensuring supplies of groceries and increasing naval power.
The task of setting up the empire was carried out by the chartered companies. This
worked to the advantage of the state as it was at a minimum cost. After 1660s the
colonies became royal possessions and royal agents headed the government. French
colonial government was as authoritarian as that of Spain. France was then an absolute
monarchy and ruled colonies without giving them any constitutional rights. Local
administration and law in the colonies were modeled on those prevailing in France. Her
colonial empire suffered from too much state interference. France made no fiscal profits
on her colonies, in sharp contrast to Portugal. This was despite the fact that more than
two fifths French exports in 1788 were to colonial governments. By 1789 France lost
most of her colonial possessions in America and India to Britain. The crucial weakness
was her inferior naval power.
Some of the Western states developed their colonies in the tropics, in India, Africa,
Latin America and Australia. The Europeans did not settle in Africa, they were content
with slaves, gold dust and ivory. The colonies were crucial to the British economy, they
31
supplied raw materials and were markets for metropolitan products. The French minister,
Expansion of Europe Choiseul, regretted that ‘in the present state of Europe it is colonies, trade and in
consequence sea power, which must determine the balance of power upon the continent.”
Of the five big European powers, France, Britain, Austria, Russia and Prussia, Britain
soon emerged as the leader. She had many advantages — the first was a developed
banking and financial system. Her geographical location at the westward flank of Europe
helped her to maintain a distance from the continent when she wished. The most important
factor, which gave Britain an edge, was that it was the first country to undergo the
Industrial Revolution. This enabled it to dominate Europe and to acquire colonies. In
Bernard Porter’s words, she was the first frogspawn egg to grow legs, the first tadpole
to change into a frog, the first frog to hop out of the pond.
The first empires represented European ambition, determination and ingenuity in
using limited resources rather than European predominance throughout the world.
“Christendom is also the proper perspective from which to view the religious drive
behind the Spanish justification for empire.”(Doyle:110) Doyle further sums up Spanish
and British empires: “Spain and Britain focused on trade in the east, on settlement and
production in the west, and neither acquired colonies for immediate reasons of national
security.”
Decline
The old colonialism had its natural limits. Flow of precious metals declined. By the late
18th Century Spanish and Portuguese power declined and they lost their colonies.
Dutch monopoly on shipping ended. Colonial rivalry between France and Britain ended
in Britain’s preeminence. Britain was now the world leader in empire, finance and trade.
As Eric Hobsbawm put it, “Old colonialism did not grow over into new colonialism. It
collapsed and was replaced by it.”
Let us sum up the discussion so far. Europe’s conquest of America, Africa and Asia
from the sixteenth century was possible only because of her mastery of the seas. In this
the countries on the Atlantic seaboard, Portugal, Spain, France, Britain and Holland,
had an obvious advantage because of their geographical location. Europe’s domination
was disastrous for other peoples: the indigenous populations in the Americas were
wiped out and twelve million Africans were made slaves between 1500 and 1860.
Europe benefited vastly in this era when merchant capital controlled the world economy.
Institutions such as the modern state and bureaucracy and the scientific revolution in
knowledge laid the foundations of the modern world.

17.5.2 Industrial capitalism — Imperialism of Free Trade

Hobsbawm describes the Industrial Revolution in Britain as that unusual moment in
world history when the world’s economy was built around Britain; when she was the
only world power, the only imperialist, the only importer, exporter and foreign investor.
The description of Britain as the workshop of the world was literally true in the middle
of the nineteenth century when she produced most of its coal, iron and steel. The Industrial
Revolution was followed by the single liberal world economy (in the 1860s possibly
because of the monopoly of Britain) and the final penetration of the undeveloped world
by capitalism.
The early British industrial economy relied for its expansion on foreign trade. Overseas
markets for products and overseas outlets for capital were crucial. The cotton industry
exported eighty per cent of its output at the end of the nineteenth century. The iron and
steel industry exported forty per cent of its output in the mid nineteenth century. In
return Britain bought specialized local products such as cotton from the US, wool from
32
Australia, wheat from Argentina, etc.
Britain’s trade also increasingly became greater with the empire. In cotton Latin America Imperialism
accounted for thirty five percent of British exports in 1840. After 1873 the East absorbed
over sixty per cent of British cotton exports. Thus there were sound economic reasons
for Britain opposing these areas being opened up to others.
By 1815 Britain had already become the preeminent world power, combining naval
mastery, financial credit, commercial enterprise and alliance diplomacy. The
following decades of British economic hegemony were accompanied by large-scale
improvements in transport and communications, by the increasingly rapid transfer of
industrial technology from one region to another, and by an immense increase in
manufacturing output, which in turn stimulated the opening of new areas of agricultural
land and raw material sources. The age of mercantilism was over and with it tariff
barriers stood dismantled. The new watchword was free trade and this brought
international harmony rather than great power conflict.
Europe’s military superiority continued. The improvements in the muzzle loading
gun, the introduction of the breechloader, the Gatling guns, Maxims and light field artillery
constituted a veritable firepower revolution, which the traditional societies could not
withstand. The decisive new technology was the gun, the symbol of European superiority
in the armament factory. As Hilaire Belloc said, “Whatever happens, we have got the
Maxim gun, and they have not.”
In the field of colonial empires, Britain brooked no rivals. The empire grew at an average
annual rate of 100,000 square miles between 1815 and 1865. One group of colonies
comprised those acquired for strategic and commercial reasons like Singapore, Aden,
Falkland Islands, Hong Kong and Lagos. A second group was that of settler colonies,
such as South Africa, Canada and Australia.
With the spread of industrial capitalism the need grew for colonies as markets for
manufactured goods especially textiles and suppliers of raw materials such as cotton
and foodgrains. The colony emerged as a subordinate trading partner whose economic
surplus was appropriated through trade based on unequal exchange. This international
division of labour condemned the colony to producing goods of low value using backward
techniques.
Late industrializers and colonial powers
By the 1860s the other countries like Germany and United States, were catching up
with Britain in industrialization. In 1870 the figures for share of world industrial production
were 13 percent for Germany and 23 per cent for the United States. The extent of the
declining domination of Britain among the super powers can be understood by the table
given below.
Table
Per Capita Levels of Industrialization
Relative to Great Britain in 1900 = 100
1880 1900 1913 1928 1938 Rank in 1938
1 Great Britain 87 100 115 122 157 2nd
2 United States 38 69 126 182 167 1st
3 France 28 39 59 82 73 4th
4 Germany 25 52 85 128 144 3rd
5 Italy 12 17 26 44 61 5th
33
Expansion of Europe In 1900 Britain was the unquestioned world leader. Her empire extended to twelve
million square miles and a quarter of the world’s population.
The race for colonies speeded up from the 1880s with the entry of Germany, Italy, US,
Belgium and Japan into the race for colonies. These rivalries between the powers led to
a race for new colonies as each power sought to make secure her markets, raw materials
and investments. Backward regions were annexed in order to control their raw material
supplies. Malaya gave rubber and tin and the Middle East gave oil. Empire was a
cushion in a hard world.
These imperialist rivalries which carved up the world into colonies, semi colonies
and spheres of influence also divided Europe into blocs armed to the teeth, the
logical corollary of which was World War I .
World War I ended in the defeat of Germany and the Ottoman Empire and redivision
of colonies among the imperial powers, who were henceforth called trustees. The
Depression of 1929 brought a change in the attitude of imperial powers. Gone were the
days of Free Trade; protectionism was the new catchword.
17.5.3 Finance Capitalism
Stages of capitalism and imperialism could overlap, as in the case of industrial capitalism
and financial capitalism, where one did not replace the other, it was superimposed on it.
The informal empire of trade and finance was added to the empire of industrial capital.
Many major changes took place in the world economy after 1860. Industrialization
spread to several countries of Europe, the US and Japan with the result that Britain’s
industrial supremacy in the world came to an end. For Britain this was a setback. She
exchanged the informal empire over most of the underdeveloped world for the formal
empire of a quarter of it, plus the older satellite economies.
The application of scientific knowledge to industries led to an intensification of
industrialization. Modern chemical industries, the use of petroleum as fuel for the internal
combustion engine and the use of electricity for industrial purposes developed during
this period. Moreover, there was further unification of the world market because of
revolution in the means of international transport.
Capital accumulation on a large scale took place because of the development of trade
and industry at home and extended exploitation of colonies and semicolonies. This
capital was concentrated in a few hands. Trusts and cartels emerged and banking capital
merged with industrial capital. Outlets had to be found for this capital abroad.
Significant export of capital had been there even before the stage of predominance of
finance capital. By 1850 Britain’s capital exports were 30 million pounds a year. In
1870-75 this was 75 million pounds. The income from this came to 50 million pounds,
which was reinvested overseas. This financed the trade with the colonies, wherein huge
quantities of raw materials were procured and equally vast quantities of industrial goods
sent out. As Paul Kennedy puts it so evocatively, the world was the City of London’s
oyster.
The stranglehold of monopoly capital can be gauged from the statistic that by 1914
European nations controlled over 84.4 per cent of the world. Capital was concentrated
in and channeled through first, the City of London and then New York, the centres of
the international network of trade and finance.
The metropolitan country also used empire for political and ideological ends. Jingoistic
nationalism and glorification of empire acted to reduce social divisions in the metropolis.
34 Bipan Chandra notes that the slogan —‘the sun never sets on the British empire’ –
generated pride among British workers on whose hovels the sun seldom shone in real Imperialism
life. Each country justified its empire in different ways – for example, the “civilizing
mission” of the French and the pan – Asianism of Japan.
Between 1870 and 1913 London was the financial and trading hub of the world. By
1913 Britain had 4000 million pounds worth abroad. Most international trade was
routed through British ships at the turn of the twentieth century. After World War I
Britain lost this position to the US. The US became the major dominant capitalist
economy. She was now the world’s largest manufacturer, foreign investor, trader and
banker and the US $ became the standard international currency.
From the mid-twentieth century onwards, decolonization gathered pace, as did the rise
of multinational companies, international donor agencies and the entire gamut of
mechanisms of international economic influence. This process is generally known as
neo-colonialism.

17.6 THE EMPIRE ON WHICH THE SUN NEVER

SET
Let us take Britain and her empire, especially India, as a case study to assess the
advantages accruing to the mother country from her imperial possessions.
Bipan Chandra draws our attention to the simultaneity of birth of the Industrial Revolution
and the British Empire in India, which, interestingly, was not merely coincidental. The
conquest of Bengal in 1757 enabled the systematic plunder of India and the Industrial
Revolution took off around 1750. The drain of wealth or the unilateral transfer of
capital from India after 1765 amounted to two to three per cent of the British national
income at a time when only about five per cent of the British national income was being
invested.
In the 19th Century India emerged as a major market for British manufactures and
supplied foodgrains and raw materials. Opium from India was sold in China, enabling
Britain’s triangular trade with China. Railways were a major area of investment of capital.
Britain’s international balance of payments deficit was handled by the foreign exchange
got from Indian exports. British shipping grew in leaps and bounds on the back of its
control over India’s coastal and international trade.
India played a crucial role in the development of British capitalism during this stage.
British industries especially textiles were heavily dependent on exports. India absorbed
10 to 12 per cent of British exports and nearly 20 per cent of Britain’s textile exports
during 1860-1880. After 1850 India was also a major importer of engine coaches, rail
lines and other railway stores. Moreover, the Indian army played an important role in
extending British colonialism in Asia and Africa. Throughout this stage the drain of
wealth and capital to Britain continued.
England was particularly keen on the Indian empire as it provided a market for cotton
goods; it controlled the trade of the Far East with her export surplus (opium) with
China. The Home Charges (India’s payments for receiving “good” administration from
Britain) and the interest payments on the Indian Public Debt were important in financing
Britain’s balance of payments deficit.
India strengthened Britain’s position as an international financial centre. India’s trade
surplus with the rest of the world and her trade deficit with England allowed England to
square her international settlements on current account. Also India’s monetary reserves
helped Britain. Hence in India even the free traders wanted formal control!
35
Expansion of Europe The projection of India as the brightest jewel in the British crown played an important
role in the ideology of imperialism. The British ruling classes were able to keep their
political power intact even when it was being riven with class conflict. Thus the pride
and glory underlying the slogan of the sun never sets on the British empire were used to
keep workers contented on whose slum dwellings the sun seldom shone in real life.
India also played a crucial role in one other, often ignored, aspect. India bore the entire
cost of its own conquest. India paid for the railways, education, a modern legal system,
development of irrigation and detailed penetration of administration into the countryside.
Lastly once the struggle for the division of the world became intense after 1870 India
was the chief gendarme of British imperialism. She provided both the material and
the human resources for its expansion and maintenance. Afghanistan, Central Asia,
Tibet, the Persian Gulf area, Eastern Africa, Egypt, Sudan, Burma, China and to some
extent even South Africa were brought or kept within the British sphere of influence by
virtue of Indian men and money. The British Indian army was the only large scale army
contingent available to Britain. It is therefore not a surprise that the British empire in
Asia and Africa collapsed once Britain lost control over the Indian army and finances.

17.7 SUMMARY
Hobsbawm has described the history of the world from the late fifteenth to the mid
twentieth century as the rise and decline of its domination by European powers. Britain
was the first unquestioned world power. Since 1870 this position was under challenge
from other countries in Europe who were industrializing and gaining military and economic
power. Even when this domination ended formally, the influence of Britain, and then the
US, continued, be it in multinational banks and financial institutions, parliamentary
democracy or association football. This Unit then is an exploration of the domination
of these geo-political forces in different forms in modern times.

17.8 EXERCISES
1) What are different theoretical explanations for imperialism? Discuss briefly.
2) Describe different historical stages through which imperialism took different forms
on a global scale.
3) Why was India crucial as a colony in the expansion of British imperialism?

36