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The Awakening of the Merchants

Of the many forces that have created New India, the awakening of the Merchants into political life is perhaps the most potent, and the most pregnant with happy possibilities. Sir Dorab Tata, in the Industrial Conference in Bombay, 1915, advocated the yoking together of Politics and Industry. It is now coming about. Hitherto the merchants had remained immersed in their own occupations, but they were awakened by the War to the necessity of taking part in politics by finding that those very occupations were threatened with disaster by the attitude of the Government; as for instance, the refusal to lend a helping hand to industries which had been connected closely with German trade and were menaced with ruin by the War; by the refusal to aid the efforts made to replace necessaries --hitherto supplied by Germany-- by the founding or financing of factories for their production at home; by the restrictions put on trade under pretext of the War, that prevented the legitimate expansion of promising branches of industry; by the absence of effort to relieve the stringency of the money market, wealthy merchants being unable to obtain cash to meet their liabilities here, because their English debtors could not transmit the money they owed; some were even obliged to sell the depreciated Government paper at heavy loss in order to maintain their credit; in other cases War Bonds were offered to them in lieu of cash for goods supplied. The details have varied in different centres, and the wealthy and independent merchants of Bombay have suffered less than the merchants of Madras, with whose difficulties I am naturally more familiar.

There, added difficulties constantly arise from the favouritism shown by the Presidency Bank to English, as compared with Indian, clients, and the absence of Indians from its Directorate, complained of for years. The anxiety felt by the merchants was largely increased by the depreciation of Government paper, and apart from the heavy losses of capital incurred when necessity forced holders to sell for cash, an uneasy feeling arose as to the stability of the Government, when its securities fell so low.

Another disturbing cause was the alienation during many years of lands and minerals to foreigners, the Government looking on with indifference.

The copra and coir industry of the West Coast had passed into German hands; struck away from them by the War, there was danger of its being absorbed by the English; happily the firm of Tata and Sons stepped in and rescued it, and it remains an Indian industry. Ten years ago, the working of the blend known as monazite, an ingredient in munitions, was absorbed by Germany. Indian mica mines became German property. Undressed hides were exported wholesale to Germany, although Mysore had shown that they could be dressed and tanned better in Indian than in European factories, and only a little encouragement and help were needed to ensure their dressing and tanning, if not also their working, here. Instead of that, the undressed hides were bought up by Government at a price fixed by themselves, and were largely exported to be dressed, tanned and worked abroad. The Viceroy, speaking in the Supreme Council on September 5th last, stated that large orders had been given to "tanners in India," and that experimental work in tanning had yielded results which promised success on a commercial scale; he expressed the hope that, after the War, the tanning industry would undergo a great expansion for general purposes. But hide merchants are distressed by an order that hides are to be purchased at War prices, the British War Office buying them to provide with leather goods the civilian population in Britain. But what has the War Office to do with providing boots for civilians, and why should India be drained for civil as well as for military purposes? If the tanning experiments are being carried on with India's money by experts paid by India, and not by British capitalists, then the outcome should be the property of India and enrich the people of the country, not British merchants and manufacturers settled here.

The War has turned the attention of Government to the wisdom of utilising India's immense natural resources, and the Viceroy speaks of organising these resources with "a view to making India more self-contained, and less dependent on the outer world for the supplies of manufactured goods". We heartily endorse this view. This has long been the cry from Indians, for India, with her varieties of soil and climate, can produce all the materials she needs, and with her surplus goods she can --as Phillimore said of her in the seventeenth century-- "with the droppings of her soil feed distant Nations". But the East India Company first, the British Government next, and lately exploiting bodies of Imperialist Traders, have vehemently insisted that India should supply raw materials, export them for manufacture abroad, and purchase, preferably within the Empire, the goods manufactured out of them. As Macaulay pointed out, the marvellous expansion of English industry was contemporaneous with the impoverishment of India. The reversal of this policy by the present Viceroy will earn India's undying gratitude, if he fosters Indian industries and not English industries in India. A witness before the Industries Commission stated that India should raise products for use outside, that is, as the East India Company put it, become a plantation for the supply of raw materials. The Viceroy must pardon us, if previous experience has made us anxious on this point. We cannot forget that a century ago the traces of iron were found in the Central Provinces, and that nothing was done to extract the metal -- England then being the world's shop for iron to her own huge profit, and not desiring a rival. It was left for Tata to seize the opportunity, and his shares of Rs. 30 are now sold at Rs. 1,180. He started a great industry, and Tata's steel is sought so largely that he cannot meet the demand. Had the iron been raised and worked here during these long years, we should not now be dependent on Britain for our machinery, the want of which cripples the efforts to found new industries and to expand old ones, in order to supply the demand caused by the necessary absorption of factories in Great Britain for War work.

The Viceroy remarks truly that previous "efforts were more sporadic than systematic," but proceeds:

The marked success which has followed the organisation of research and demonstration work in scientific agriculture, and the assistance which has been given to the mineral industries by the Geological Survey, are striking examples that encourage a bolder policy on similar lines for the benefit of other and especially the manufacturing industries.

Here, again, we must pause to remark that some of these experiments in scientific agriculture result in efforts to meet the demands of England, rather than those of India. India works up short-stapled cotton. Especially in her hand-loom industry, short-stapled cotton suits her. Lancashire wants long-stapled, and cannot get enough from the United States and Egypt. Therefore, India should substitute long- for short-stapled cotton. We confess we do not see the sequitur. Nor do we find, in our study of English trade, that England, which is set up as an example to be copied, has followed self-denying ordinances, and has regulated her production so as to help foreign countries to her own detriment.

However, the War has done for India, in awakening the interest of the Government in her industries, that which the attempts of Indian patriots have failed to do. The War brought about the Industries Commission, and the need for munitions has forced industrial organisation for their production. It is for Indian merchants to see, by seizing and utilising the political weapon, that the organisation and encouragement of industries by Government --unless it be a Home Government, under their own control-- does not reduce Indians to a more subordinate position than they now hold. It is this danger which is playing a great part in the fear which has caused the Awakening of the Merchants. The tea industry, for instance, is in the hands of English planters, and while incomes drawn from other agricultural profits have been taxed, incomes derived from tea --which is certainly an agricultural profit-- have wholly escaped till lately. If this policy be pursued, and the fostering of industries with Indian money places the industries in foreign hands, Indians will, even more than now, be dubashes, and clerks, and other employees of English-captained firms, and will depend ever more and more on wages, driven lower and lower by increasing competition.

The industrial prospects in India are by no means discouraging, if Indians exert themselves to hold their own. Mr. Tozer, in his British India and its Trade, says:

The cotton and jute manufactures, already conducted on a large scale, offer scope for still further development. Sugar and tobacco are produced in large quantities, but both require the application of the latest scientific processes of cultivation and manufacture. Oil seeds might be crushed in India instead of being exported; while cotton seeds, as yet imperfectly utilised, can be turned to good account. Hides and skins, now largely exported raw, might be more largely tanned and dressed in India. Again, the woollen and silken fabrics manufactured in India are mostly coarse fabrics and there is scope for the production of finer goods. Although railways make their own rolling stock, they have to import wheels and axles, tyres and other iron work. At present steel is manufactured on a very small scale, and the number of iron foundries and machine shops, although increasing, is capable of greater expansion. Machinery and machine tools have for the most part to be imported. Millions of agriculturists and artisans use rude tools which might be replaced by similar articles that are more durable and of better make. Improved oil presses and hand-looms should find a profitable market. Paper-mills and flour mills might be established in greater numbers. There are openings also for the manufacture of sewing machines, fire-works, rope, boots and shoes, saddlery, harness, clocks, watches, aniline and alazarine dyes, electrical appliances, glass and glassware, tea chests, gloves, rice, starch, matches, lamps, candles, soap, linen, hardware and cutlery.

Obviously, India might be largely self-sufficing, and, as of old, export her surplus. But now her imports are rising, and under the present system her exports do not enrich her as they should.

Imports were steadily rising before the War, but dropped with it (amounts given in pounds sterling):

1911-12 £ 92,383,200 Piece Goods 29,592,000
12-13 ... 107,332,490 ... 35,536,000
13-14 ... 122,165,203 ... 38,758,000
14-15 ... 91,952,600 ... 28,643,000
15-16 ... 87,560,169 ... 25,175,000

The previous five years also show generally rising imports (amounts given in rupees):

1906-7 Rs. 135,50,85,676
7-8 ... 162,71,55,234
8-9 ... 143,89,75,796
9-10 ... 154,48,36,214
10-11 ... 169,05,72,729

Exports exceeded imports, and the War has made difficulties in the way of realising payment. (Amounts given in pounds sterling.)

1911-12 £ 147,879,060
12-13 ... 160,899,289
13-14 ... 162,807,900
14-15 ... 118,323,300
15-16 ... 128,356,619

Indian merchants have seen the swift expansion of Japanese trade, and know that it is fostered by the Japanese Government both by protection and with bounties. They have to compete with it in their own land. Is it any wonder that they desire an Indian Government? They see Japanese goods underselling them and flooding their own markets. Is it any wonder that they desire a Home Government, that will put duties on these foreign goods and protect their own products?

The furious uprising of the European Associations, ever indifferent to politics which only concern Indian interests, has shown them that their trade rivals dread the transfer of power, because they fear to lose the unfair privileges and advantages which they have always enjoyed, since the humble traders of the seventeenth century became the masters of India. They are not accustomed to a struggle on equal terms, and the prospect dismays them. They want privilege, not justice and a fair field. Much of their fear and anger, the need felt by Sir Hugh Bray for English dominance for the protection of English interests, lie in the fact that they dread the Budget of a Home Government, even more than they dread a fair trade competition.

The Indian merchants now realise that in the trade-war after the end of the present War, they will go down, unless they have power in their own country. Trade, commerce, industry, organised by the countrymen of the European Chambers of Commerce and Trade Associations, mean ruin to the Indian merchants, traders and manufacturers. The favouritism of Governments and English Banks has spelt hard struggle during the period when organisation was wanting. When it is accompanied by organisation created and ruled by the foreigners, it will spell ruin. Mr. J. W. Root has rightly observed that to give Great Britain, under present circumstances, the control over Indian foreign trade and internal industry that would be secured by a common tariff would be an unpardonable iniquity. . . Can it be conceived that were India's fiscal arrangements placed to any considerable extent under the control of British legislators, they would not be regulated with an eye to British interests? Intense jealousy of India is always cropping up in everything affecting fiscal or industrial legislation.

Indian merchants are fully alive to this danger, and to avert it they are welcoming Home Rule.

The merchants also realise that fiscal autonomy can only come with political autonomy. Only the illogical demand fiscal autonomy and reject Home Rule. A budget framed by an Indian Finance Member would aim at a much increased expenditure on education, sanitation and irrigation -- an expenditure that would result in increased capacity and increased health for the citizens and increased productiveness for the land. Railways would be constructed out of loans raised for the particular project, not out of revenue. Administration charges would be reduced by the reduction of salaries and greater economy. They have increased in a decade by Rs. 160 millions.

On the revenue side, the taxation on land would be lightened, so that cultivators might make a decent living by their labour. Exports of Indian monopolies, such as jute and indigo, would be heavily taxed. Imports would be taxed according to India's needs, and heavy duties laid on bounty-fed products. Imported liquors would carry a prohibitory duty, and they were imported in 1910-11 to the value of Rs. 1,89,81,666. Provisions, which were imported to the value of over 3 crores of rupees, might also be heavily taxed, being a luxury. Sugar rose in five years from 10 crores of rupees to 14 crores, and should be heavily taxed, so as to encourage its growth here. Cotton piece-goods have risen from 37 crores to 41 crores and India should supply herself, as well as with silk piece-goods, risen from If crores to 2| crores. Army expenditure at the moment cannot be reduced, but later. Territorial Armies would be raised and large reserves gradually formed. For a time English troops would remain, as in the South African Union, but the short service system would be abolished, and recruiting charges reduced.

Even so hasty a glance over the economic condition of India makes very plain the reasons for the awakening of Indian Merchants, and their entry into the Home Rule Camp.