EUROPEAN SETTLEMENTS:
A PLAN FOR COLONIZING INDIA IN 1823
R.N. Ghosh and N.S. Narayanan
Tiie University of Western Australia
Discussion Paper No. 81.14
September 1981
EUROPEAN SETTLEHENTS: A PLAN 1"0R COLONIZING INDIA
IN 1823
--------------------------------------------~---
By R.N. Ghosh
& N. S. Narayanan
I
1\.
The University of Western
Australia.
The rise of British rule in India in the second-half of the eighteenth
century coincided with a remarkable transition in the intellectual history
of economics.
The mercantile philosophy, which had dominated European economic
thought for nearly two centuries after the Reformation, began to decline during
this· period of Bri.tish rule, both in view of the changed economic environment
with industrialization, and the growth of Classical Political Economy.
The
publication of the Wealth of Nations (1776), which stands as a watershed in
this intellectual transition, is with some aptness described as a "revolution"
.
.
1
in econonucs.
British commercial intercourse with India began in a period of tl1e dominance
of mercantilist thought. The royal charter which gave the East India company
the monopoly of trade in "the eastern waters" was almost totally influenced by
Mercantilism.
Indeed, one of the most forceful and leading exponents of
Mercantilism in Engiand, at any rate, in the first half of the seventeenth
century was Thomas Hun, who also became a director of the East India Company
in 1615.
The early activities of the East India. Company were therefore not
surprisingly influenced by Mercantilism.
In general, the ·eca.nomic aim of the mercantilists was to encourage foreign
trade, particularly a favourable balance of trade (or, an export surplus), in
order to achieve an inflow of gold and silver through the mechanism of overseas trade.
Such policies naturally led to a very positive attitude towards
colonies, which were .looked upon as secure markets for the merchants of the
mother country.
They did not hesitate to advocate the use of military power
to obtain political control ov"r the colonies,
This was thought necessary in
... /2
-2order to exclude rival European trade1;s from colonial markets, and also in order
to avoid the uncertainties of trade in the absence of political control in a
colony.
Under the influence of the mercantilist policy a complex system of trade,
hedged by various restrictions on exports as well as imports, slowly emerged
colonies.
between the mother country and
trade"
The term "The Colonial System of
has been often used to describe these various commercial restrictions
bet1veen Britain and her colonies, tvl1ich came into existent:e for about t\vo centuries
before the publication of the Wealth of Nations, un:ler the influence of a dominant
mercantile philosophy.
At the same time, the mercantilists had a very ambivalent attitude towards
colonization of India, i.e., European settlements in India.
2
In almost all
respects these newly conquered Indian territories differed from British settlements
in North .A.r.ierica and Australia.
Climatically, the new dominions in India appeared
to be unsuii:able for any large scale colonization by Englishmen, and when the.
first Englishmen had arrived they found iri India a fairly high density of
indigenous population and a people with their own government and culture.
Although
therefore, the mec·cantilists were generally not oposed to extending political
colltrol ov~r colonies and even colonization, if necessary, to secure the
objective of "a colonial system of trade",
large scale colonization of India.
they were hesitant to recommend any
There were indeed two important economic
reasons why the mercantilists were originally against E4ropean settlements in
India.
First and foremost was, of course, their anxiety to prevent any infringe-
ment of the monopoly of trade enjoyed by the East In.dia Company.
were obsessed with "the fear of competition".
The mercanfilists
The merca"ntilist dictum was:
competition tends to lower profit and ruin commerce.
They argued that European
settlements in India would intensi.fy competition among these settlers and
undermine the economic strength of East India Company.
A second economic reason
was the mercantilist fear of under-population in the mother country due to
colonization.
../3
•
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Emigration on a large scale from the mother country, they thought would
seriously weaken Britain·• s economic and military power in Europe,
Other
reasons also, mainly of a non-economic character, were advanced to oppose
European colonization of India,
types:
Broadly, these arguments were of three
First, it was maintained that free colonization would encourage
the rich European settlers to supplant Indians in the possession of soil.
Secondly, it was pointed out that in a system of unrestricted colonization,
India would run the risk of being exposed to large scale migration of the
lower class of Europeans, who might try to take advantage of the situation·
to oppress the indigenous Indian population,
Finally, it was argued that as
soon as India was tolerably well peopled with English settlers, it would
become independent of the mother-country,
3
and the example of the settlers
in the U.S.A. who achieved independence from Britain in 1783, was frequently
cited to make this point.
Under the influence of the mercantilist philosophy, European colonization
of India was effectively made impossible by a series of regulations.
By a
Regulation of the Bengal Government in 1793, it was provided that "No
European, of whatever nation or description, shall purchase rent cir occupy,
directly or indirectly, any land out of the limits of the town of Calcutta,
without the sanction of the Governor-General in Council"; nor should those
who might make loans to natives "on the security or mortgage of their lands
or lease':• be allowed, directly or indirectly·, to hold possession of the
lands, the proprietary right in which, or lease whereof, may be mortgaged to
them in security for the loan".
By another Regulation of 1794 emanating
from the Governor-General in Council, Europeans were permitted to hold land
in Benares to the extent of 50 begahs
each, for buildings.
The Regulations of the Bengal Government relating to European settlers
in India were made statutory by the Charter Act of 1813.
Section 53 of the
Charter Act provided that a licence or certificate from the Directors of the
, .. /4
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East India Company should be requisite to entitle any person to proceed to the
East Indies.
By Section 101 residence in India without licence or authority
was made punishable, for the first offence, by a fine not exceeding 2,000
rupees, with imprisonment for a term not exceeding two months; and for the
second offence, by a fine not exceeding 4 ,ODO rupees, with four months 1
imprisonment.
Under Section 108 the licence or certificate obtained from the
Directors under the provisions of this statute, merely authorized the person
to whom it was granted to reside at one of the principal settlements in
India. _To empower him to reside at any place distant more than ten miles from
the presidency to which his license from the Directors relates, he was required
4
to obtain further permission.
Until. 1824 the Bengal Government scrupulously avoided granting permission
to Europeans to own land.
The exceptions made by the Government were few in
number and despite all efforts, the indigo planters did not succeed in
p ·rsuading the government to lift, or relax these restrictive rules.
In
practice, the Directors of the East India Company allowed certain categories
of Europeans to settle in India, viz. missionaries, schoolmasters, barristers,
attorneys, partners·or assistants in established mercantile houses, shipwrights,
coachmakers, and other mechanics, and ladies of "fair reputation" who had
invitations from friends and relations in India.
prohibited from coming to India as settlers.
All other Europeans were
Europeans were not allowed to
own farms in India either
.
. for self-cultivation or for capitalist type of
farming.
II
By the turn of the eighteenth century Mercantilism
under attack from the Classical Economists.
w~s
increasingly
The emergence of the Classical
Political Economy led to a re-examination of the value of colonies and
colonization to the mother country.
The literature on colonies in Classical
... /5
-5-
Economics has been growing in recent years,
5
It is known that the classical
economists criticised.the old colonial system of trade, which comprised a
series of restrictions on trade between Britain and her colonies and developed
slowly for two centuries, prior to the publication of the Wealth of Nations
(1776), under the influence of the mercantile philosophy.
Adam Smith was
critical of the monopoly of the colony trade, and in his attack on mercantilism,
he became responsible for a re-assessment of the utility·of colonies to the
mother country.
Although intensely critical of the colonial system of trade,
the classical economists did not fail to recognise the utility of colonies.
The general position of the economists of this period on the utility of
colonies was not altogether unambiguous.
It is possible, however, that Adam
Smith looked upon colonies as a means of extending the area of free trade, while
James Mi.11
6
and J,R. McCulloch
7
found in it a way to spread British civiliza-
tion in different parts of the globe.
A more positive role for colonies and· emigration emerged under the
infl.uence of the Halthusian theory of population.
If population in an old
country has a natural tendency to outstrip the supply of food for its maintenance, it may seem that an obvious remedy fpr this is to encourage the
emigration of surplus population to new countries.
However, Hal thus himself
was unwilling to commit himself to a position of looking upon emigration as a
remedy for .over-population in Britain.
He was apprehensive that the bene-
ficial effects of emigration of surplus population would soon be netltralised
by the tendency of the vacuum in population to get filled up again.
8
Some other Classical Economists, in particular economists like Torrens,
Bentham and Wakefield, adopted a very unorthodox position from the point of
view of Classical economic theory, and went far beyond the ideas of James
Mill, Halthus and J.R. McCulloch.
They had a later convert to their view,
and this was John Stuart Mill, who abandoned the orthodox Ricardian position,
and made his intellectual surrender to Bentham and Wakefield.
9
•
• .. /6
Torrens and Wakefield challenged the validity of the Mill-Say Law of
Narkets, and argued that in a mature capitalist society savings were neither
automatically nor instantly invested, as was. supposed to be the case in the
orthodox Classical economic model.
Indeed, they envisaged a situation of
savings going to waste because of lack of investment opportunities' thereby
leading to the stagnation of Capitalism.
They argued that a free capitalist
society was always confronted with the twin risks of surplus capital and
10
.
surp 1 us popu1 ation.
The post-1815 economic d.epression in Britain, which was characterised by
both low profits and low wages, gave some kind of empirical conformation to
the Torrens-Wakefield theory of stagnation.
It was in this type o.f economic
environment that the colonization campaign gained momentum in the 1820's.
It was thought that colonization, involving both a migration of surplus
population and· an outflow of su:rrplus capital from the mother country to the
colonies would lead to all-round economic prosperity.
In this new favourable environment of colonization R.J. W:'..lmot-Horton
developed a plan for the emigration of surplus population from Britain to
Canada.
Horton was without any doubt the moving spirit behind the British
emigration campaign in the 1820's.
Just about a decade later E.G. Wakefiel.q
developed a rival plan for colonizing Australia,
The major debates in the
intellectual history of British emigration in these two decages revolved around
.
11
the suitability of these two rival plans )or colonizing Canada and Australia.
So far as is known, the' economists were not interested in developing any
elaborate scheme for sending settlers from Britain to col.onize tropical and
populous countries such 'as India and Egypt,
Most of the discussions of the
economists turned around Horton's and Wakefield's plans.
However, John Wheatley
developed a plan for colonizing India by British landowners, on the argument
that the farms in India would be owned and operated by the British landlords
with the aid of hired Indian labour.
• •. /7
-7III
John Wheatley. is little known to the economicsts of the present day.
Yet
he is not quite obscure to the students of the history of economic thought.
Enough is knmm about his life and works
12
impression of the personality of the man.
to enable. us to make. a rough
Born in Erith, Kent in l772 of a
well-knmm landed and military family, he was educated at Christ Church College,
Oxford and was subsequently admitted to Lincoln's Inn.
Married in 1799 to
Georgiana, daughter of William lushington who served in India in the Bengal
Civil Service and enjoyed some ir.iportance in the commercial life of London, he
went to India in 1822, where he lived for about five years, before going to
South Afrj_ca.
It is known that he was in cc.nsiderable financial difficulties in
India and South Africa and left unpaid debts to be settled by his son-in-law.
He died in 1830.
John Wheatley published his first book, Remarks on Currency and Commerce,
in 1803.
He followed it up by a major book, which was published in two volumes
under the title An Essay on theory of Money and Principles of Commerce.
The
first volume comprising 379 pages was publishecl in 1807 and the second volume of
227 pages appeared fifteen years later in 1822.
To students of the history of economic thought, Wheatley is best known for
his 'pro-bullionist' position, in the bullionist.controversy following the
suspension of the specie payments by the Bank of England in 1797.
There was a
surprising similarit'y o·f the theories of Ricardo and of Wheatley on prices and
.
.
.
1 a d.JUStment. 13
t h e mec h anism
o f internationa
Basically, the Wheatley-Ricardo
line of argument was that the high price of bullion was -proof of a
of bank notes.
1
depreciation'
Both Wheatley and Ricardo argued that the depreciation of bank
notes was also reflected in high prices and an unfavourable sterling exchange
rate and was evidence of the excess issue of currency.
Furthermore, they argued
that under a metallic standard currency such risks of excess circulation of
currency could be reduced.
14
. .I 8
-8-
Wheatley was a prolific writer.
15
In those days of pamphleteering in the
nineteenth century, Wheatley participated by writing, in the form of open
letters, such monographs as A Letter to Lord Grenville, on the Distress of the
Country,
London, 1816, pp.87,
A Letter to the Right Honourable Charles Watkin
Williams Wynn, President of the Board of Control on the Latent Resources of India,
Calcutta, 1823, pp.26 and A Letter to His Grace The Duke of Devonshire on the
State of Ireland, and on the General Effects of Colonization, Calcutta, 1824,
pp.l/f3.
It is very difficult to assess Wheatley's intellectual influence upon his
contemporaries.
Two contemporaries, Williams Blalce
16
and John Rooke
17
.
not only
iµade fairly extensive reference to his works but also observed striking similarities in his arid Ricardo's vieivs on money, prices and exchange rates.
It is
known that Ricardo had.a copy of Wheatley's A Plan to Relieve the Country from
its Diffic.ulties, Shrewsbury, 1821, and made critical comments on it in a letter
to Wheatley, dated the 18th September, 1821.
18
R.J.Wilmot Horton was familiar with his works.
It is also certain that
Horton's plan for colonizing
Canada was very slmilar to Wheatley's as outlined by the latter in An Essay on
the Theory of Money and Principles of Commerce,
1 and 8.
volume II, particularly chapters
There is also no doubt that Wheatley and Horton both had shown some
preference for the colonization of Canada.
However, it seems that Wheatley's
ideas went beyo"rid Horton's·· insofar as the former ·explored ·the possibility and
the rationale
of colonizing North Africa and India, reaching the conclusion
that colonization of India by English settlers was not
~nly
possible but actually ·
desirable for the sake of Britain and for the welfare of the Indians.
.· . /9
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IV
Wheatley made frequent references in his works to the need for
colonizing India by Englishmen.
However, his major contribution was that he
actually developed a plail; for colonizing India in his A Letter to the Right
Honourable Charles Watkins Williams ii'ynn, President of the Board of Control on
the Latent Resources of India, to which reference was made earlier.
important
This very
pamphlet has now become extremely scarce and remained virtually
unnoticed by the students of the history of British emigration in the nineteenth
century.
In A Letter to the Right Honourable Charles Watkin Wi:Llccams Wynn, Wheatley
contends that the primary sector is the main agent - the propelling force-behind
economic development.
The.rate of growth of agricultural surplus determined the
rate of growth of manufacturing produce:
"Towns cannot produce beyond the supply
?Q
of ·food they receive, and no addition can be made to the produce of the towns."His notion· that "towns prodtn:e in proportion to the supply of food they
'receive" was not new.
It can be traced to William Petty, James Steuart, and more
distinctly to the writings of the French Physiocrats in the eighteenth century.
However, what was new in Wheatley's notion was that shortage of food and raw
materials in the domestic economy must be overcome by imports in order to prevent
the stagnation of the manufacturing sector and the economy as a whole.
As he
pointed out.:_ "But if_foreign corn be prohibited altogether, a prohibition will be.
put to all further advancement in wealth. 1121
Wheatley was quick to attribute the economic depression in Britain in the
1820' s to the restrictions on the imports of foreign corn.
He declared that t11ese
restrictions were wrongly imposed by "country gentlemen of England" who fear that
the introduction of foreign corn would lower
the value of domestic
corn,
dismissing them with the comment: "Towns produce in proportion to the supply of
food they receive, and will go on producing to any extent, as corn comes in,
always bringing the amount of manufactures to a perfect correspondence with the
.. /10
-10,.:
·amount of food.
As every additional supply of corn will therefore give rise to
an equivalent addition of manufactured produce, it is evident that the corn of
England will at all events continue to exchange for the same amount of manufacturer
?2
as before, let foreign corn be admitted to what extent it may."-
As foreign
corn was likely to be more expensive than domestic corn because of the high cost
of transportation, Wheatley argued that the domestic growers should not fear
competition from foreign corn and, indeed, could expect in the long run to get
better prices for their produce because of 'the parity of national prices to
imported corn prices in a system of free trade.
Here Wheatley recognised the important dynamic role of money in the
overall process of economic growth.
a suitable monetary policy.
A policy of free trade must be supported by .
A restrictive monetary policy, according to Wheatley,
has a depressing effect on economic activity.
As the Corn Laws were lifted
to allow free importation of foreign corn, and thereby stimulating
the British economy, it was necessary to let the supply of money increase
in response to the upswing in economic activity.
Wheatley formulated
a simple quantity theory of money, and argued that unless the supply of
money kept pace with its demand generated by economic growth, prices
would fall and a general
recession would stifle and halt recovery.
According to him, a metallic currency imposed excessive rigidity and
was not suitable for a growing economic system,
Therefore, he
advocated the introduction of a paper currency and the gradual
replacement of the gold standard.
It is important to remember that Wheatley did not support a managed
currency in order to achieve economic growth through inflation.
His approach
to the currency question was very orthodox, and he opposed inflation and deflation,
because such fluctuations in prices led to a "breach in the spiri·t of all
contracts. 11
23
Wheatley argued that Corn Laws had caused a decline in the price
of wheat maintaining that it should not be allowed to fall below 100 to 120
•
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q
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shillings a quarter:
"The distress of the landed interest of England has
arisen from no other cause whatever, than the unjust reduction of prices .
1124
To sum up, John Wheatley opposed the Corn Laws, and like the Classical
Economists, advocated free trade in corn as a means of ensuring economic revival
in Britain.
At the same time, his position on the Corn Laws was, strictly
speaking, un-classical.
He did not accept the Classical view that the Corn
Laws were intended to protect British farmers from cheap overseas imports of
corn.
On the other hand, he.argued that the repeal of the Corn Laws would
eventually raise corn prices in Britain, and thereby prove beneficial to the
farming community.
His advocacy of free corn trade was not out of-any
philanthropic attitude towards the British landowning class
but was intended
to achieve a higher rate of British economic growth through imports of
agricultural surpluses, both food and raw materials.
His support of a scheme
of paper currency was designed to provide reasonable elasticity to the currency
system.
And he questioned whether British manufacturers had the necessary
competitive advantage over foreign manufactures to be able to compete in
overseas markets and attract the imports of foreign agricultural surplus to
Britain.
His own thinking was that Britain had a comparative advantage in
manufactures because of her coal, iron and stern engine·and the general
technological superiority in the industries as a whole.
The other question which he asked ang then dismissed was whether there was
any fear of a general glut in agricultural produce, if all restrictions on the
importation of foreign corn were withdrawn.
''There can be· no fear that the
gradual introduction of a larger agricultural surplus will not find a competent
number of manufactures to create an equivalency in manufactured produce to
exchange for it 11 •
25
His optimism seems to have been based on his knowledge of
the existence of a large supply of half-employed and unemployed persons in
British towns.
It is at this stage that Wheatley tried to link his theory with his scheme
-12-
for colonizing India.
He said: "As a larger agricultural surplus may be
derived from India then from any other part of the British Empire, it is of
more importance to review the policy that is pursued towards her than to any
other dependency."
26
He argued that India's poverty could be traced to
"agricultural overpopulousness". No agricultural surplus in India could be
raised until the Hindu law of equal inheritance to all sons was replaced by a
law of.primogeniture.
He argued that the Hindu law of inheritance encouraged
population growth.thereby tending to reduce the size of the agricultural
surplus; agricultural production was consumed by the large rural population.
Whe~tley
then referred to the other method of increasing agricultural
surplus ih India: to allow British subjects to purchase land and settle in India.
In fact, he discussed at length the advantage of colonization of India by
Englishmen.
Had it taken place during Lord Cornwallis' governor-generalship
in India (1786-1793) "much the greater part of Bengal, Behar and Orissa would
now have been in our possession, as most of the propertY of these provinces
has changed hands since that time, and been bought by our banyas and sircars,
or the servants of the British, instead of by the British themselves".
27
Wheatley also argued that British landowners would bring into production
large farms thus generating a large agricultural. surplus to feed the requirements
of the manufacturing industries in Britain.
He brushed aside the important
question, viz. how to introduce large farms in a country of small farm's with a
rural over-population.
vfuatever the cost in terms of human sacrifice, the task
of removing all unwanted people from agriculture had to_ be achieved, because
"the wealth and prosperity of the country would be augmented by the division of
so much superfluous agricultural labour into other channels, as so much more
produce would be raised, or so much improvement carried into effect". 28
In a
lat~r
publication, he pushed his idea still further.
farms from the 'natives',
In acquiring
no purchase-price would have to be paid because, he
argued, by the Hindu law "the fee simple of the soil of India has always. been
. ./13
!
-13-
held to be vested in its government, and because by dispossessing the 'native'
landlords the ryots. would be freed from their oppression.
29
So great did he think the benefit of colonizing India to be that he
advocated "unrestricted system of colonization" by the.Englishmen until about
a half of the total 800 million acres of Indian dominions has been posse3sed
and settled by them.
Estimating that about.a fourth of the proprietors would
reside in England, he thought that the remittances for the income of these
absentee landlords would be around ElOO million, on the assumption that the
net produce of an acre of land would be worth one pound sterling.
Furthermore,
assuming that those Britons settled permanently in India would lay out one ..·third
.of their net income in British manufactures, he estimated that the united remittances to be exchanged for British.manufactures would amount to E200 million - an
addition equal to three times the extent of Britain •·s export trade at that time.
Wheatley argued that most of the remittances from India to Britain would
take the form of an agricultural c;urplus toonsisting of food as well as raw
111ateri:als which British settlers in India would produce.
The food would be
corn, flour, sugar, GDffee, rice, spices, tobacco, tea and other articles of
substance; and the raw produce would consist· of "cotto11, sillc., wool, indigo,
saltpetre, lackdye, cochineal, timber and co".
31
Wheatley pointed out that there was· no reason why the remittance from
India should not also oe made .in manufactured produce, if the towns of India
could raise any manufacture at a cheaper rate than in England, "as the great
body of the people of England would be benefited hy having it at a lower price,
whatever might be the partial injury to those who were concerned in the
.. f erior
.
Br1t1s
. . h manu f acture " . -32
in
There was a touch of philanthropy for the Indians, too, in Wheatley's
scheme.
Indians would benefit by the example set by the English settlers "by
seeing the practical good that follows from these laws in the wealth and
happiness of the people who live under them: but never will they be converted
.. /14
30
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to the religious, civil and moral institutions of Europe by the missionary
system".
33
The influence of European science and knowledge upon the minds of the
'natives' \Vould work. as a 'liberalising' force; and
long fettered "by gloomy superstitions",
of reason".
11
freedom of their intellect 11 ,
would be assured by the "magic powers
34
It is now possible to summarize the ma;in features of Wheatley's plan for
colonizing India:
1.
The Plan involved the idea of developing large British type
capitalist farms in India in place of small farmers.
This
aspect of Wheatley' s Plan was more in common with Wakefield •·s
than H·artOn •·s.
In his scheme of
11
systematic colonization 11 ·,
Wakefield also advocated the introduction of the British type
of large scale farming in Australia.
Unlike Wheatley and
Wakefield, however, Horton •·s plan of colonization involved the
creation of small peasant - proprietary farms of about 100 acres
each in Canada.
2.
The English Capitalists were to be encouraged to migrate to India
to buy land to set up large farms.
Wheatley supported the idea
of "unrestricted migration" by Englishmen.
However, if some
capitalists did not want to settle in India, they could - according.
to Wheatley - still be encouraged to buy farms in India, which they
could run through their agents as absentee landlords.
3.
The English Capitalists were to own these big farms in India, and
apply their capital and technology for superior management.
In a
f:it of excitement Wheatley went to the extent of saying _that the
Indian landlords who were to be dispossessed did not deserve any
compensation, not only because land rights by the Indian legal
system vested in the ruler, but also because of the enormity of,
•
economic gains to be achieved by
s~pp"lanting
Indian .o>mers from soil.
-15-
4
Although Wheatley was not very explicit, it seems his Plan could
work only if the English capitalists were allowed to use cheap
Indian labour to work in their big farms.
Unlike Wakefield, Wheatley
did not advocate that labourers were to be.transported from Britain.
Wheatley also recognised that there was already great pressure of
population on land in India because of over-population.
Despite
this he was an advocate of large farn1s in India, whicl1 l1e knet..\7 would
lead to displace"!ent of labour from agriculture.
He recognised that
the removal of surplus labour from agriculture would cause great
hardships and sacrifices to large numbers of people.
Yet he thought
that such sacrifices were worth mak:ing in order to ensure the long:
I
term development of agriculture.
5.
Wheatley's Plan involved the ·conversion of nearly 400 million acres of
land in India into these Capitalist farms under British ownership and
management~
All surplus farm produce consisting
0-F
food and rav-1
materials was to be exported from India to England to facilitate the
development o~ the manufacturing sector,
in particular, but in
general to stimulate the level of economic activity, so that Britain
could indefinitely retain her unrivalled industrial supremacy in the
world.
6.
Although the scheme was principally intended to help the growth of
British economy, it was expected that it would stimulate Indian
economy as well.
In the concluding pages of his pamphlet Wheatley made a bitter attack on
Mercantilism.
It was the mercantile theory relating to the monopoly of trade
of the East India Company, which had becqne the single most important impediment
to large scale European settlements in farming and trade in India.
A strong
advocate of laissez faire, Wheatley pushed his free trade argument to an extreme
position:
until
11
commerce be as free as the air we breathe, it is impossible
33
that we can be raised to so high a state of prosperity as we otherwise might be,
-16-
a type of argument he used to criticise the mercantile theory of the monopoly
of foreign trade as a source of economic gain to the mother country.
He argued
that the mercantilists were clearly wrong in ignoring the possibility of
colonization of India by English settlers.
argument, he observed:
Employing ·a type of ner-physiocratic
"The possess:i.on of the land is the key-stone of the arch,
on which the whole superstructure of increased wealth depends; for unless British
subjects are allowed to be proprietors of land (in India), no large agricultural
surplus can ever be raised for the use of England".
36
Wheatley's scheme for colonizing India is an important contribution to the
intellectual history of English economic thought on colonies and colonization.
Between tl}e loss of the American colonies in 1783 and the growth of intense
emigration and cplonization campaigns in the 1820's,
most important colony of Britain.
India had become by far the
It is knmm that many English economists,
particularly the philosophical radicals, openly supported an imperial policy
towards India. · This imperialism '·ms coloured by the belief that European
civilization was superior to the indigenous Indian civilization.
The utilitar-
ians thought that c .continuing British rule in India would be to the best
advantage of the Indians, as it would give them an opportunity to learn from
superior European science and culture.
In an article in t1'e Edinburgh Review in
1810, James Mill had already stated his solution for India's problems: "Instead
of sending out a Governor-General to be recalled in a few years, why should we
not constitute one of our Royal Family, Emperor of Hindustan, with hereditary
succession?
The Sovereign would then be surrounded by Britons, and the spirit
of Britons would animate and direct his government:
Europeans of all descriptions
would be invited to settle in his country and to identify their interests with
those of the nation<
37
But James Hill did not actually put forward a plan for
colonizing India by European or English settlers.
Wheatley 1 s obscure pamphlet
of 1823 therefore goes a step forward.
A complex pf historical circumstances probably explains why Wheatley's
•. /17
'
.
. -17-
scheme failed to make the impact necessary for large scale European settlements
to be established in India.
First, his plan did not receive as much publicity
as Horton's and Wakefield's rival plans, because of the place of the publication
of the pamphlet
38
and the subsequent tragic death of its author.
Second, the
economic policy of the East India Company was being slowly dominated by the
Classical Economists who (especially those who adopted the Ricardian tradition)
never.openly advocated colonization of Indfa, though they supported British rule
in India with a view to civilizing the indigenous Indian population.
1'»1eatley' s efforts to colonize India· did not altogether go in vain.
In
1824 the Government of Bengal, in an attempt to encourage the cultivation of
coffee, relaxed the restriction on European settlements and authorized
Europeans to take leases of land for the sole purpose of the cultivation of
coffee.
[The demand for withdrawal of all restrictions on European migration
to India beca"Ue more intense in the next few years. ]
Several public meetings
in Calcutta in 1828-29 indicate that this demand was pressed forward not only by
the European merchatf'IS of Calcutta, but also by some influential Bengali
gentlemen of the time like Dwarkanath Tagore and Raja Rammohun Roy.
39
•
R E F E R E N C E S
1
See, for instance, Ronald Meek 1 s Introduction to Precursors of Adam
Smith 1750-1775 (edited by Ronald L. Meelc), 1973.
2
In England .and America, Vol.II, E.G. Wakefield defined colonization as a
process of "the removal of people from an old to a new country, and the
settlement of people on the waste land of the new country". (p. 74).
For an excellent study of the mercantilist attitude to Indian colonies
See, W.J.Barber, British Economic Thought and India 1600-1858, Clarendon,
1975, Part - I.
3
See,for instance, Frederick John Shore, Notes on Indian Affairs,
Vol.1, 1837, p.40.
4
British Parliamentary Papers, East India Company Affairs, Colonies,
East India, 5, PP• 343-5.
5
.See, for instance, Winch, Donald Classical Political Economy and
Colonies, Londori 1965; Kittrell, E.R. "The Development of the Theory
of Colonization in English Classical Political Economy", Southern
Economic Journal, January 1965, pp. 189-206; Winch, Donald "The
Classical Debate on Colonization: Comment" and Kittrell, E .R. "The
Ciassical Debate on Colonization : Reply", Southern Economic Journal,
January 1966, pp. 341-349 and Shaw, A.G.L. (ed.) Great Britain and the
Colonies, 1815-1865, London, 1970.
6
See, for instance, Forbes, Duncan "James Mill and India", The Cambridge
Journal, Vol.5, 1951-2, pp. 31-32 and Barber, W.J. "James Mill and
the Theory of Economic Policy in India", History of Political Economy
Spring 1969, pp. 85-100.
7
See, Ambirajan, s. "McCulloch on India", The Manchester School of
Economic and Social Studies, May 1965, pp. 125-140. For a slightly
different view, see O'Brien, D.P. J.R. McCulloch: A Study in Classic
Economics, London, 1970, pp. 336-341.
8
For a detailed account of Malthus' views on emigration, see Ghosh, R.N.
"Malthus on Emigration and Colonization: Letters of Wilmot-Horton",
Economica, February, 1963, pp. 45-62.
9
I t is possible that J. S. Mill himself dici. not realise the difference
between Ricardian orthodoxy and The Torren-Wakefield theorem on
stagnation. See, in particular, Lord Robbins, Robert Torrens and the
Evolution of Cl.assical Economics for a brilliant exposition of
J.S. Mill's position.
10
For an excellent exposition of Torrens-Wakefield theory, see Lord
Robbins, op.cit. T.W. Hutchison's "Bentham as a_n Economist",
Economic Journal, 1956, traces the evolution of Bentham 1 s ideas from
economic orthodoxy to economic heresy.
11
For a recent study of the Horton-Wakefield controversy, see Johnston,
H.J.M. British Emigration Policy, 1815-1830, Oxford, 1972, Chapter 10.
12
See Fetter, F. W. "The Life and Writings of John Wheatley", Journal of
Political Economy, June 1942, pp. 357-376.
• .. /2
-2-.
13
On all this see Viner, J. Studies in the Theory of International Trade,
London, 1960, pp. 136-148. Also, see Schumpeter, J.A. History of
Economic Analysis, pp. 706-717.
llf
It is known that the Wheatley-Ricardo line of argument was different
from the position of the other bullionists. m1eatley and Ricardo both
argued that foreign remittances did not depress the exchanges, whether
und.er convertibility or inconvertibility, The other bullionists, on
the other hand, were prepared to accept the argument that foreign
remittances would under inconvertibility affect the exchange rates.
See Viner, J. op. cit., pp. 138-140.
15
For a list of Wheatley' s publications, see Fetter, F. W. ~~·,
pp. 359-360.
16
Blake, William Observations on the Principles which Regulate the
Course of Exchange, London, 1810 and Observations on the Effects
Produced by the Expenditure of Government, London, 1823.
17
Rooke, John Remarks on the Nature and Operation of Money, London, 1819,
18
Sraffa, P. (ed.) The Works and Correspondence of David Ricardo,
Vol, pp. 71-74. A Plan to Relieve the Couotry from its Difficulties
is a section of An Essay on the Theory of Money, Vol. II and was
seperately printed in advance of the publication of the Essay.
19
Ghosh, R.N. Classical Macroeconomics and the Case for Colonies,
Calcutta, 196 7, pp. 132.:.161.
20
A Letter to The Right Honourable Charles Watkin Williams Wynn on the
Latent Resources of India, Calcutta, 1823, p.2.
21
Ibid, p.4.
· 22
Ibid, p.5.
23
Ibid, p.6,
24
Ibid, p.7. Apparently, Wheatley is arguing (as he did in his earlier
publication, An Essay on the Theory of Money, Vol.II, Chapter 5) that
the restrictions on the importation of corn have the effect of 'lowering the price of corn in Britain, because of the increased home
production of corn, and thereby affect the landlords and fanners as
well as the manufacturers advers.ely, This whole approach seems to be
un-Ricardian. Ricardo did not fail to observe this and therefore wrote
to Wheatley: "I shall only now say that I think it an error to suppose
that the price of corn is regulated by supply and demand, only, without reference to the cost of producing it".
(Sraffa, P. (ed.) op.cit.,
p. 72. Also, see the editor's footnote 2 on p. -73),
25
Ibid, p.9.
26
Ibid, p.10.
. .. /3
-3-
27
Ibid, pp. 13-14. In his Principles of Conm1erce, Vol.II, 1822 and in his
Letter to His Grace The Duke of Devonshire on the State of Ireland
and the General Effects of Colonization, Calcutta, 1824, Wheatley had
developed a scheme of pauper-emigration to Canada, which was very
similar to.Horton's Scheme. He agreed that the nature of the colonization of India had to be different from that of Canada. As more
population is wanted in Cariada, the introduction of a large body of
landless labourers from Ireland to Canada would have to be the obvious
policy. But in India, what is wanted is not more population, but
enterprise, scientific management and skill. Therefore, h'e proposed
that Englishmen having these qualities should be encouraged to go to
India and given facilities to own large farms by liquidating the 'native
.zamindaris',
28
Ibid, p.15.
29
A Letter t.o His Grace The Duke of Devonshire on the State of Ireland
·and the General Effects of Colonization, Calcutta, 1824, pp. 72-73.
30
Op.cit., pp. 16-17.
31
Itid, p.17.
32
Ibid, p.17.
33
Ibid, p.15.
34
A Letter to His Grace The Duke of Devonshire on the State of Ireland,
and on the General Effects of Colonization, Calcutta, 1824, p.38.
35
An Essay on the Theory o:'.: Money, ·vol. II, p .199.
· 36
A Letter to The Right Honourable Charles Watkin Williams Wynn on the
Latent Resources of India, Calcutta, lP.23, pp. 23-24.
37
Edinburgh Review, Vol,16, Art. VI, April, 1810, p.156.
38
No place of publication of the pamphlet is mentioned but the letter
is dated Calcutta, June 15, 1823.
39
British Parliamentary Papers, op.cit., pp. 341-43.
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