Clemens Dutt

Capitalist Exploitation in Indian Agriculture
Part II

Source: Labour Monthly, Vol. 9, December 1927, No. 12, pp. 744-753, (3,520 words)
Transcription: Ted Crawford
HTML Markup: Brian Reid
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Exploitation by Moneylenders

On top of the heavy exploitation of the present cultivators by the government and the landlords comes a third enormous toll in the shape of interest on debts. In recent times rural indebtedness has grown to gigantic proportions, the total in British India alone being estimated at about 600 crores of rupees.1 Since most of this sum is lent at high rates of interest, from 10 up to 100 per cent. and even more, the annual drain on peasant production must amount to some 60 crores at least, or nearly twice the amount of land revenue. The following illustrative facts on indebtedness in different provinces of British India give some idea of the burden of this debt.

In the Madras Presidency, Sir F. Nicholson estimated the total debt of the rural population in 1895 at 45 crores of rupees. At an average interest of 15 per cent. this would involve an annual charge of 6.75 crores. He considers that 8 crores of rupees is a more probable figure and that at least another crore can be added for stamps, fees, commission brokerage, costs in litigation, &c. Reckoning the gross annual produce at 60 crores, the annual charge of 9 crores would mean a drain of 15 per cent. of the total.

A detailed study of rural indebtedness in the Punjab has recently been made by Mr. Darling. He concludes that “for the province as a whole, debt is twelve times the land revenue, which means that the total debt of the proprietors of the Punjab is about 55 crores of rupees.” His figures refer to 43,733 proprietors, 80 per cent. of whom were found to be in debt. Mortgage debts, i.e., on the security of the land, were found to be 45 per cent. of the total. He says further that in 1921 the total mortgage debt of the Province was ascertained to be 34 ½ crores of rupees so that on this basis, assuming that this represents 45 per cent. of the total debt, the latter must amount to some 77 crores.

For Bengal, the registrar of co-operative societies, giving evidence before the Royal Agricultural Commission, declared that rural indebtedness amounts to about 60 crores of rupees.

Every one of the recent intensive studies of the economy of selected villages, most of them based on the example of the classic work of Dr. H. Mann, makes mention of the prevalent and onerous burden of rural debts. Some investigators, notably Mr. Darling, draw the conclusion that the most important cause of rural poverty is to be found in the extortions of the moneylenders, and that the weight of Government land revenue is of slight influence in comparison. It is probable that this standpoint reflects chiefly the official position of the British administrator. It must be emphasised that the exploitation of the peasants by the moneylenders is not an isolated specific form of exploitation, but is intimately bound up with the whole of the process of exploitation involved in capitalist production and is part of the economic machinery of exploitation which is headed and dominated by British imperialist finance-capital. The significance of the moneylender lies in his association with the rest of the apparatus of exploitation. He is very rarely merely a usurer, he is usually a combined moneylender, landlord, and capitalist trader. The mortgaging and expropriation of the peasant proprietors and the transfer of their holdings to non-cultivating buyers, which has rapidly been taking place all over India, is mainly the result of the operations of moneylenders. These moneylenders appear as capitalists who prefer to invest their money in land rather than in any other form of capitalist enterprise. Marx has a description of this process which is now markedly applicable to Indian conditions. He says:—

as soon as rent assumes the form of money rent and with it the relation between rent-paying peasants and landlords becomes a relation fixed by contract . . . . a development which is not possible until the world market, commerce and manufacture, have reached a relatively high level . . . . the leasing of land also puts in an appearance. . . . When the capitalist tenant steps between the landlord and the actually working tiller of the soil, all conditions have been dissolved which arose from the, old rural mode of production. The capitalist tenant becomes the actual commander of these agricultural labourers and the actual exploiter of their surplus value, whereas the landlord has any direct relations only with the capitalist tenants, the relation being a mere money form fixed by contract. (Marx, Capital, Vol. III, p. 929. Kerr edition.)

Exploitation by Traders

The moneylender in India, as the capitalist tenant in the sense meant by Marx, is also the chief trader and immediate disposer of the agricultural commodities in the market. He not only has possession of the land and finances the cultivation, but buys the crop cheap and sells it at a higher price. The description given by Mr. Subbarama Aiyar of the situation in Malabar is typical of all parts of India. He says:—

The moneylender who is generally a grain dealer, cloth merchant, and jack-of-all-trades, is an indispensable figure in the village economy. Every typical village has at least one usurer who finances the local cultivation and local trade.

The collection of Government kist in money soon after the harvest compels the small ryot to sell his paddy at once instead of waiting for a more favourable time. Whatever may be the cause the price of paddy is comparatively low at the time of harvest and gets higher as the season proceeds. The necessitous cultivator is thus at a disadvantage in that he cannot afford to wait.

The trading capitalist-moneylender exploits the actual tillers of the soil as much as if the latter were actually hired agricultural labourers. He advances money for the purchase of seed, &c., and he buys the agricultural commodities that they produce leaving them a bare minimum of subsistence. In many cases the crop is already mortgaged or sold to the trader before it is even sown. The helplessness of the peasant cultivator lies in the fact that he is not working for local needs, but is a producer of commodities for the world market.

Capitalism in Village Economy

The tendencies in the development of Indian agriculture are only explicable on the basis of a study of the penetration of capitalism under the influence of British imperialism. The preceding sections have described the increasing process of capitalist the first and foremost feature of capitalist agriculture. This exploitation is based on the development of a money in place of the old feudal system of barter. This development of money economy and capitalist relations is seen not only in production but also in consumption. The old self-sufficiency of the village has been destroyed in both spheres. This is seen in the penetration of machine-made goods and the accompanying ruin of the old village handicrafts. Formerly every village possessed its weaver, potter, leather-worker, blacksmith, brazier, oil-presser, &c., who, as Sir William Hunter remarks in his book The Indian Empire, were “members of a community as well as inheritors of a family occupation”. They were paid in kind or directly supported by the village community, and not producers of commodities on a money basis. Now their livelihood has been seriously undermined by the breakdown of the village communal system and by the introduction of factory products from the towns. Already, for example, it is becoming impossible for the handloom weavers to compete with factory-made cloth, and in spite of the enormous increases of Indian-produced yarn and cotton goods, there has been a steady decline in the number of spinners and weavers. Some illustrative quotations from just one of the recent intensive studies of Indian villages (Economic Life in a Malabar Village, S. S. Aiyer, 1925) will be sufficient to indicate the importance of the changes that have been taking place.

The increasing use of machine-made cloth in place of handwoven fabrics, kerosene for castor oil, vessels and implements of iron and copper, scissors, knives, and mirrors which pour in from abroad; the use of bicycles, watches and clocks, power-lamps and chimneys, and folding umbrellas among the well-to-do classes, and motor cars among the very rich; the demand for sewing machines and machine tools of several kinds, matches, cutlery, and soap . . . . these factors, assisted by the railway and post office, have combined to break down the old self-sufficiency in Malabar as in the rest of India.

In Malabar, as in the rest of India, the blacksmith has lost his chief business of making new ploughshares, hoes, and big knives, which are now imported from foreign countries.

Kerosene oil and power lamps are gradually displacing castor and other country-made oils for lighting purposes. People of several castes have begun to use soaps, and the consumption of coffee and tea is on the increase year by year.

Capitalist exploitation of the peasant cultivators and the effects of the penetration of factory-made products into the villages are two important aspects of the development of capitalism in Indian village economy. An even more important aspect which remains to be dealt with is the growing unequal distribution of wealth and the development of class differentiation and class struggle in the country side.

The Class Struggle in the Village

Class division in the village does not arise for the first time with the introduction of capitalism, but it does take on a new character, for whereas previously the two chief classes occupied with agriculture were the feudal lords and the peasants cultivating the soil in a state of serfdom, under capitalism the two chief classes are the capitalist landlords and the landless agricultural labourers. While the presence of wage labour is the outstanding mark of capitalism in agriculture, it is not necessary for the dominance of capitalist relations that there shall be an immediate expropriation of the peasants. Lenin has declared that:—

The basic and chief tendency of capitalism consists in the squeezing out of small production by large, both in industry and in agriculture. But this squeezing out must not be understood as meaning solely immediate expropriation. Under this squeezing out must also be understood the more powerful destruction and deterioration of the conditions of economy and the petty cultivators continued through years and decades.

This description can be very aptly applied to the Indian situation. As already described, the conditions of existence of the mass of poor peasants are such that, while large numbers are actually being driven into the ranks of the agricultural proletariat, the remainder are wholly occupied in producing surplus value for the various classes of exploiters, retaining for themselves the equivalent of the barest minimum of subsistence wages. The economists, speak as if, with a few conspicuous exceptions, a dead level of poverty reigned in the villages. On the contrary there are rich and poor in every village, and even in the towns a large section of the bourgeoisie owe a considerable proportion of their income to rents from agricultural property.

The gulf between rich and poor is larger in India than in any Western capitalist country. The disproportion between the wealth of even the only moderately well-off sections and that of the lowest classes or castes is enormous. The figure, of house property in the villages, such as those given by Mr. Aiyer, in his study of a Malabar village, show this contrast in a striking form, and, as he says, they “convey a fair idea of the economic status of the several castes.” The relatively well-to-do castes of Nambisan, Brahmin, and Nair families in this village own house property worth on the average from 660 down to 143 rupees but that of the artisan castes is worth only 50 to 20 rupees or even under while the average for the depressed classes is 10 rupees or even less. The better off cultivators are fifty to sixty times as rich as the poorest.

The general deterioration of the economic conditions of the poorer cultivators and the existing unequal distribution of wealth comes out very clearly in the figures relating to sub-division of holdings. Studies of Indian villages in all parts of India have confirmed the existence of the serious and critical position so graphically described by Dr. H. Mann for the Deccan, where a large proportion of the cultivators (85 per cent. in the village of Jategaon Bruk) are unable to live on their earnings even on their own ,meagre standard. Everywhere the number of small and uneconomic holdings is on the increase. In the Jategaon, mentioned above, more than half of the holdings are less than ten acres, and 77 per cent. are below twenty acres. In the village of Nelluvaya, in Malabar, out of 105 holdings under private ownership no less than seventy-five are below five acres. Yet the average size for the whole is about nine acres. Several big landlords exist in the village, and the author declares:—

Owing to the existence of a few big landowners whose estates are impartible and of vast stretches of land in the hands of temples, absentee landlordism is the inevitable result.

In the village of Vazhamangalam, in the Madras presidency, 147 out of 181 holdings are below five acres in extent. The average size of holding is about four acres. In 1910 there were only 143 holdings altogether, and of these 106 were below five acres.

The report published by the Labour Office of the Government of Bombay on An Inquiry into Agricultural Wages in the Bombay Presidency gives some interesting statistics on the size of holdings in the presidency. Out of a total of nearly 2¼ million holdings, over a million are less than five acres. Yet the total acreage amounts to nearly 3½ million acres, and the average size for all the holdings is 15.4 acres. There are 3,369 holdings over 500 acres, most of them in Sind, with an average size of 1,024 acres.

This is the situation in Bombay where large landowners are much more infrequent than in the regions under zemindary tenure. In the zemindary areas the contrast between big and small ownership is much more marked. In Bengal, with its crowded population of small cultivators, the average size of a holding is hardly three acres. Professor Mukherji gives the average size of a holding in the district of Dacca as 2.88 acres, and in that of Bakarganj as 2.51 acres. Yet there are in Bengal 92,508 estates under permanent settlement with an area of 37½ million acres, i.e., with an average size of over 400 acres per estate. Professor K. T. Shah declares:—

In the three provinces of Bengal, Bihar and Orissa, and Assam, the zemindary estates number 223,920 embracing a total area of 89,080,811 acres, or an average size of an estate of 400 acres in round figures. (Wealth and Taxable Capacity of India, 1925, p. 303.)

It is true that the over-pressure on agriculture is the basic fact in Indian poverty. Nevertheless, the unequal distribution of wealth and the heavy toll taken by the exploiters is a very important factor in driving down the masses of small cultivators below the subsistence level. Even with the admittedly excessive agricultural population in India to-day, an equal distribution of land would give an economic holding for all the peasants. The cultivated area in British India amounts to about 660 million acres, and the total number of ordinary cultivators is about 193 millions, or say 35 million families. That gives an average of nineteen acres per family, or 3.4 acres per head. The unequal distribution of land is reflected in the unequal distribution of wealth. Professor Shah concludes that the distribution of the national dividend is as follows:—

More than a third of the wealth of the country is enjoyed by about 1 per cent. of the population; or allowing for the dependents about 5 per cent. at most; slightly more than another third (about 35 per cent. of the annual wealth produced in the country) is absorbed by another third of the population allowing for dependents while 60 per cent. of the people of British India enjoy among them about 30 per cent. of the total wealth produced in the country.

Thirty per cent. of the annual production of wealth is distributed among 60 per cent. of the population. This section which represents the poorer peasants, together with the proletariat, therefore get only half the wealth that it should have if the distribution was on an equalitarian basis. The various tolls taken from the peasant, in the shape of land revenue, rents, interest on debt, profits of shopkeepers and traders, and the upkeep of religious institutions must amount to at least 150-160 crores of rupees. This is nearly 10 rupees per head of the agricultural population in British India. Actually, the value taken from the cultivators must be much greater than this, for Professor Shah and others have estimated the value of the agricultural production of British India at 1,300-1,500 crores. This represents about 80-90 rupees per head, but the actual income per head as found in the various investigations of different villages is usually below 50 rupees. Professor Gilbert Slater declares:—

The poverty of India is a grim fact. In the main it is the result not of unequal distribution of what wealth is produced, excessively large incomes being very few though conspicuous, as of a very small production per capita. (Preface to Pillai, Economic Conditions in India, 1935)

While this may be true “in the main” as far as absolute figures of wealth production are concerned, it must be emphasised that relatively to the amount of wealth produced the effect of exploitation and unequal distribution is very important.

The bulk of Indian agricultural cultivators still belong to the class of peasants. They differ from the class of proletarian workers in that they are still producers of commodities, and that they sell commodities and not their labour. Nevertheless, it is common knowledge that more and more of them are being converted into landless labourers. In 1882 Sir William Hunter remarked that “the increase in the population has developed a large landless class,” and he reported that there were in India “7¼ millions of adult day labourers” engaged in agriculture. The All-India Census report for 1921 estimates the number of agricultural labourers and dependents to be thirty-eight millions, of which twenty-two millions, are actual workers. Mr. N. M. Joshi, the General Secretary of the All-India Trade Union Congress, has recently stated that there are twenty-five millions actual wage-workers in agriculture, and that a further fifty millions, at least, are so engaged for some part of the year. He says:—

The wage earning agricultural workers number 21.6 millions, and they support a total population of 37.9 millions. Besides these there are 5.2 millions of actual workers, including those who work for wages in allied occupations, maintaining a total population of over eight millions. Thus it is safe to estimate that there are about twenty-five millions of persons who are mere agricultural wage-earners. . . .

Out of the total number of 100 millions of actual workers in agriculture, at least fifty millions should be working as wage-earners from four to eight months in the year. (The Trade Union Movement in India, N. M. Joshi, 1927.)

These latter fifty millions are already practically converted into proletarians. Thus the effective numbers of the proletarianised agricultural class already amount to some seventy-five millions, forming, with their dependents a majority of the actual cultivators.

The conditions summarised in the above statistics are confirmed by the descriptions of individual villages. The following is a typical example:—

In a village of Bengal (Murshidabad) of forty peasant families of which only five were solvent (these had three-acre holdings, and their rent had increased from 7 to 17 annas in twenty years).

Six families earn their living by day labour on lands at one time owned by them, but now relinquished to usurers. The rest earn a precarious livelihood either on their own lands or as hired farmers on a half-to-half share basis. (Professor Mukherji, Modern Review, November, 1925.)

The most fully developed capitalist exploitation of agriculture occurs in the big plantations worked by limited liability companies for the production of industrial crops. There are some 800,000 workers on the organised tea, coffee, rubber, and sugar plantations, including men, women, and small children. The profits of these companies are very large, while the wages of the labourers are low even for India.

The growth of the agricultural proletariat gives rise to a class struggle in the countryside between this class together with the poor cultivating peasants and the landlord and rich peasant class. This conflict threatened to reach the dimensions of an actual upheaval in the turbulent period of non-co-operation.

This class struggle shows also the connection of the agricultural working class with the industrial working class, Further it demonstrates the importance of the whole peasant and agricultural proletarian struggle against exploitation for the struggle of the whole people against imperialism.



1. One crore = 10 millions. A crore of rupees = (approx.) £750,000.