MN Roy

India in a Transition Stage

Date: Dec. 1921
Published: Communist International No.19, pp.429-436
Transcription: Ted Crawford
HTML Markup: Mike B.
Public Domain: Marxists Internet Archive (2007). You may freely copy, distribute, display and perform this work; as well as make derivative and commercial works. Please credit “Marxists Internet Archive” as your source.


The Growth of the Bourgeoisie

As we know, there is no feudalism in India. Feudalism in India was destroyed or, rather, shaken not by a violent revolution as in Europe, by a comparatively peaceful and slow process. Feudalism as the basis of social economy received its first blow - which was also its death-blow - the first years of the British rule (in the middle the 18th century) when the political power went over to the representatives of the foreign bourgeoisie. As the British East India Company representing British commercial capital was seizing the supreme power in India, the foundations of the feudal system were shaken. But it took the East India Company about a century to establish its rule over the whole country. Thus feudalism, though weakened, continued - at least formally - to exist all through this period. Already at, the very beginning of the British rule the right of landownership was by force or treachery taken from the Indian landowning class and handed over to the British Government. In other words, in lieu of the feudal lords, the representatives of British trade capital became owners of the land.

The unsuccessful revolution of 1857, known the Sepoy Rising, destroyed the last remnants of feudal power. It was the last attempt of the surviving feudal lords to regain their former power. It was a struggle for political supremacy between the dying feudal system and commercial capital which was just gaining a footing in the country. When feudalism in Europe broke down under the pressure of the rising bourgeoisie, this great social struggle found an echo in India. However, during the century preceding this revolution, the normal economic development and the strengthening of the native bourgeoisie met with following obstacles. In the first place, it was impeded by the forcible export by the East India Company to England of over 70% of India's accumulated wealth, where it contributed to the further development of industry. A second factor of considerable importance was the deliberate destruction of handicraft industry and the forcible expulsion of the handicraft artisans into the villages. This prevented the artisans from becoming an integral part of the proletariat of modern machine industry, as it had been the case in Europe. In Europe also handicraft industry was destroyed about the same time; but while in Europe it gave way to a higher form of production - to machinery which arose as a new social power - in India the destruction of handicraft industry came about by a forcible and deliberate process. This branch died out but it was not in order to give way to a higher form of production in the country. The Indian artisans rather fell victim to England's historical growth. But, be that as it may the historical results were in general outline, identical: the political power went over to a new social class, which controlled the highest forms of production, and this undermined the feudal system, depriving it of the economic importance, and ruined handicraft industry. After the 1857 rising the whole country was subjected by capital. The government of India passed from the hands of the East India Company to the British Government.

The present population of India consists of four classes: 1. The landed aristocracy to whom there belong also the ruler's of so-called native India; 2. the bourgeoisie and the intellectuals; 3. The peasantry; 4. The working class, including the landless peasants. Out of 17,328 big landowners 700 hold sway over native India. They are called vassals and enjoy the protection of the British Government. This native India ruled by the vassal lords comprises about one third of the whole country and extends over 709,555 square miles. The largest of these provinces, the Haiderabad or Nisam is as large as Italy and counts 13½ million inhabitants; the smallest consists of not more than five villages. The whole population of native India amounts to 72 millions, i.e. a little less than one quarter of India's total population. It was owing to these provinces being governed by the vassals that India used to be called a feudal country. In theory these vassals exert supreme power in their provinces, but in practice they are deprived of all power, and it would therefore be wrong to regard this fact as the basis of the social and economic structure of the country. Moreover, the government of these provinces is naught but feudal in nature; not one of the ruling vassals descends from the feudal aristocracy which existed before the British conquest of India. These "kings" and "princes" whose power does not extend beyond the narrow sphere of local government, are nothing but tools in the hands of the British Government. All the political and military power in "their" provinces is held by British capital, while trade and industry are in the hands of the native bourgeoisie. As a matter of fact, the latter exercises greater influence over the local governments than does the central Government of India. All these provinces have their legislative councils, upon which the local commercial and agricultural classes are represented; of late the commercial bourgeoisie is rapidly acquiring a prominent part in them. However, the whole power practically lies in the hands of the Resident representing the British Government. At first these Residents were delegated to the courts of the Indian princes as envoys of the British Government, but, representing as they did a more advanced social class, the British bourgeoisie, in course of time they became absolute masters of those provinces. Thus, practically the whole political power belongs to the bourgeoisie, though some remnants of feudalism may still be found here and there.

In the local government of native India the progressive tendency of the bourgeoisie is more marked than British India. The percentage of illiterates is much smaller in such dominions as Maysore, Travangor, Baroda, Kochin etc. than in British India. Whereas in the latter primary education is not even free of charge, in most of native India it is both free and compulsory. The industrialisation of the country these last years has also been progressing more rapidly in native than in British India. The position of the peasants is the same in both parts of India. In brief, native India possesses as few remnants of feudalism as British India.

The princes of native India realise perfectly well that they are doomed and that it is only thanks to the British Government that they still keep their power. British rule in India had never rested on these fragments of extinct feudalism. Just the reverse; their existence in the social structure of India was kept up artificially by the Indian Government representing the British bourgeoisie. Realising that they owed their existence to the British rule, they have always been body and soul on the side of England and will doubtless support her in all emergencies, just as they did during the last war.

As to the other 16,628 big landowners out of the 17,328 mentioned above, they are also either directly or indirectly connected with the feudal lords who began to rule over India after the fall of the Mogul Empire. Together with the seven hundred native princes they form the native aristocracy of India. These aristocrats and their families count 541,175 persons out of the total population of 320 millions. According to the census returns of 1911 (we have no data for the years 1920-21) 8,500,000 persons live on ground-rent. Besides the above mentioned 541,175 persons belonging to the landed aristocracy, eight millions more hold land on terms of lease. They differ from the former group in that these hold the land as it were by tenure from the British Government, and their land is subject to the feudal law of succession, i. e. it passes from the father to the eldest son. The second group hold the land on the basis of temporary or eternal lease, the land being considered the property of the Government. The rent which they pay to the Government is in some cases fixed once for all, in others it is subject to periodical changes, corresponding to the changing land value.

This class of leaseholders or farmers takes its origin from the first days of British rule in India. It arose on the ruins of the Moslem Empire, even before British power was established, and its first representatives were the dignitaries of the last period of the Moslem administration. In the last decades of the 18th century the country experienced a number of famine years, called forth by the deliberate destruction of handicraft industry; The unlimited export of foodstuffs, crop failures owing to unfavourable climatic conditions, the transition in many places to the cultivation of indigo and jute, and the considerable decrease of the cultivated area brought about by the civil war. As a result thereof a considerable part of the peasantry had to bear the fetters of heavy indebtedness, and their land passed to the usurers and the Government officials who had accumulated a great wealth. The East India Company at that time had not enough human material at its disposal to keep down the discontented population with its own forces, and therefore it promoted the growth of this farmer class, leasing out to them land which belonged to the Government. Thus the elements which might have gone to form a native bourgeoisie were drawn off the path of their natural evolution and turned into a farmer class. This was partly due also to the conquest of the political power by the foreign bourgeoisie, which assumed the right to exploit the whole country. But now that the British Government is forced to change its policy of crushing India's home industry, we see the new Indian bourgeoisie being recruited to a large extent from this farmer class. The small farmers think it more advantageous to give up their land and invest their money in commercial and industrial enterprises. This leads to the concentration of the land in the hands of big capital. We shall deal with this concentration in detail later on.

"'The second layer of the population of India - the bourgeoisie and the intellectuals - count 37 millions, including women and children (20 millions). In 1918-1919 the sum total of capital owned by this class was 640 million pounds st., invested partly in Government bonds (359 million pounds st.) and partly in various Companies' shares (225 millions). besides, considerable sums were invested in industrial concerns recently sprung up, such as 1,800 cotton ginning mills, iron end steel works, sugar works, rubber plantations, 500 rice mills, oil factories, printing shops, leather factories etc. A hundred years ago, in 1820, this class held in Government bonds alone a capital of 20 million pounds st. There were no joint-stock companies in India at that time.

The Indian intelligentsia which, together with the progressive elements of the farmer class, forms the basis of the local bourgeoisie, is a child of the British Government. Already in the first years of its rule the British Government considered it more advantageous to fill the offices and the minor administrative posts with natives than to bring out people from England especially for this purpose. Moreover, it was important for the Britishers to have the support of the native elements in the local government machinery. The big British trading firms in India also required clerks and other employees who would be satisfied with a bad pay. In the early days of British rule about fifty native clerks could be hired for the same salary that would have had to be paid to a single British clerk called out from the Metropolis. In view of this, in the twenties of the 19th century the Government began to open new schools, thus giving a strong impetus to the development of the local intellectual class, which soon exceeded in numbers all expectations of the foreign rulers. These intellectuals took complete hold of the medical, legal and teaching professions. At present the British have been completely ousted from these professions by the native intellectuals. According to the census returns of 1911, there were 7,973,662 persons engaged m these professions and occupying administrative posts. This number does not include the clerks and employees of private firms. The above mentioned professions proved pretty lucrative, and large sums were accumulated in the hands of the upper intellectual strata. In 1850, the sums accumulated by this group of the population and invested in Government securities totalled 69 million pounds st. In those days this was practically the only profitable way of investing one's capital, as there were no commercial companies, etc. The sum total deposited in the national banks at that time equalled 15 million pounds st. Another profitable operation was to take land on lease. At that time the land was just slipping out of the hands of the big farmers who were unable to pay the heavy land-taxes. The small farmers too were forced to give up their land, owing to their heavy indebtedness which made it impossible for them to make both ends meet. Thus a considerable part of the land changed hands, passing from the old conservative owners to the new progressive elements of the native intellectual class. This class of progressive farmers, a part of whom continue - along with their landownership - to exercise the highly lucrative liberal professions, is rapidly filling the ranks of the bourgeoisie proper, for, as large sums accumulate in their hands, these farmers-intellectuals are more and more frequently and extensively investing their capitals in industrial enterprises. At present one can often meet big farmers in India who at the same time represent large manufacturing interests.

In the early days of British rule, trade and banking was carried on pretty extensively among the several governors of India. This inner trade was, however, completely ruined in the first half of the 19th century, when the newest banking system was introduced and British trading firms were established. As a result of this process the commercial class of India - once a pretty, considerable factor - was reduced to the level of small traders. After 1860, internal trade was revived once more. This revival was brought about by the slow but steady penetration of European capital info the interior of the country - in search for raw materials and markets for European goods. This fact, in its turn, led to the formation of a class of Indian middle-men. The growth of foreign trade enriched the native commercial class, which rapidly began to accumulate large capitals but since foreign trade and international banking were monopolised by foreign capital, the native trader had no immediate access to this sphere of interests. What was left to him were the industrial enterprises, and he directed thereto both his energy and capital. The first Indian cotton mill was established in Ahmedabad in 1851.

However, until 1880 Indian capital penetrated but slowly into industry. It was not until after that, year that the industrialisation of the country really began. In 1880 there were altogether 58 cotton mills in India, with a total capital of 3,800,000 pounds st., and 22 idle and textile factories with a capital of 22,246,000 pounds st. The total number of workers employed in these enterprises was 68,000, Besides the capital invested in these and other private industrial concerns - including internal trade and banking - the native capitalists held another 90 million pounds st. in savings 'banks' and joint-stock companies. Thus we see that towards the beginning of the eigthties Indian capital, as concentrated in the hands of the representatives of the liberal professions, Indian farmers and merchants, was ready to contribute its share to the industrialisation of the country. But this was counteracted by the representatives of foreign capital, who looked upon India as a source of raw materials and a market for manufactured goods. Special taxes were imposed upon the native enterprises, hampering their development and frequently making them close down immediately after they had been started. Yet, notwithstanding the active opposition on the part of foreign capital, native enterprise continued to crop up and gained a firm fooling, for they had such advantages in their favour as the cheapness of local row materials and the possibility to employ cheap labour.

The native intellectual class having grown rich, and being deprived of the possibility to invest its capital profitably, became discontented with the British Government. Since they considered it beneath their dignity to engage in trade, and the industrial enterprises met with continual opposition from the authorities, landed property and Government securities remained the only objects for the investment of their capitals. The Government bonds yielding a very low interest - from 3 to 3½% - offered but little attraction to the rich intellectuals. Ground-rent did not yield much profit either. Native capital was shut out from the building of railways and street-cars, from mining, as well as from the participation in other industries whose development the British Government did not interfere with. This whole sphere of industry as monopolised by British capital. The liberal professions were overcrowded. Seeing all the roads blocked to them, the rich class of intellectuals naturally began to look upon the British Government as the cause of all their troubles, and decided to fight the Government. Thus it was the economic interests that made the bourgeoisie as born of the Indian intelligentsia begin the political struggle. The earliest stage of this fight was the Indian National Congress which held its first session at Bombay in 1885, under the chairmanship of J. S. Vanarji, a rich lawyer who had invested all his savings in industrial and commercial enterprises. The new political movement set itself a clear aim: to destroy or, at least, curtail the power of the British Government which deliberately checked the economic development of the local bourgeoisie. This movement was headed by rich lawyers, merchants, manufacturers, physicians, etc., in short - by those progressive social elements who wished to be free to invest their capitals as they pleased.

Towards the close of the 19th century the power of Indian capital went on growing slowly but steadily, thanks to the excess of free capital and the ever growing proletariat. The ranks of the latter were swelled by the landless natives as well as by the artisans who had been deprived of their earnings. Native industry continued to develop and expand, notwithstanding all the obstacles that the British Government put in its way.

The big farmers of the Province of Bengal enjoy special privileges on the basis of the 1829 Act. Under this Act, they only pay a fixed land-tax, and no other taxes. Moreover, the Bengal Land Act grants the big farmers the right to hand over their land in life-rent to others. Thanks to these provisions, Bengal always held a prominent place in agriculture, and the ground-rent reached there a very high level.

However, the 1829 Act placed the British Government at a disadvantage, depriving it of the possibility directly to profit by the high ground-rent. In order to remove this "inconvenience", a division of Bengal was carried through in 1905. The Eastern half of the Province with its rich rice fields was placed under a newly established provincial government, and the latter was granted the right to revise the old system of taxation.

Thus a new conflict cropped up between the Government and the rich farmers. This conflict made the representatives of the landed property and the native capitalists join forces for the common fight against the British rule. In 1905 the political movement of the Indian bourgeoisie, voiced by the National Congress and supported by the progressive elements of the farmer class, took up the economic weapon of boycott against British capital. The twenty-sixth session of the Indian National Congress held at Calcutta in 1905 declared the boycott of English to continue until the division of Bengal Act would be repealed.

The Indian bourgeoisie consisting of intellectuals, industrials, traders and Progressive farmers, had acquired such considerable power by that time that it was able to engage in an open fight against the monopoly of foreign capital. The number of factories had grown to 2,688 in 1905. Out of these factories 1970 were worked by steam or electricity, and in 718 enterprises the work was done without machines.

According to official data, the sum total of capital invested in shares of native industrial enterprises was equal to 57 million pounds st., i.e. almost ten times as much us in 1880. On the other hand, the sums invested in Government bonds totalled 94,616,740 pounds st., showing an increase of only 4 million pounds st. With the development of industry there also grew up banks founded on Indian capital. In 1905, nine such banks existed in India.

To justify the boycott, the theory was set forth that the growing industry required protection and encouragement in order to increase the national wealth which was the only source for the improvement of the position of the masses. Indian industry was however, too young as yet to stand competition with British capital, and the boycott failed to attain its purpose. Nevertheless the Government was obliged to recognise the force of the Indian bourgeoisie. In 1909, a law was passed granting the bourgeoisie a certain share in the government of the country. For the first time during the whole period of British rule an Indian was appointed member of the Executive Committee of the Viceroy, - an office corresponding to that of a minister in an absolute monarchy. The choice fell on one of the most prominent lawyers who was at the same time a rich farmer. The number of the members of the Legislative Councils, national as well as Provincial, was increased. A special Royal Commission was instructed to deal with the question of attracting a greater number of natives to the service. The year 1911 witnessed the completion of the first stage of the struggle started by the Indian bourgeoisie against the British Government: the Partition of Bengal Act was rescinded. With this first political victory the fighting spirit of the Indian bourgeoisie rose still higher. It persevered in the struggle, and a year later the Government, through the King himself - who had visited India specially with this purpose - promised to grant India self-government in the nearest future.

Together with its political victory the bourgeoisie continued to make headway in the economical sphere. It was particularly in the textile industry that the number of enterprises owned by natives grew rapidly. There had never been any British capital worth speaking of invested in this industry, and after 1905 it shrunk still more. The boycott movement gave a strong impetus to the development of Indian industry as a whole. A large number of new enterprises were started, and the old ones were enlarged and improved. Next to the textile industry, a considerable development was recorded in the following branches, coal mining, metal, paper-making, dying, soap-making, glass, matches, flour-milling, oil manufacture etc.

The iron and steel trade also progressed rapidly after the "Tata" Iron and Steel Mills Company with a capital of seven million pounds st. had been founded in 1907.

With the outbreak of the war, a new era set in for the Indian bourgeoisie. England, being obliged to mobilise all her industrial forces for the production of war munitions, had also to adapt a part of her merchant marine to the war requirements. All this, along with the submarine war, led to a considerable decrease of English export into India. Quite unexpectedly, the Indian manufacturers were thus placed in a favourable position. The competition of British capital, which tended to undermine Indian capital, ceased all at once, and a wide field of activity was opened up to the native manufacturers The British Government itself, which had up to that time relentlessly pursued the policy of crushing India's industry, now realised the necessity of changing ifs policy. Discontent had been growing in India since the very beginning of this century. In the years preceding the war this disaffection became nationwide, on the one hand owing to the greater unity of the masses and, on the other hand, to the enormous growth of unemployment among the intellectuals, who found it more and more difficult to get occupation. This is why at the beginning of the war the general feeling inside India gave cause for alarm. Attempts were even made to overthrow the British rule by armed insurrections. In the ranks of the Indian army too a spirit of mutiny was abroad. The political movement initiated by the rich intellectuals was joined by the so-called extremists whose ranks were swelled by the lower strata of the petty-bourgeois intellectuals. Terroristic societies had been active in the political field since 1904. Now, however, it was not only secret revolutionary organisations that strove for the complete separation of India from the British Empire by means of a revolution, It was also the aim pursued by the numerous ranks of extremists forming the left wing of the Indian National Congress. The political movement was supported by two factors: in the first place there was the powerful class of Indian capitalists who, having concentrated large capitals in their hands, strove to attain, if not the monopoly, at least a share in the exploitation of the natural resources and labour forces of the country; in the second place, there were growing destitution and unemployment brought about by extensive and intensive exploitation of the country by foreign capital which deliberately checked the industrial development of India. Both these factors worked against the British rule. Socially they represented interests diametrically opposed to each other, but in view of the common enemy they became temporary allies, Naturally the British Government directed all its efforts to break this alliance, The British Government decided to bribe if only a part of the bourgeoisie by means of political concessions. but the Indian bourgeoisie of 1919 was no longer the same that it had been in 1906. It could no longer be pacified with sham political and administrative privileges. It demanded economic concessions, it wanted to get its share in the exploitation of the country.

In the first years of the war Japan seized a considerable part of the Indian market which had formerly been supplied with English goods. The British capitalists now proved unable to oust Japanese goods from the Indian market. All these internal and external causes combined to make the British Government enter into an agreement with the Indian bourgeoisie. Once more India was promised home rule, provided she would help England in the war. As home rule meant a partial transference of the government of the country to the Indian bourgeoisie, it was but natural that this promise led to an active support of England by the propertied class of the Indian population. This class gave up its political struggle and helped the British Government to recruit the Indian troops. In return for these valuable services the Government introduced in 1916 a 3½% import duty on cotton goods. This protection of India's chief industry was such a considerable concession to the industrial bourgeoisie that the latter, in its turn, gladly aided the British Government to realise the 100 million pounds st., loan, as a gift to England. Thanks to the introduction of the cotton import duty, the shareholders' capital invested in the textile industry immediately rose to 24,500,000 pounds st. in 1917, and the number of mills was increased to 276.

In 1917 India. managed to produce all the yarn she required for her textile industry and half of the textile goods she needed.. Production in India in 1917 reached 94.6% of the total imports, whereas the pre-war home production had not exceeded 42% of the imports. In 1917 India produced 1,614,126,458 yards of cotton cloth representing a sum of 18 million pounds st.

An idea of the economic and industrial position of India may be obtained from the following data. In 1917 the railways extended over 40,000 miles and were owned chiefly by British capitalists. The figure does not include the narrow gauge and branch-lines the majority of which were owned by native capital. The number of workers employed on the railways, including those who worked in the railway workshops, was 1½ million and for other industrial enterprises there were in all 9,000 with two million workers. Of these enterprises 5,000 were worked by steam and electricity; Besides, India had 1800 tea and coffee plantations with 900,000 workers. The production of coal, naphta, manganese, mica, iron and gold was carried on with great energy. The activity of the ports and docks may be judged of by the fact that no less than a million workers were employed therein.

Considerable progress was also made by the jute industry. The native capital invested in this branch grew 113% since 1914. The woollen and paper-making also developed greatly.

India's coal output in 1917 was 18,200,000 tons and the coal consumption — 17,809,000 tons. As compared to 1913 the production had increased by two million tons. The Indian industry consumed 9,000,000 tons. For the sake of comparison we recall that, the Japanese industry - not counting the merchant marine - consumed 10,326,000 tons of coal in 1917. The naphta output in India also increased considerably.

Simultaneously with the growth of industry, Indian trade developed greatly. Indian merchants are lately beginning to take an ever greater part in foreign trade. They are competing in Dutch India, on the Malay Peninsula, in East Africa, Afghanistan and partly in China, supplying these markets with cotton goods and semi-manufactures. The export of manufactured goods from India is growing, whereas the export of raw materials, in particular of raw cotton, is decreasing.

The following table showing (in percentage) the decrease of Indian capital as invested in Government bonds and securities and the growth of capital in industrial enterprises, testify that the Indian bourgeoisie did not fail to take advantage of the favourable conditions created by the war and the change, in the economic policy of the British Government:

1914 1917 1918 1919 1920
Gov. bonds and securities 100 70 67 74 62
Banking 100 106 112 116 137
Municipal loans 100 89 84 84 81
Jute industry 100 311 467 383 563
Cotton industry 100 132 162 167 386
Woollen industry 100 106 125 125 187
Coal mining 100 136 134 157 149
Tea plantations 100 137 125 123 136
Flour-milling 100 137 206 238 406
Iron and steel 100 332 295 284 207

The change in the economic policy of the British Government also found expression in the setting up in 1916 of the India Industry Commission with a view to finding ways and means for the industrial development of the country. The Commission consisted of 10 members, four of whom were Indians; one of them was the leader of the right wing of the Indian National Congress and the other three belonged to the biggest manufacturers of the country. The Commission was instructed to investigate and report on the possibilities of a further industrial development of India and to give its views on the following questions.

A. Can new sources be found for the profitable application of Indian capital in Indian trade and industry? B. Can the Government — and if the answer is in the affirmative, in what way — contribute to the industrial development of the country by means of: 1. technical advice; 2. the organisation model enterprises showing the practicability of certain industries on commercial lines; 3. direct or indirect financial support to the industrial enterprises; 4. any other ways not conflicting with the Government's fiscal policy in India.

The Commission finished its labours and in 1918 presented a printed report. In general outline its contents are the following:

1. In future the Government must take an active part in the industrial development of the country. 2. India produces all the raw materials she requires, but she is unable to produce many articles that she needs in peace and war times. It is therefore imperative that the Government help to set up such industries in India in default of which the country would be exposed to a great danger in case of war, 3. The most modern methods must be introduced in the agricultural technique, in order that the labour now wasted may be profitably employed in the manufacturing industries. 4. General education must be aimed at, but it were unjust to place the whole expenditure for its realisation on industry, it being clearly the duty of the Government to carry through this measure. 5. Special technical education must be provided for on a large scale. 6. The Government must give up its policy of non-interference with the country's economical life, which it had pursued until now. Industrial banks must be established; if necessary — with the Government's financial support. 7. Since it is, on the one hand, doubtless necessary to strengthen the economic position of the country, while, on the other hand, it is obvious that the population itself, without the Government's aid is unable to achieve this, the Government must adopt the principle of energetic interference in the industrial affairs of the country.

The British Government's readiness to come to terms with the Indian bourgeoisie also found political expression in the Montagu-Chelmsford Bill. Profiting by the highly favourable conditions brought about by the war, the Indian capitalist class obtained so firm an economic footing that the British Government could no longer ignore it.

If, after the war, the Government had resurrected its old, policy of checking the economic development of the country; this would have induced the Indian bourgeoisie, grown strong during the war both politically and organisationally, to take its stand at the head of the revolutionary movement which had widely spread all over the country. The only way to prevent this catastrophe was to direct the political aspirations of the bourgeoisie into another channel. The war was over. The Indian bourgeoisie had all along been loyal to the Government and was now waiting for the realisation of the twice repeated promise of home rule. The Government therefore hastened to introduce the reforms provided by the Montagu-Chelmsford Scheme, which may be summed up as follows: 1) Changes were made in the control of the British Parliament over the Government of India, as exercised by the State Secretary for India. 2) The number of Indian members of the Viceroy's Executive Committee was increased. 3) Two legislative chambers were established, and the number of Indian members as well as the ratio of elected members to those appointed has been increased. 4) The franchise has been extended so as to include all the propertied classes as falling under a certain property qualification. 5) The actual political power which formerly had been wielded by the Executive Committee went over partly to the legislative chambers. 6) To assist the provincial rulers, Indians were appointed, who were to be recruited from among the representatives of moderate nationalism. 7) The number of members of the provincial legislative chamber was increased and their legislating powers extended 8) A third part of all the higher civil service posts was reserved for the native population. 9) Facilities were granted for the admission of natives to civil service examinations in India as well as in England. 10) The difference between the salaries of the English and the Indian officials was reduced. 11) The municipal government has been to a large extent placed into the hands of the local bourgeoisie.

By the way, the most essential part of this reform which — as many people believe — has opened up a new political era in India, are the economic concessions made to Indian capital. The nature of these concessions may be seen from the Reform Act, which states that, in view of the desirability of the industrial development of India, the Government fully shares the wish of the representatives of Indian industry to avail themselves of the economic advantages which can arise from the manufacture of local raw material at home. The British theories of the non-interference of the State with the sphere of economics, cannot be applied to India. If the resources of the country are to be developed, the Government must contribute to it. It is not to be wondered at that the leading Parties are still embittered against the Government. The people realises its inability to achieve the programme of industrial development with its own forces, without aid or guidance from the Government. Thus a new situation arose. The prohibition of import from enemy countries was welcomed in India, as it gave the possibility to replace foreign goods by native manufactured articles. After the war the necessity of industrial development must be felt still more keenly, if India does not want to become a dumping place for foreign goods and wishes to prevent a violent competition on her territory among foreign countries for a market upon which depends their political might. India is, of course, entitled to claim the assistance of the Government in helping her to become an industrial country.

A progressive economic policy is necessary in all respects — not only in order to give India economic stability, but also to satisfy the aspirations of her population to make India an industrial country; and to provide a wider sphere of activity for her youth which now has no openings except Government service and some overcrowded professions; and, lastly in order that the money now lying waste might be used for the welfare of the country. The interests of the Empire also demand that India's resources should receive full development. Thanks to the industrial development of India, the might of the Empire will increase enormously. The representatives of separate branches of industry are inclined to believe that each new mill or factory curtails the source of their profit; yet all additional wealth raises the buying capacity of the whole country. The war has shown clearly how important the economic development of the State is in military respects. In our days the production of war materials depends to such an extent upon the state of industry, that the development of India's natural resources becomes a military necessity. The representatives of the Indian political Parties probably also wish that India should be able to satisfy her military requirements The Government realises its responsibility in the question of India's industrial development. It is confident that the necessary capital will be found as soon as favourable conditions will be established. Therefore banking and credit facilities must be provided. The general wish that Indian capital and Indian labour should find application for the welfare of the country as a whole is the best augury.

Such were the reasons that induced the British capitalist class not only to recognise the Indian bourgeoisie as a very important factor, but also to help its development by drawing it to the exploitation of the country. With its change of policy the British Government intended to split off the Indian bourgeoisie from the national movement by showing them that a wide sphere of activity can be guaranteed to them under British rule. On the other hand, the Indian bourgeoisie were interested most of all in strengthening their own economic position and considered the political struggle merely as a means thereto. The acquisitions of the bourgeoisie in the economical sphere during the war were substantiated by the new policy of the Government, a new era of prosperity thus setting in for Indian industry since 1918.

Furthermore, the development of industry was promoted by the influx of free capital brought about by the closing of German and Austrian firms which — by means of Indian middle-men — had been carrying on an extensive export and import trade in raw materials and manufactured goods. In 1918-19, their capital invested in commercial enterprises fell to one eighth of the pre-war sums.

As native industry developed important changes came about in the foreign trade. The imports of machinery grew, while those of cotton goods decreased. The export of raw materials diminished considerably. According to official data, India's foreign trade has increased sixfold since 1900, machinery and naptha taking the first place in imports. The returns of India's foreign trade show that the country's industry must be developed in order to raise her purchasing capacity. Manufactured and semi-manufactured goods are of greater value than raw materials. This tendency has been noted these last years. Jute is exported in manufactured articles. Oil seeds are worked in the country itself and oil exported. Thanks to this India is able to import more machines and other articles required for her industrial development.

The wealth of the Indian bourgeoisie during and after the war did not increase at the expense of British capital. As we shall show in another article, along with the enrichment of the Indian bourgeoisie, the broad masses of the population became impoverished.

To-day the Indian bourgeoisie represents doubtless an important factor. Realising this and in view of the growing revolutionary movement in India, the Government, wishing as it does to win over to its side that part of the population which, owing to its class interests, is the nearest to it, is now ready to admit the Indian bourgeoisie to the government and exploitation of the country. However, the Indian capitalist class — in whose hands are already concentrated three quarters of all the industrial concerns and a considerable part of the trade — is far from being content. The greater the concessions made by the Government to the Indian bourgeoisie, the more their demands grow. The Indian bourgeoisie realise perfectly well that they cannot do without a compromise with British capital, but they are biding their time to begin the struggle for the monopoly of exploiting India. They also realise that they need the help of the masses to overthrow British imperialism. In order to bribe the workers, whose revolutionary consciousness is growing day by day in view of the impoverishment of the masses and the concentration of the country's wealth in the hands of the bourgeoisie, the latter freely admit the masses to the Indian National Congress. But at the same time the Indian bourgeoisie, by declaring for a second time a boycott of British goods, have made it evident that they wish to enrich themselves at the expense of the people. The Indian bourgeoisie as well as the Indian masses are egged on to revolution by a number of objective factors. But these two parts of the population are divided by the difference of their class interests, and the abyss between them is broadening and will broaden still more as Indian industry will develop, both these factors are becoming stronger and consolidated each for itself, The masses — thanks to the growth of the Labour Union and peasant movement, the bourgeoisie — by means of their political mouth-piece: the National Congress. The fact that the Indian National Congress under Gandhi's leadership has been able in three months to collect 10 million rupees for the National Fund testifies the growing solidarity of the Indian bourgeoisie. The All-India Moslem League founded in 1912 with the aid of the Government, which expected to create out of the Moslem capitalists and landed aristocracy a political opposition to the Indian National Congress (consisting almost exclusively of Indian elements with a very small admixture of Moslem intellectuals), has given up its original role and joined the nationalist movement of the Indian bourgeoisie, At present the Indian bourgeoisie represents a social class closely knitted together economically and politically, and conscious of its historical mission. It will doubtless be in the vanguard of the national movement which will overthrow the foreign rule. However, the more it will be conscious of itself as of a class, the more difficult will it be for it to deceive the masses. The more important the economic development of the country, the more acute will the class differences become. There can be no doubt that the overthrow of British rule in India will be achieved by the combined efforts of the bourgeoisie and the masses, but we cannot say as yet what form their union will take. It will be easier for us to approach this question after examining the present position of the masses and measuring the gulf that separates these two revolutionary factors.


Transcriber's Note:  M.N. Roy "India in a Transition Stage", Communist International, No.19, Dec. 1921, pp.429-436, (7,397 words). There were a whole number of typos in this article which the transcriber corrected. ERC


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