Chapter 7m of Book 4

Mercantile Governments Icon

March 23, 2020

Destructive Colonial Policies

187 The English and Dutch companies only established 2 considerable colonies:

  1. Jakarta
  2. South Africa

Those two companies have made big conquests in the East Indies. The natural genius of an exclusive company showed itself in how they governed their new subjects.

In the spice islands, the Dutch burn all the spiceries beyond what they expect to sell in Europe for the profit that they want.

  • In the islands where they have no settlements, they give a premium to those who collect the young blossoms and green leaves of the clove and nutmeg trees which naturally grow there.

This savage policy has now almost completely destroyed all those trees. Even in the islands where they have settlements, they have very much reduced the number of those trees.

They suspect that the natives might find ways to bring their islands’ surplus produce to other nations, if it were more than what their market needed. They imagine the best way to secure their monopoly is ensure that no more shall grow than what they themselves carry to market.

By different arts of oppression, they reduced the Moluccas population to what was needed for:

  • their own insignificant garrisons, and
  • their ships which come for the spices.

Those islands were in a better condition even under the Portuguese government.

The English company has not yet had time to establish such a perfectly destructive system in Bengal.

  • However, their government’s plan had exactly the same tendency.

It was common for a factory’s chief or first clerk to order a peasant to plough up a rich field of poppies and sow it with rice to pretend to prevent food scarcity.

  • The real reason was to let the chief sell his opium at a higher price.

On other occasions, the order was reversed.

  • A rich ricefield was converted into a poppy plantation when the chief foresaw that huge profits could be made by opium.

The servants of the company attempted to establish their own monopoly of the foreign and inland trade of the country. Had they been allowed to go on, they would have certainly attempted to restrain the production of the commodities which usurped the monopoly.

In a century or two, the English company’s policy would have proved as destructive as that of the Dutch.

188 Those exclusive companies became the sovereigns of their colonized countries.

Their destructive plan goes directly against their real interest

In almost all countries, the sovereign’s revenue is drawn from the people’s revenue. The greater the people’s revenue, the greater their annual produce, the more they can give to the sovereign.

  • It is his interest to increase that annual produce as much as possible.
  • This is especially true if he earns chiefly from a land-rent, like Bengal’s sovereign.

That rent is proportional to the quantity and value of the produce.

  • The value of the produce depends on the market size.
  • The quantity of the produce will always match to the quantity needed by the paying consumers.
  • The price they pay will always be proportional to the eager competition between the consumers

It is the interest of such a sovereign:

  • to widen the market for the produce of his country
  • to allow the most perfect freedom of trade to increase the number and competition of buyers
  • to abolish all monopolies and all restraints on the transportation of the home produce:
    • from one part of the country to another
    • upon its exportation to foreign countries
    • upon the importation of goods for which it can be exchanged

In this way, the quantity and value of that produce is likely to increase.

  • Consequently, his own revenue will increase.

189 But a company of merchants do not think of themselves as sovereigns. Instead, they consider trade to be their principal business.

By a strange absurdity, they regard being a sovereign as an appendix to that of being a merchant.

  • They regard being a sovereign as being subservient to being a merchant.
  • They use it to buy cheaper in India and sell with a better profit in Europe.

This is why they try to keep out as much as possible all competitors from their markets.

  • They reduce the surplus produce of those countries to what is barely sufficient for selling in Europe with the profit they want.

Their mercantile habits perhaps insensibly:

  • draw them to prefer the monopolist’s little and transitory profit, to the sovereign’s great and permanent revenue and
  • lead them to treat the countries that they govern nearly as the Dutch treat the Moluccas.

It is the interest of the East India company as sovereigns that:

  • the European goods sold to their Indian dominions should be as cheap as possible
  • the Indian goods be sold in Europe as dear as possible.

But the reverse of this is their interest as merchants.

  • As sovereigns, their interest is exactly the same with the country they govern.
  • As merchants their interest is directly opposite to that interest.

190 The genius of such a mercantile government is essentially and perhaps incurably faulty even in its management in Europe. The genius of its administration in India is still more faulty.

That administration is composed of a council of merchants, an extremely respectable profession. But it does not have the force of authority anywhere to naturally:

  • overawe the people and
  • command their willing obedience.

Such a council can command obedience only by its military force. Their government is necessarily military and despotical.

Their proper business is to be merchants, to: -

  • sell, on their masters’ account, the European goods consigned to them as dear as possible and
  • buy in return, Indian goods for the European market as cheap as possible.
  • exclude all rivals from the market where they keep their shop.

Therefore, the company’s management makes government subservient to the monopoly’s interest.

  • It stunts the natural growth of the country’s surplus produce to what is barely sufficient for answering the company’s demand.

Competition Among the Corrupt

191 All the administration’s members trade on their own account. It is in vain to prohibit them from doing so.

It is completely foolish to expect that the clerks of a great counting-house 10,000 miles away should, upon a simple order from their masters:

  • immediately give up doing any business on their own account
  • forever abandon all hopes of making a fortune when they have the means to do so
  • content themselves with the moderate salaries allowed by those masters.

Those salaries:

  • can seldom be increased, and
  • cannot be as large as the real profits of the company’s trade

Prohibiting the company servants from trading on their own account will enable the superior servants to oppress the inferior ones. under pretence of executing their master’s order.

  • The servants naturally try to establish the same monopoly for their own private trade as of the company’s public trade.

If they are allowed to act as they could wish, they will establish this monopoly openly and directly.

  • They will do this by banning other people from trading in their goods.

This perhaps the best and least oppressive way of establishing it.

But if they are prohibited from doing this by an order from Europe, they will establish the same monopoly, secretly and indirectly. This way is much more destructive to the country.

They will:

  • employ the government’s whole authority and
  • pervert justice to harass and ruin those who interfere with their commerce.

They might do it through concealed agents.

  • The servants’ private trade will naturally have more articles than the company’s public trade which is limited to the trade with Europe.

European trade makes only a part of the foreign trade of India.

  • The servants’ private trade can expand inland and to all foreign trade.
  • The company’s monopoly only stunts the natural growth of its surplus produce by limiting it to Europe.
  • The servants’ trade stunts the natural growth of all the produce they deal in because such produce is destined for home consumption and exportation. This:
  • degrades the country’s cultivation
  • reduces its population by reducing the amount of produce and life’s necessities whenever the company servants choose to deal in them.

192 From the nature of their situation, the servants rigorously protect their own interest against India, than their British masters protect their interest as master.

India belongs to their British masters, not to the servants. The real interest of those masters, if they could understand it, is the same with India’s interest. But they oppress the country’s interest chiefly from:

  • ignorance and
  • the meanness of mercantile prejudice.

But the servants’ real interest is not the same with India’s interest. The regulations sent from Europe were weak but well-meaning.

  • More intelligence and perhaps less good-meaning has sometimes appeared in the regulations of the servants in India.

Every administration member wishes to establish a very singular government in India and then leave the government as soon as he can. The day after he leaves it and carries his whole fortune with him, he is perfectly indifferent even if India were swallowed up by an earthquake.

193 I am not saying that the servants of the East India company or any particular persons are odious.

I mean to censure the system of government where they are placed, and not those in it.

They acted as their situation naturally directed. Those who clamoured the loudest against them would probably not do better themselves.

In war and negotiation, the councils of Madras and Calcutta acted with a resolution and decisive wisdom which would have done honour to the Roman senate in its best days.

However, those council members were bred to professions very different from war and polities. Their situation alone:

  • formed in them the required great qualities, without the previous education, experience, example
  • inspired them with abilities and virtues they themselves did not know they had.

194 Such exclusive companies are nuisances in every respect. They are:

  • always inconvenient to the colonizer
  • destructive to the colonized