This article was planned as a joint venture before Jack Gallagher's final illness; unfortunately he could not turn to it. But it draws largely on unpublished papers he gave to seminars at Cambridge in 1973, which we hope to publish in due course. Some of the themes of this piece have been admirably treated by B. R. Tomlinson in two articles, ‘India and the British Empire 1880-1935’ and ‘India and the British Empire 1935-1947’, Indian Economic and Social History Review, XII, 4 (October-December 1975) and XIII, 3 (July-September 1976), and in a book, The Political Economy of the Raj, 1914-1947 (1979).

¹ See Redford, A., Manchester Merchants and Foreign Trade (Manchester, 1956), II;Google ScholarImlah, A. H., Economic Elements in the Pax Britannica (Cambridge, Massachusetts, 1958);CrossRefGoogle ScholarCairncross, A. K., Home and Foreign Investment, 1870–1913 (Cambridge, 1953);Google Scholar and Saul, S. B., Studies in British Overseas Trade, 1870–1914 (Liverpool, 1960), esp. Ch. 8.Google Scholar

²For example, British exports to India of cotton yarn reached their peak in 1888; thereafter Indian, and later Japanese yarn won an increasing share of the market. By now British dominance of the Indian market for the cheaper and plainer cottons had begun to be challenged by Indian mill production, foreshadowing the sharp decline of cotton exports after the First World War.Google Scholar

³Just as the collapse of the Mughal empire had given the British their opportunity in India in the eighteenth century, so in the nineteenth the Turkish polity had been thrown back upon extreme decentralization in the vilayats; the Quajar dynasty in Persia had begun to break down; the crack-up of Rangoon and Mandalay, of Spain in Manila, and Johore in Malaya, and the distraught condition of the Ching Government in Peking, all had given British expansion in the east a remarkably free run.Google Scholar

⁴The Great Game opened in the eighteen-forties; it grew sharper in the eighteensixties; from the seventies, there was friction over Sinkiang. But as yet these Russian pressures were little more than inhibitions; only later in the century was there to be standing room only.Google Scholar

⁵ The case for Indian security brought about the large, perhaps preposterously large, insurance of founding an empire in east Africa; see Robinson, R. E. and Gallagher, J. A., Africa and the Victorians (1961).Google Scholar

⁶ Defending India against Russia required more troops than Britain possessed. By March 1904 Calcutta gloomily estimated that a war with Russia would call for a 100,000 troops from Britain (Cabinet Papers [henceforth CAB] 2/1, Minutes of the Committee of Imperial Defence [CID], 2 March 1904); only 30,000 could be found right away (ibid., 24 March 1904), although 100,000 might be rustled up within a year of the outbreak of war; by November 1904, the Committee noted ‘the progressive demands for reinforcements made by the Indian Government…have now reached the total of 158,000.… The Adjutant-General stated that if we comply with the demands to the extent even of 100,000 men, there will be no troops left for any imperial purpose’ (ibid., 16 November 1904); as late as 1907 the Committee saw that ‘the needs of India are the key to [imperial defence]… War, on our Indian land frontier, they would make the largest demands upon our military resources’ (CAB 2/2, CID Minutes, 30 May 1907).

⁷The Anglo-Japanese alliance, and the ententes with France and with Russia, meant that India no longer dominated British thinking about defence before the First World War. There may have been something Venetian about being forced to use diplomacy in this way, but, whatever the long-term effect of these changes, the British empire was able to come through the war at least ostensibly unscathed.Google Scholar

⁸ The argument here, and in the paragraphs which follow, has been developed in Seal, Anil, ‘Imperialism and Nationalism in India’, in Gallagher, , Johnson, , and Seal, (eds), Locality, Province and Nation (Cambridge, 1973), pp. 1–27.Google Scholar

⁹ Already in 1861 Samuel Laing had tried to get London to pay its fair share of Indian costs: ‘The day is past when England can consider India as a sort of milch-cow.… Strict and impartial justice must be the rule in all money matters between England and India, if England wishes to get a return for her capital…and if she wishes to see India become, everyday, more and more the best source of supply for her raw produce and the best market in the world for her staple manufactures.’ (Financial statement, 27 April 1861 in Thomas, P. J., The Growth of Federal Finance in India (Madras, 1939), p. 84). But the day was not past; it was to drag on for another three-quarters of a century.Google Scholar

¹⁰Strachey, Richard, 1878 quoted in Misra, B. B., The Administrative History of India, 1834–1947 (Bombay, 1970), p. 37.Google Scholar

¹¹ Curzon to Godley, 5 August 1903, Kilbracken Papers, MSS EUR.F. 102, quoted in ibid., pp. 37–8.

¹²They did not hold the purse strings; in law-making they had little power of initiative; but they now had the right to comment on financial and administrative matters.Google Scholar

¹³More than a million Indian troops were recruited for duty overseas; by 1920, the Indian tax-payer was paying three times more for the army than he had a year before the outbreak of the war; in addition India made a free gift of £ 100,000,000 to Britain's war effort.Google Scholar

¹⁴Until the 1917 revolution, the Russians were Britain's allies; after 1917, the Bolsheviks had troubles of their own. The Germans and the Turks signally failed to push their offensive to the western frontiers of India; the Amir of Afghanistan held to his treaty obligations, and the Japanese alliance effectively covered India's eastern flanks.Google Scholar

¹⁵The seat of the Government of India was moved from Calcutta to Delhi in 1912.Google Scholar

¹⁶British forces controlled from Egypt and India had pulled down the southern vilayats; Cairo's armies had conquered Palestine and Syria and helped to liberate Hejaz; Delhi had occupied Mesopotamia, overawed Persia and encouraged Ibn Saud in Arabia.Google Scholar

¹⁷Wells, H. G., Mr. Britling Sees it Through (1916), p. 197, quoted in Porter, B., The Lion's Share: A Short History of British Imperialism 1850–1970 (1975), p. 235.Google Scholar

¹⁸See Gallagher, J., ‘Nationalisms and the Crisis of Empire, 1919–22’, above, pp. 353–66.Google Scholar

¹⁹See CAB 32/2, Minutes of Imperial Conference, 6 July 1921.Google Scholar

²⁰Warning the Committee to exercise extreme care, Lloyd George said ‘He was unwilling to use the word “bankruptcy”, but that word…might be applicable to Great Britain should she embark on this devastating competition.’ Here, in the Prime Minister's opinion, was ‘the most difficult [problem] which any Government in British history had to solve’. CAB 2/3, CID Minutes, 14 December 1920.Google Scholar

²¹Volume of British Exports: 1913 = 100Google Scholar

²²See Aldcroft, D. A., The Inter-War Economy (1970), p. 262.Google Scholar

²³ibid., Table 23, p. 156 (cotton), pp. 150–55 (coal), Table 25, p. 164 (shipbuilding), pp. 169–74 (iron and steel).

²⁴See Feinstein, C. M., ‘Production and Productivity, 1920–1963’, London and Cambridge Economic Bulletin (1963), Table 1. The annual growth rate was little more than 1.5 per cent between 1924 and 1937.Google Scholar

²⁵Between 1920 and 1925 the work force of the old industries dropped by one milion; by 1929 the workless from these industries amounted to nearly half the total number of the unemployed.Google Scholar

²⁶ By 1924, 5,800,000 more voters were to turn out than in 1918. See Kinnear, M., The Fall of Lloyd George: the Political Crisis of 1922 (1973), pp. 21, 30.Google Scholar

²⁷ After the Geddes axe fell in 1922, government expenditure, exclusive of local government spending, never rose as high again until 1936. See Peacock, A. J. and Wiseman, J., The Growth of Public Expenditure in the United Kingdom (Princeton, 1961), Appendix Table A-5, pp. 164–5.Google Scholar

²⁸Of course, the general agreement of the politicians to pay for social services by cutting back on the armed services rested on the assumption of strategic security. By the middle of the nineteen-thirties that assumption was exploded.Google Scholar

²⁹CAB 21/159, Memorandum by Hankey, 17 July 1919.Google Scholar

³⁰CAB 23/15, W. C. 616A, 15 August 1919: Service estimates to assume ‘that the British Empire will not be engaged in any great war during the next ten years’.Google Scholar

³¹Expenditure on armed forces: (£ millions)

³²Before the war, the military needs of the empire had called for sixteen and two-thirds infantry divisions, three and one-third cavalry divisions, and four squadrons of aircraft; in 1920, they required twenty-nine and two-thirds infantry divisions, five and two-thirds cavalry divisions, and thirty squadrons of aircraft (CAB 4/7, ‘Military Liabilities of the Empire’, Memorandum by General Staff, 27 July 1920, Appendix A, CID255-B).Google Scholar

³³ Diary of Sir Henry Wilson, 13 September 1921, quoted in Callwell, C. E., Field Marshall Sir Henry Wilson (1927), II, 305.Google Scholar

³⁴The Labour ministry of 1924 did not establish a new trend; rather it followed an existing trend which had been evident under the Conservative or Conservative-dominated governments before it.Google Scholar

³⁵Montagu to Reading, 23 February 1922, Reading Papers, vol. 4.Google Scholar

³⁶ Quoted in Tomlinson, B. R., ‘India and the British Empire, 1880–1935’, Indian Economic and Social History Review, XIII, 4 (October–December 1975), 349.Google Scholar

³⁷During the war, Lancashire's exports to India dropped drastically. By 1918, India was importing only 1,300 million yards, a decline which accounted for three-quarters of Lancashire's war-time losses. Indian mill production, and imports from Japan, captured a market which had for so long been dominated by the Manchester men.Google Scholar

³⁸‘When additional revenues are required’, Sir Malcolm Hailey told the Assembly, ‘the first heed to which one's thought naturally turns, is customs’, Budget Statement (1922–1923), p. 11, quoted in Thomas, Federal Finance in India, p. 336.Google Scholar

³⁹CAB 6/4 Memorandum by Finance Department, India Office, circulated by Montagu, 7 December 1920. Estimate of Indian Military Costs (£ million: rupees £1 = 15)Google Scholar

⁴⁰ CAB 6/4, ‘Indian Military Expenditure’ Memorandum by Montagu, 24 December 1920, CID 118-D; also quoted in Tomlinson, , IESHR, XII, no. 4, 360.Google Scholar

⁴¹CAB 6/4 ‘Report of the Army in India Committee, 1919–20 Part I’, 115-D, idem.Google Scholar

⁴²CAB 6/4, Memorandum by Montagu, 24 December 1920, 118-D.Google Scholar

⁴³ CAB 6/4, Viceroy's Army Dept. to Montagu, 30 March 1921, 122-D, also quoted in Tomlinson, , IESHR, XII, no. 4, 361. On the Indian army after the war, see Keith Jeffery, ‘“An English Barrack in the Oriental Seas?”—India in the Aftermath of the First World War’, above, pp. 367–84.Google Scholar

⁴⁴Montagu to Reading, telegram, 22 February 1922, Reading Papers, vol. 11.Google Scholar

⁴⁵ CAB 6/4 ‘Report of the sub-committee on Indian military requirements’ 22 June 1922, ‘amended and approved by His Majesty's Government’, 26 January 1923, 130-D; also quoted in Tomlinson, , IESHR, XII, no. 4, 361–2.Google Scholar

⁴⁶Throughout the nineteen-twenties, Indian politicians went on protesting against the army. As the Finance Member admitted, ‘the existing scale of military expenditure is a disastrous burden upon India. There is a crying need for more and more expenditure upon the betterment of the conditions of life for the people of India and since the reforms there is at last the beginnings at any rate of an effective popular demand for such expenditure’. (Memorandum by B. P. Blackett, 4 July 1927, Irwin Papers, 3.)Google Scholar

⁴⁷See Hirtzel to Irwin, 15 January 1927, Irwin to Birkenhead, 16 January 1927, Birkenhead to Irwin, 3 February 1927, Irwin Papers, 3.Google Scholar

⁴⁸See CAB 5/5, Memorandum by Hankey, 15 February 1924, 222-C; Report of sub-committee, 7 July 1924, 237-C and CAB 2/5 CID, Minutes, 29 June 1931.Google Scholar

⁴⁹CAB 5/7, Memorandum by India Office, 3 May 1928, 318-C.Google Scholar

⁵⁰These retrenchments in the Indian army, and the restrictions upon its use as an imperial task force, had a crucial bearing upon the first crisis of empire that the British faced soon after the First World War. See Gallagher, ‘Nationalisms and the Crisis of Empire, 1919–22’, above, pp. 353–66.Google Scholar

⁵¹ In the nineteen-twenties, Lancashire's exports to India were relatively stable. In 1920, Lancashire exported 1,272 million yards to India; and in 1929 1,248 million yards, but in the nineteen-thirties this fell drastically. By 1939 Lancashire exported only 145 million yards to India (see Tomlinson, , IESHR, XII, no. 4, Table II, 379). The more dynamic sectors of British industry found little outlet in India for their goods (see Tomlinson, The Political Economy of the Raj, Table 2.8, p. 48).Google Scholar

⁵²Between 1923 and 1929, India flouted most of London's traditional taboos over the tariff. In 1924 an openly protectionist tariff was imposed upon iron and steel; in 1926, the countervailing cotton excise which helped Lancashire was abolished.Google Scholar

⁵³Lloyd George to Reading, 26 July 1922, Reading Papers, vol. 21.Google Scholar

⁵⁴Not until the period from 1941 to 1945 was the Indian economy to be driven hard, and then only through heavy government intervention. And for that there would be a heavy political price to pay.Google Scholar

⁵⁵Indian ministers were given safe subjects such as education and local government, the ‘nation-building’ departments; the civilians kept the departments which mattered.Google Scholar

⁵⁶Irwin to Benn, 8 May 1930, Irwin Papers, 6.Google Scholar

⁵⁷ Note by Irwin, signed and dated December 1928 (shown to Simon 21 December), Simon Commission Collection, Box 34, quoted in Moore, R. J., The Crisis of Indian Unity, 1917–1940 (Oxford, 1974), p. 43.Google Scholar

⁵⁸ Note on conversation with Patel, 11 January 1929, Irwin Papers, 5, quoted in ibid., p. 46.

⁵⁹The statement, described by Jawaharlal Nehru as an ‘ingeniously worded announcement which could mean much or very little’ (J. Nehru, Autobiography (1936), p. 196), was made at a time when Dominion Status had no fixed meaning. Constitutional lawyers have debated whether Dominion Status was compatible with external control, as Irwin believed it was, or whether it could be achieved only after full responsible government had been granted, as the Home Department in Delhi argued in 1929.Google Scholar

⁶⁰Earl of Halifax, Fulness of Days (1957), p. 122, quoted in Moore, The Crisis of Indian Unity, p. 93.Google Scholar

⁶¹Irwin to Davidson, 5 December 1929, R. R. James, Memoirs of a Conservative (1969), p. 311.Google Scholar

⁶²Irwin to Wedgwood Benn, 26 April 1931, Irwin Papers, 6.Google Scholar

⁶³Most of the viceroy's provincial governors opposed his Plan. But a viceroy could. override governors. More important, Irwin's viceroyalty was one of the rare periods in the later history of the Raj when policy was made more in New Delhi than in London. During the second Labour Government it was Irwin who dealt most of the cards which Ramsay MacDonald and Wedgwood Benn played. By the end of December 1930, MacDonald and Benn were at Chequers working on a scheme to give responsible government with safeguards to a native Indian government (see Benn to Irwin, 26 December 1930, and 10 January 1931, Irwin Papers); more than that, Irwin converted Baldwin as well. On 26 January 1931, the leader of the opposition stated that a Conservative Government would also follow such a policy.Google Scholar

⁶⁴PREM 1/414, Linlithgow to Zetland, 21 December 1939.Google Scholar

⁶⁵See Thomas, Federal Finance in India, p. 331.Google Scholar

⁶⁶In these commercial matters, New Delhi was trapped inside its political calculations. Needing all the help it could get against agitational politics, it did not dare to embitter the Bombay millowners who might hit back by financing the agitators.Google Scholar

⁶⁷ In 1929 there was ‘a general feeling of consternation’ in Baldwin's Cabinet; in 1931 ‘another tiresome tussle in the Cabinet this morning’, reported Wedgwood Benn; in 1934, his conservative successor at the India Office, Sir Samuel Hoare, was deep in depression; ‘If the moderates in Lancashire go off the deep end…I shudder to think of the results on my Party in the House of Commons’. See Peel to Irwin, 30 January 1929, Irwin Papers, 5; Benn to Irwin, 27–28 January 1931, Irwin Papers, 6; Hoare to Willingdon, 2 November 1934, Templewood Papers, 10; Hoare to Willingdon, 3 February 1935, Ibid. Also see R. A. Butler, The Art of the Possible (1971), p. 52.

⁶⁸For the early operation of the fiscal conventions, see CAB 27/229. The dramas of the cotton duties are summarized in I. M. Drummond, British Economic Policy and the Empire, 1919–1939 (1972), pp. 121–40. This account describes Britain's mauling at the hands of the Indians in terms reminiscent of Au Baba and the Forty Thieves. But in fact these were political not business transactions, and even Sir George Rainy, Commerce Member of the Viceroy's Council ‘feels very strongly’ that Indian politicians had to be given control of Indian trade; see Irwin to Wedgwood Benn, 2 August 1930, Irwin Papers, 6.Google Scholar

⁶⁹ CAB 27/470, Memorandum on Indian Finance by Secretary of State, 8 December 1930, DDG(30)17, quoted in Tomlinson, , IESHR, XII, no. 4, 371.Google Scholar

⁷⁰Jones, T., A Diary with Letters, 1931–1950 (1954), entry for 11 March 1931, p. 5.Google Scholar

⁷¹See Hoare to Willingdon, 13 February 1935, Templewood Papers, and R. A. Butler, The Art of the Possible (1971), p. 52. Some of this opposition was grounded on a general desire that the imperial flag of Britain should still fly high above the citadels of India; but there were other grounds, lying inside the factions of the Conservative Party. Some Conservatives joined in because they disliked the Party's captivity inside the National Coalition, and saw the Bill as a handy stick with which to beat it; others, because they supported the take-over bid for the Party, made by Churchill and his cronies, and others because they were swayed by the pressures from Lancashire. At most, thirty Conservative members liked the Bill.Google Scholar

⁷²Hoare to Willingdon, 12 April 1935, Templewood Papers.Google Scholar

⁷³In this way the growth of politics in India was exacting its revenge upon the development of politics in Britain.Google Scholar

⁷⁴Irwin to Benn, 13 December 1930, Irwin Papers, 6.Google Scholar

⁷⁵CAB 2/5, CID Minutes, 22 March 1932.Google Scholar

⁷⁶CAB 2/5, CID Minutes, 6 April 1933.Google Scholar

⁷⁷See CAB 4/26, Memorandum by Eden, 15 June 1937, 1332-B; and memoranda by Chiefs of Staff, 28 July 1937, 1346-B, and 12 August 1937, 1347-B.Google Scholar

⁷⁸See CAB 4/26, report of Chiefs of Staff, 26 October 1937, 1364-B; CAB 4/27, report of Chiefs of Staff, 24 November 1937, 1371-B; memorandum by Inskip, 19 November 1937, CP 283 (37); CID minutes, 18 November 1937.Google Scholar

⁷⁹CAB 16/182, memorandum by Inskip, 8 February 1938, DP(P)16.Google Scholar

⁸⁰CAB 16/183, memorandum by Chiefs of Staff, 20 February 1939.Google Scholar

⁸¹ibid., memorandum by Chiefs of Staffs, 13 April 1939.

⁸²CAB 2/7, CID Minutes, 25 March 1938.Google Scholar

⁸³These Middle Eastern tangles meant that a colonial division had to be formed ready to deal with them. Fifteen years before, Haldane had considered Britain's growing strategic interest in the Middle East and had noted: ‘since the War the Empire's most serious commitments appear to be rather in the Near and Middle East than in Western Europe; the situation in Iraq, Egypt and Persia was such that demands might be made for troops in any of these countries’. CAB 2/4, Memorandum by Haldane, 4 November 1924, CID. These troops, Haldane had then hoped might come from India. In 1939 India remained the only source.Google Scholar

⁸⁴ In 1938 the Auchinleck Committee castigated the Indian army for ‘showing a tendency to fall behind the forces of such minor states as Egypt, Iraq and Afghanistan. Judged by modern standards, the Army in India is relatively immobile and under-armed and unfit to take the field against land or air forces equipped with up-to-date weapons’. See Das, S. T., Indian Military—Its History and Development (New Delhi, 1969), p. 117,Google Scholar quoted in Tomlinson, , ‘India and the British Empire, 1935–1947’, IESHR, XIII, no. 3, 334.Google Scholar

⁸⁵PREM 1/339, Grigg to ‘H.J.’ Sir Horace Wilson, 16 January 1938.Google Scholar

⁸⁶ibid., Government of India to Secretary, Military Department, India Office, 9 February 1938.

⁸⁷CAB 27/653, Interim Report by Committee on Defence of India, 18 July 1938, CP 174(38), Second Report, 29 July 1938, CP 187(38).Google Scholar

⁸⁸ CAB 27/65A, Draft Report of sub-committee of Committee on the Defence of India, 7 June 1939, ID(38). Of course there was to be no stopping there. By an agreement between London and Delhi in 1940, the division of Indian defence expenditure was settled. India was to pay only the cost of specifically Indian defence. In 1940–41 Britain's contribution to India's defence was Rs 53 crores, while India's contribution to Indian defence was Rs 73.6 crores. But by 1941–42 Britain's contribution to India's defence was Rs 297.9 crores and India's contribution was 103.9 crores. Britain's contribution to Indian defence continued to rise. By the end of the war, Britain owed India £1000m, a sum which was soon to rise to £1500m. (See Tomlinson, , IESHR, XIII, no. 3, Table I, p. 350.) Certainly this was defence at bargain prices. As Sir John Simon sarcastically put it, ‘India was fortunate indeed in having us behind her’. (CAB 27/653, Minutes of sixth meeting of Committee on Defence of India, 7 June 1938.)Google Scholar