450 Part VI: European Empires in Asia
first place. Back in London, there was a growing sense that the Crown must
take greater responsibility for what was happening in India. Pitt’s India Act of
1784 attempted to force responsible government on the Company by establish-
ing a supervisory Board of Governors made up of British ministers and
required the Company to begin training and adequately paying officials who
would work diligently and honorably in India. It also called for regularizing the
land holdings of Indians from whom revenues were collected. This resulted in
a vast undertaking, in which the holdings and claims of every small and large
zamindar were investigated and then British concepts of private property own-
ership were imposed on what had been a vastly more fluid system of land use.
The Permanent Settlement of 1793 thus made possible the displacement of the
old Mughal princes of Bengal by newly rich Indian commercial families who
could afford to buy them out when they fell on hard times.
Meanwhile, during the first half of the nineteenth century, economic phi-
losophy was undergoing a shift. The philosophy under which the East India
Company had first been chartered held that the purpose of trade was both to
profit the merchants and to bring glory to the nation. The East India Company
had been given a monopoly on trade to ensure it would become rich and pow-
erful and simultaneously maintain and strengthen British power in competition
with other sovereign nations. Business—international trade, at least—was to
serve national interests. This philosophy was known as “mercantilism.”
But new ideas were in the wind, ideas associated with the growing middle
class and with Britain’s emerging manufacturing base. This was the idea of
“free trade,” destined to dominate the nineteenth and twentieth centuries.
From the point of view of Manchester textile barons, the East India Company
monopoly on trade meant flooding Britain with cheap Indian cloth just when
English factories were becoming so productive that they needed constantly
expanding markets to absorb all they could now produce. The monopoly on
trade was abolished, but just to be on the safe side, tariffs were raised against
Indian cloth entering Britain to protect the English textile industry. Thus eco-
nomic policy under the name of free trade was tweaked to ensure England’s
continued economic advantage. The result was the destruction of the Indian
handloom industry.
A second new idea began to emerge: the linking of the British and Indian
economies in a new way. Where, before, India had primary industries (grain,
raw materials) and secondary industries (handloom cloth manufacturers), India
would now specialize in primary production while Britain specialized in sec-
ondary production, using its new industrial technology to add value to India’s
raw goods. A permanent relationship and a single, pan-imperial economy
would result. Rather than importing industrial technology to India, a new tech-
nology for raw goods production was invented: the plantation system. Tea, cot-
ton, opium, sugar, indigo—all were grown on vast estates owned by English
planters employing Indians on a wage basis. Now instead of cultivating for
themselves on small plots of land that could be passed down from father to son,