What India Paid London, Head by Head

In 1894-95 the Secretary of State for India drew bills worth Rs 30.97 crore on the Indian treasuries and received £16.9 million for them in London.¹ Fourteen years earlier, in 1880-81, Rs 18.35 crore had fetched £15.3 million.² The sterling raised rose by about a tenth; the rupee cost of raising it rose by more than two-thirds.

That gap is the most concrete thing the colonial account shows about money leaving India before the First World War. This article takes the flows one at a time, under the names the official books gave them, and then sets them against the larger claim made by Dadabhai Naoroji and R.C. Dutt: that India suffered a “drain” to Britain.

The Council Bills moved the money but were not the spending

A Council Bill was a draft sold in London by the Secretary of State and paid in rupees from an Indian treasury. Exchange banks and merchants with rupee obligations in India bought them with sterling, and the India Office used that sterling to meet its bills in England.³ The Statistical Abstract records each year the rupees drawn, the sterling received, the average rate and a “loss by exchange” measured against a notional ten rupees to the pound.⁴

The bills were a means of remittance, not a head of expenditure. They carried the Home Charges without shipping bullion; gold appears in the London accounts only from 1900-01, and then for the Gold Reserve Fund.³ Because the bill totals include remittances to that fund, they overstate spending in England. In 1903-04 the Secretary of State received £23,859,303 from bills against net Home Charges of £17,399,730.⁵

The average rate on the bills fell from 1s 11.867d in 1862-63 to 1s 2.984d in 1892-93, when the recorded loss by exchange reached £9,946,200.⁶ By proclamation of 26 June 1893 the Government of India closed the mints to the free coinage of silver.⁷ Drawings in 1893-94 dropped to Rs 15.72 crore, raising £9,530,235.⁸ Sales reached £31,200,826 in 1913-14 and fell to £7,748,111 in 1914-15, the first year of the war.⁹

The sterling raised rose by about a tenth; the rupee cost of raising it rose by more than two-thirds.

The Home Charges, head by head

The Home Charges were the Government of India’s expenditure in England charged against revenue. In 1893-94 the gross figure was £15,826,815; after £193,454 of receipts in England the net was £15,633,361, spread across 48 separately itemised heads.¹⁰ Seven of them account for roughly three-quarters of the net total:

• Interest and annuities on State railway debt: £3,589,593
• Interest on other debt paid in England: £2,505,495
• Interest guaranteed to the railway companies: £2,154,720
• Pay and pensions of retired officers, mostly military: £1,734,166
• Military stores, including special defence works: £919,430
• Payments to the Imperial Exchequer for British forces in India: £739,820
• The Secretary of State’s establishment in London: £167,386¹¹

Together these come to £11,810,610, or 76 per cent of the net charge. Debt service on railways and other loans alone was £8,249,808, just over half.

In sterling the total moved slowly: £13,608,690 in 1875-76 and £16,060,636 in 1898-99.¹² The rupee price moved faster. The Indian accounts carried a separate “exchange” charge for the extra rupees needed at the depreciated rate: £1,490,650 in 1893-94 and £3,279,601 in 1894-95, falling to £80,949 in 1899-1900 once the gold-exchange system was working.¹³

Opium ran the other way

Opium does not sit on the same ledger. It was revenue raised in India: a Bengal monopoly sold at auction in Calcutta and a pass duty on Malwa opium at Bombay, mostly for export to China and the Straits Settlements.¹⁴ Gross opium revenue was Rs 9.12 crore in 1876-77 and Rs 10.48 crore in 1880-81; it was Rs 6.63 crore in 1893-94 and Rs 4.40 crore in 1899-1900.¹⁵ Net receipts after the cost of production were smaller, Rs 4.75 crore in 1893-94.¹⁵

Naoroji himself treated opium as an offset. Of about £500 million he reckoned England had retained from India between 1835 and 1872, he attributed about £141 million to net opium revenue.¹⁶ Bengal chests sold for export fell from 59,100 in 1879-80 to 37,695 in 1895-96.¹⁷ The Statistical Abstract names no buyers, and the research behind this article could not confirm from primary records which merchant houses bought the chests.¹⁸

What the drain argument claimed

Naoroji wrote in 1901 of “the evil of the ‘bleeding’ and impoverishing drain by the foreign dominion”, which he put at “nearly or above £30,000,000 a year”, and nearer £40 million if export profits, freight and insurance were counted.¹⁹ A table in the same book computed the drain as exports plus 15 per cent profit, minus imports: £5,347,000 a year in 1835-39, rising to £27,400,000 in 1870-72.²⁰ These are his own estimates, not official figures, and the database records them as reported.

His £30 million is nearly twice the recorded Home Charges of £16,060,636 in 1898-99.¹² He reached it by counting the whole export surplus rather than adding up official transfers, a method that charges the surplus as a loss while also crediting opium revenue and commercial profits against it.²⁰

Dutt’s railway evidence is narrower and firmer. He printed the sums paid from Indian revenue to make good the guaranteed interest between 1849 and 1858, including £1,528,046 to the East Indian Railway; the repo records these as reported.²¹ The guarantee was real, but not wholly one-way: the same official table shows £403,506 of “surplus profits, land and supervision” accruing to government from the guaranteed companies in 1893-94.²²

What the record can and cannot settle

The official tables establish direction and scale. Every year from 1875 to 1903 between £13 million and £18 million was spent in England out of Indian revenue, and the fall of silver made each pound dearer in rupees.¹² The same books show capital moving the other way: £13,436,000 was borrowed in England on Indian account in 1893-94.²³

They cannot settle whether the payments bought equal value. Railway interest paid for capital spent on Indian lines; pensions and the army charge paid for defence and past service whose benefit to India the project’s claim checks call contestable.²⁴ Neither the Welby Commission evidence nor the revisionist literature from Morris (1963) onwards has yet been read, so whether later historians refuted the drain is recorded as undetermined.²⁵

Nor does the series reach the war intact. The Statistical Abstract run obtained stops at 1903-04, and the only accessible copy for later years prints Council Bill sales of £226,468,308 for 1910-11 and £285,759,706 for 1912-13, both impossible as printed.²⁶

Footnotes

1. Statistical Abstract relating to British India, 39th number (HMSO, 1905), table 84: bills drawn 1894-95, £16,905,102 received. https://dsal.uchicago.edu/statistics/1894_excel/1894.084.XLS ↩

2. Statistical Abstract relating to British India, 21st number (HMSO, 1887), table 57: bills drawn 1880-81, £15,261,810 received. https://dsal.uchicago.edu/statistics/1876_excel/1876.057.XLS. The percentage changes are this paper’s arithmetic on the two rows. ↩

3. Statistical Abstract, 39th number (HMSO, 1905), tables 72 and 84, as summarised in the project’s claim check on the Council Bills mechanism; B.R. Ambedkar, The Problem of the Rupee (P.S. King, 1923), ch. 4. ↩ ↩²

4. Statistical Abstract, 21st number (HMSO, 1887), table 57; 39th number (HMSO, 1905), table 84. ↩

5. Statistical Abstract, 39th number (HMSO, 1905), tables 71 and 84. https://dsal.uchicago.edu/statistics/1894_excel/ ↩

6. Statistical Abstract, 21st number (HMSO, 1887), table 57; 39th number (HMSO, 1905), table 84. ↩

7. Report of the Indian Currency Committee (Herschell, 1893). https://archive.org/details/india.history.resource.108376 ↩

8. Statistical Abstract, 39th number (HMSO, 1905), table 84. https://dsal.uchicago.edu/statistics/1894_excel/1894.084.XLS ↩

9. Statistical Tables relating to Banks in India, 1915-1926, introduction, table of Council Bill sales. https://archive.org/details/india.history.resource.108520 ↩

10. Statistical Abstract, 39th number (HMSO, 1905), table 71. https://dsal.uchicago.edu/statistics/1894_excel/1894.071.XLS ↩

11. Statistical Abstract, 39th number (HMSO, 1905), table 71. The totals and shares that follow are this paper’s arithmetic on these heads. ↩

12. Indian Currency Committee 1898 (Fowler), Index and Appendices to the Evidence (HMSO, 1899), App. II, Statement No. 9, p. 138, for 1875-76 (reported); Statistical Abstract, 39th number (HMSO, 1905), table 71, for 1893-94 onwards (verified). https://archive.org/details/dli.csl.367 ↩ ↩² ↩³

13. Statistical Abstract, 39th number (HMSO, 1905), table 46. https://dsal.uchicago.edu/statistics/1894_excel/1894.046.XLS ↩

14. Statistical Abstract, 21st number (HMSO, 1887), table 47; 39th number (HMSO, 1905), tables 51 and 163. ↩

15. Statistical Abstract, 21st number (HMSO, 1887), table 46; 39th number (HMSO, 1905), table 50. https://dsal.uchicago.edu/statistics/1894_excel/1894.050.XLS ↩ ↩²

16. Dadabhai Naoroji, Poverty and Un-British Rule in India (Swan Sonnenschein, 1901), pp. 33-34. Naoroji’s own estimate; reported. https://archive.org/details/cu31924022963916 ↩

17. Statistical Abstract, 21st number (HMSO, 1887), table 47; 39th number (HMSO, 1905), table 51. ↩

18. Project research notes, “Extraction channels and currency”, opium section: financing and shipping firms recorded as not found in the sources read. ↩

19. Naoroji, Poverty and Un-British Rule in India (1901), Introduction. Reported. ↩

20. Naoroji, Poverty and Un-British Rule in India (1901), pp. 33-35. Reported. ↩ ↩²

21. R.C. Dutt, The Economic History of India, vol. 2 (1906 ed.), p. 176, citing Juland Danvers’s report of 12 March 1860. Reported. https://archive.org/details/india.history.resource.89077 ↩

22. Statistical Abstract, 39th number (HMSO, 1905), table 71, as cited in the project’s claim check on the railway guarantee. ↩

23. Statistical Abstract, 39th number (HMSO, 1905), Ways and Means of the Home Government. ↩

24. Project claim check, “The Home Charges were ‘tribute’ rather than payment for services”: partially supported, moderate strength. ↩

25. Project claim check, “Later economic historians have refuted the drain theory”: undetermined; the confidence is unknown by design. ↩

26. Statistical Tables relating to Banks in India, 1915-1926, introduction. OCR figures recorded with confidence unknown. https://archive.org/details/india.history.resource.108520 ↩