ESTABLISHMENT OF COMPANY RULE CLASS 8
BY POONAM DUA 
Grant of Diwani and Financial Powers
The East India Company was made the Diwan of Bengal on 12 August 1765; by then Mughal Emperor Shah Alam II. Thus, the Company became of the chief financial administrator of the territory of Bengal.The Company officials understood one important aspect of expanding their base in India. They understood the importance of those who had ruled the countryside in the past, and had enjoyed authority and prestige. The Company wanted to be careful not to annoy those people.
Growth of Revenue: Initially, the Company was just interested in collecting revenue so that its trade and other expenses could be financed. But the Company was not interested in setting up any regular system of assessment and collection. The revenue was enough to double the purchase by Company within five years.
Growth of Problems for Common People: But the Bengal economy was facing a deep crisis. Artisans were being forced to sell their goods to the Company at low prices and hence most of them were deserting their villages. Peasants were not able to pay the dues. Production by artisans declined and farm production also declined. In 1770, a terrible famine hit Bengal. It killed 10 million people.
Permanent Settlement
The Company had to take some steps to improve agriculture by improving investment in land. The Permanent Settlement was introduced in 1793. According to this, the rajas and taluqdars were recognized as zamindars and were given the responsibility of revenue collection from the peasants. The amount to be paid was fixed permanently and hence the name Permanent Settlement. The Company officials felt that it would ensure a regular flow of revenue. They also felt that this would motivate the zamindars to invest in improving the land. The zamindars would benefit from increased production because the revenue demand would not be increased.The Problem of Permanent Settlement
The revenue was fixed at such a high level that the zamindars found it difficult to pay. A zamindar who failed to pay the revenue lost his zamindari. Hence, zamindars were not investing in the improvement of land.But the situation changed by the first decade of the nineteenth century. There was price rise and expansion in cultivation. The income of the zamindars increased but it did not result in any gain for the Company because of fixed revenue demand.
The zamindars preferred to earn as much profit as they could and seldom bothered about investing in land. They were just happy to lease out the land to tenants.
The system was extremely oppressive for the cultivator. He had to pay a high rent to the zamindar but there was no security of his right on the land. Cultivator often had to take loan from the moneylender, to pay rent. Failure of payment of the rental meant eviction for the cultivator from the land.
Mahalwari Settlement
By the early nineteenth century, the Company officials were planning to change the revenue system. A new system was devised Holt Mackenzie. Mackenzie was convinced about the importance of village in the north Indian society. He wanted to preserve this important social institution. He sent collectors to different villages to take a survey. Data regarding land size and type and customs and rights of different groups were collected. The revenue estimation was done for each village. The village was known as mahal and hence this system was known as Mahalwari System. It was also decided to revise the revenue demand periodically. The village headman was given the responsibility of revenue collection. This system was first implemented in the villages of the North Western Provinces of the Bengal Presidency. Most of this area now comes under Uttar Pradesh.The Munro System
This system was also known as the ryotwari system. It was first tried on a small scale by Captain Alexander Read. He tried it in some of those areas which were taken over after the defeat of Tipu Sultan. This system was subsequently developed by Thomas Munro. This system was gradually implemented all over south India.There were no traditional zamindars in the south. Hence, the settlement had to be directly made with the cultivators (ryot). The ryots had been tilling the land for generations. Their fields were carefully surveyed to make the revenue assessment.
Problems of Excessive Revenue Demand
The revenue officials wanted to increase the income from land. Hence,
they fixed very high revenue demand. Peasants were not able to pay the
revenue. The ryots fled the countryside and villages became deserted in
many regions.
Crops for Europe
By the late eighteenth century, the Company was also trying to expand
the cultivation of opium and indigo. In the subsequent 150 years, the
British also persuaded or forced the cultivators to produce other crops;
like jute, tea, sugarcane, cotton, wheat and rice; to be supplied to
Europe.
High Demand of Indigo
The tropical climate is good for indigo plantation. By the thirteenth
century, Indian indigo was being used in Italy, France and Britain. But
the price of indigo was very high and hence a small amount of Indian
indigo could reach the European market. Woad is another plant which is used for making violet and blue dyes. Wood is a plant of temperate zones and hence was easily available in Europe. Woad was grown in northern Italy, southern France and in parts of Germany and Britain. The woad producers in Europe were worried by the competition from indigo and hence pressurized their governments to ban the import of indigo.
But indigo was preferred by the cloth dyers. While indigo produced a rich blue colour, woad produced pale and dull blue. By the seventeenth century, European cloth producers pressurized their governments to relax the ban on indigo import.
Indigo cultivation was started by the French in St Dominique in the Caribbean islands. Similarly, the Portuguese began indigo cultivation in Brazil, the British in Jamaica and the Spanish in Venezuela. Indigo plantations were also started in many parts of North America.
By the end of the eighteenth century, industrialization began in Britain and cotton production expanded manifold. This created an enormous demand for cloth dyes. The existing supplies of indigo from the West Indies and America collapsed due to various reasons. The indigo production in the world fell by half between 1783 and 1789. This meant that there was increasing demand for Indian indigo.
India: A Major Source of Indigo
The Company looked for ways to expand the area under indigo
cultivation in India. From the last decades of the eighteenth century,
indigo cultivation in Bengal rapidly expanded. Only about 30% of indigo
imported to Britain in 1788 was from India. This figure went up to 95%
by 1810. Commercial agents and officials of the Company began investing in indigo production to increase their profit. Many Company officials even left their jobs to look after their indigo business. Many people from Scotland and England came to India and became planters; to grab the opportunity. The Company and banks were giving loans for indigo cultivation at that time.
Ruling the Countryside
SYSTEMS OF INDIGO CULTIVATION:
Nij Cultivation:
In this system, the planter produced indigo on those lands which were under his direct control. The planter either bought the land or rented it from other zamindars. He directly employed labourers to produce indigo.The problem with nij cultivation
Indigo could only be cultivated on fertile lands. But these areas were densely populated and hence, only small plots could be acquired. This made it difficult to expand the area under nij cultivation.They attempted to lease in the land around the indigo factory. While doing so, they evicted the peasants from the area. Peasants’ eviction always created conflict and tension.
A large plantation required a large number of workers. Work at indigo plantation coincided with the time when peasants were busy with rice cultivation. Hence, mobilizing the labour for indigo cultivation was a difficult task.
Large scale nij cultivation also required many ploughs and bullocks. It was a big problem to bur and maintain the ploughs. Since the ploughs and bullocks of the peasants were busy in rice cultivation hence it was not possible to hire from them.
Till the late nineteenth century, planters were not willing to expand the area under nij cultivation; because of above mentioned problems. Less than 25% of the indigo cultivation was done under nij system.
Ryoti System
Under the ryoti system, indigo cultivation was done by the ryots. The planters made the ryots to sign a contract or an agreement (satta). Sometimes, they pressurized the village headmen to sign the contract on behalf of the ryots. After signing the contract, the ryots got cash advances from the planters. But after taking the loan, the ryot was committed to grow indigo on at least 25% of his land holding. Seeds and drills were provided by the planter. The cultivators prepared the soil, sowed the seed and looked after the crop.But the planters bought indigo at low prices and hence the ryots were always in debt trap.
“Blue Rebellion”
Thousands of ryots in Bengal refused to grow indigo in March 1859. The ryots refused to pay rents to the planters. They attacked indigo factories. They used to be armed with swords and spears, bows and arrows. Women also fought with pots, panda and kitchen implements. Those who worked for the planters were socially boycotted. The gomasthas were beaten up when they came to collect rent. The gomasthas were the agents of indigo planters.In many villages, headmen mobilized the indigo peasants against the lathiyals. The headmen were angry because they had been forced to sign indigo contract. Some zamindars were angry with the increasing power of the planters and at being forced to give them land on long leases. So, some zamindars also supported the villagers in their revolt against the indigo planters.
After the Revolt of 1857, the British government was worried about the possibility of another popular rebellion. When the news of indigo revolt spread, the Lieutenant Governor toured the region in the winter of 1859. This was seen as a sign of sympathy by the ryots. They began to believe that the British government would support them in their struggle.
When the rebellion spread, intellectuals from Calcutta rushed to the indigo districts. They began writing about the misery of the ryots and the horrors of the indigo system.
The government called in the military to protect the planters. The Indigo Commission was set up to enquire into the system of indigo production. The Commission held the planters guilty. It asked the ryots to fulfill their existing obligations and then they were free to cultivate whatever they wished.
After the Revolt
The indigo production collapsed in Bengal, after the revolt. The
planters now shifted their operation to Bihar. Discovery of synthetic
dyes in the late nineteenth century severely affected the business. But
the planters managed to expand production. When Mahatma Gandhi returned
from South Africa, the plight of indigo farmers in Champaran was brought
to his notice. Mahatma Gandhi visted Champaran in 1917 and began the
movement against the indigo planters.1. Summary
-
On 12 August, 1765, the East India Company was granted the Diwani
of Bengal and was now the chief financial administrator of Bengal. The
company now had rights to collect revenues in Bengal.
Robert Clive, the governor of Bengal appointed native agencies who helped him collect the revenues on behalf of the Company. However, this system failed when Clive left India in 1767.
They hence forced the peasants to pay heavy dues as land taxes and forced artisans to sell their goods at very cheap rates. This drove the peasants and artisans away from their villages, which consequently led to a decline in the production of artisanal goods and agricultural crops. The economy of Bengal collapsed.
Bengal was struck by a terrible famine in 1770, which killed ten million people. The company therefore introduced many land revenue systems. In 1793, the Permanent Settlement system was introduced by Lord Cornwallis, the Governor-General of India.
Under this system, zamindars were given the responsibility of collecting rent from the peasants and in return paying revenue to the Company. This revenue would remain fixed throughout. However, the system failed.
Another system introduced by Captain Alexander Read was called the ryotwari. The system was further developed by Thomas Munro, the Governor of Madras and came to be known as the Munro system. In 1822, another revenue system called the ‘mahalwari’ system devised by Holt Mackenzie came into effect in the north western province of the Bengal Presidency. However, all the land revenue systems introduced by the company failed miserably.
