Industrial and Financial Capitalist Phase in Nineteenth Century

Industrial Capitalist Phase: 1st half of the Nineteenth Century

By the beginning of nineteenth century the Company had emerged as a territorial power. During this period India was converted into a market for British textiles and a great source of raw materials. The Company government’s expansionist policies led to wars against regional rulers. The cost of these internal conquests was imposed on India. This apart, the Company remitted to England what was called Home Charges – the dividends on East India’s stock, interest on debt, savings from salaries and the pensions of officers and establishments and buildings in the India Office, London, transporting cost of British troops to and from India. This drain of wealth in the form of Home Charges in course of time rose to 16 million pounds per year, excluding the private remittances that worked to 10 million pounds.

Financial Capitalist Phase: 2^nd half of the Nineteenth Century

During this phase managing agency firms, export-import firms, and exchange banks began to prosper. In its bid to provide an outlet to the investible surplus capital in England, the Company government decided to make a massive investment in railroads, the postal system, irrigation, modern banking and education. The capital exported was predominantly for railway construction. The railways helped to move British troops quickly across the country. It also enabled the conquest of the Indian market to the maximum extent. The Company, supported by the English Parliament, encouraged British investment in railways with a guaranteed annual interest of 5 per cent. Mining companies were given for nominal fees and low royalties. Land for cultivation of coffee, tea, pepper and rubber was given at a throwaway price. In order to facilitate the supply of labour to work on plantations in British overseas colonies, slavery was abolished in India (1843) and the system of indentured labour was introduced.