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India’s Silver Bullets: War Loans and War Propaganda, 1917–18

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Abstract

The intensification of war demands in 1917 introduced many firsts in India's financial history. That year the government announced the ‘gift’ of a 100 million pounds towards Britain’s war expenses and launched the first of two Indian War Loans to meet this sum. This cast the colonial regime in the role of debtor to a subject population over which it had to reproduce its standing and authority. War loan propaganda could never be too strident, lest Indians conclude that Britain was bankrupt and losing the war. Social responses varied. Peasants viewed the war loan as just another oppressive exaction. However, in appealing to the figure of the ‘small investor’, war loan propaganda opened up a space for dialogue with the Indian middle classes. In the process it added fuel to the demand for home rule.

I am deeply grateful to Ravi Vasudevan, G. Balachandran, Cherian Jacob Kuncheria, A. K. Bagchi, Jayati Ghosh, Bishnupriya Gupta, Maartje Abbenhuis, Neill Atkinson, Kingsley Baird, and Gail Romano for going through drafts of this chapter; to David Sunderland for a crucial tip on sources; and to Sekhar Bandyopadhyay for support in presenting this paper at The Myriad Faces of War symposium. I am indebted to Jyotindra Jain and the CIViC Archives for permission to reproduce Mahadev Vishwanath Dhurandhar’s war loan illustration. All manuscript sources are from the National Archives of India, Delhi, unless otherwise stated. I have kept to the older spellings of Mumbai and Kolkata, to underline the importance of Bombay and Calcutta as financial nodes of empire.

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Notes

  1. 1.

    At Rs.15/- to the pound, 100 million pounds was equivalent to 150 crore rupees. One crore: Rs. 100,00,000/-. One lakh: Rs. 100,000/-. Figures in official and newspaper reports shifted continuously between pounds and rupees.

  2. 2.

    Between 1915 and 1919 the gross circulation of notes increased nearly three-fold while the percentage of the metallic backing decreased by nearly half (Hashmat Rai Chablani, Indian Currency and Exchange (London: Oxford University Press, 1925), 22).

  3. 3.

    The composition of the one rupee coin was 91.7% silver. In theory it was ‘token currency’, because, from 1898, when its exchange was fixed at 1s 4 d, its face value derived from state authorisation, not from its specie value. However, the rising price of silver in 1917 made it a hedge against inflation.

  4. 4.

    Ott points out that taxation would not have fulfilled the crucial political goals served by the mass marketing of federal war debt in the United States (Julia Ott, When Wall Street Met Main Street: The Quest for an Investors’ Democracy, (Cambridge, MA: Harvard University Press, 2014)). In India, higher taxation rather than loans met the larger part of war expenditure (Satyashraya Gopal Panandikar, ‘Some Aspects of The Economic Consequences of the War for India’ (PhD thesis, University of London, 1921), 243).

  5. 5.

    G. Balachandran, ‘“Finance orientalism”? Britain, the United States and India’s wartime currency crisis, 1914–1918’, South Asia 16, no. 2 (1993): 89–106.

  6. 6.

    Review of the Report on the Administration of the Mints at Calcutta and Bombay for the years 1916–17 (Calcutta: Government Printing: 1917).

  7. 7.

    Adam Tooze, The Deluge: The Great War and the Remaking of the Global Order 1916–1931 (New York: Allen Lane, 2014), 210. In his restrained yet anguished account of India’s hidden financial contribution to the war, Panandikar critiqued the denial to India of payment in gold for essential war supplies, and the stowing away instead of her export surplus in British Treasury Bills. Acquired when the exchange rate was 1 s 4 d to the rupee, these were realized, at a tremendous loss to India, largely in 1919–20 when the exchange rate was double (Some Aspects, 216).

  8. 8.

    David Sunderland, Financing the Raj, The City of London and Colonial India, 1858–1940 (Woodbridge: The Boydell Press, 2013), 83.

  9. 9.

    22 March 1918, Speeches By Lord Chelmsford Viceroy and Governor General of India (Simla: Government Press, 1921).

  10. 10.

    Capital, January 19, 1917, 145; January 26, 1917, 199.

  11. 11.

    The balance would be worked off by taking over the interest payment for an equivalent portion of the British War Loan, and the capital would be gradually paid off from Indian revenues.

  12. 12.

    7 February 1917, Speeches by Lord Chelmsford, 233–34.

  13. 13.

    ‘Indian War Loan’, Times of India, March 2, 1917, 9 (henceforth Times). The post office certificate was patterned on the UK war savings certificate introduced in June 1916 to attract first-time investors. Due to the marked preference for short-term bonds, the Second Indian War Loan, launched in June 1918, dropped the long-term loan and offered ten- and seven-year bonds at 5.5 per cent, and five- and three-year bonds at 5.75 per cent.

  14. 14.

    Lala Lajpat Rai, England’s Debt to India: A Historical Narrative of Britain’s Fiscal Policy in India (New York: B. W. Huebsch, 1917); ‘India and the War’, Times, March 9, 1917, 6. Vaman Govind Kale, India’s War Finance and Post-war Problems (Poona: Aryabhushan Press, 1919), 12, 56–57.

  15. 15.

    Political Department, 96-I/W, Maharashtra State Archives, Mumbai (MSA); Times, March 10, 1917, 9. For the hard financial bargains actually driven by the Dominions see Jatinder Mann, ‘War Finance, Australia’, accessed September 2017, https://encyclopedia.1914-1918.online.net/article/war_finance_australia.

  16. 16.

    However, tariffs would be reviewed again after the war.

  17. 17.

    ‘The Indian Debate’, Times, April 17, 1917, 7.

  18. 18.

    ‘Indian Budget’, Times, March 2 1918, 11; Stanley Reed, ed., The Indian Year Book 1919 (Bennet Coleman and Co.: Bombay), 726.

  19. 19.

    Foreign and Political, Internal, B, January 1919, No. 268.

  20. 20.

    In the first loan, the long-term loan accounted for 8.3 million pounds, the three- and five-year bonds for 21.2 million pounds, and post office certificates for 6 million pounds. Excluding the last item, a mere 155,103 investors contributed 29.5 million pounds. In the second loan, the post office section accounted for 3.7 million pounds. Excluding this, 103,282 applications accounted for 34 million pounds (L. F. Rushbrook Williams, India in the Years 1917–1918 (Calcutta: Government Printing, 1919), 82).

  21. 21.

    IOR/L/AG/14/17/1, India Office Library and Records, London (IOR).

  22. 22.

    Sunderland, Financing the Raj, 83.

  23. 23.

    Controller of Currency, India, 22 September 1917, IOR/L/AG/14/17/1.

  24. 24.

    Capital, June 15, 1917, 1412. Finding it difficult to get its revenues from mining and electric power remitted from London, the Mysore State invested 225,000 pounds worth of Treasury Bills in the Second Indian War Loan, through Coutts and Co. IOR/L/AG/4/17/2 (Somerset Playne, compiled, Indian States, A Bibliographical, Historical and Administrative Survey (London: Foreign and Colonial Compiling and Pub. Co., 1921–22)).

  25. 25.

    Panandikar, Some Aspects, 262.

  26. 26.

    IOR/L/AG/14/17/1. In the Central Provinces, middlemen and shopkeepers, reluctant to tie up trading capital ‘practically ignored’ the loan (Ibid.). The interest rates offered by the second war loan did not attract the ‘middle class of tradesmen’ in Punjab (M.S. Leigh, The Punjab and the War (Lahore: Government Printing), 76).

  27. 27.

    Times, March 12, 1917, 10; May 28, 1918, 7; Foreign and Political, Internal, B, January 1919, No. 268. Anne Hardgrove, chap. 4 in Community and Public Culture: The Marwaris in Calcutta, 1897–1997 (Oxford: Oxford University Press, 2004). The Marwaris were Hindu and Jain merchants originally from western India.

  28. 28.

    Times, March 29, 1917, 8.

  29. 29.

    Times, March 13, 1917, 8; ‘The War Loan’, Times, May 18, 1918, 7.

  30. 30.

    ‘Burma’s War Loan Train’, Straits Times, August 21, 1918, 9.

  31. 31.

    Foreword, Photo 59/5, Burma Railway Collection, IOR.

  32. 32.

    Capital, March 23, 1917, 687.

  33. 33.

    Statesman, April 3, 1917.

  34. 34.

    For an insightful exploration of conflicts around time zones: Jim Masselos, ‘Bombay Time/Standard Time’, South Asia, 40, no. 2 (2017), 281–84.

  35. 35.

    India’s Services in the War, Vol.V, Punjab (Newal Kishore Press: Lucknow, 1922), 60.

  36. 36.

    India’s Services in the War, Vol. III, United Provinces, 23; Vol. IV, Madras, 34.

  37. 37.

    Based on the collection in the Imperial War Museum, London. The 1911 census put the literacy rate for India at 5.4 per cent and the 1921 census at 7.2 per cent.

  38. 38.

    Times, June 6, 1918, 6.

  39. 39.

    ‘The Small Investor’, Times, August 5, 1915, 6.

  40. 40.

    Jyotindra Jain, ed., The Story of Early Indian Advertising, Marg 68, no. 3, 2017.

  41. 41.

    James Aulich and John Hewitt, Seduction or Instruction?: First World War Posters in Britain and Europe (Manchester: Manchester University Press, 2007), 2.

  42. 42.

    Chelmsford to Governor Madras, 15 February 1917, IOR/R/2/882/123. At the outbreak of the war there had been a run on banks and post office savings accounts and demands for the exchange of currency notes for coin.

  43. 43.

    Capital, January 19, 1917, 126.

  44. 44.

    Imperial War Museum Poster nos. 12561 and 12530 (IWM PST).

  45. 45.

    ‘Tomorrow is Pay Day’, Statesman, April 29, 1917. The image of a British soldier, spent cartridges around his feet, is essayed only in the Statesman, ‘Help us to refill his pouches’, Statesman, April 5, 1917.

  46. 46.

    F. A. Hook, Merchant Adventurers, 1914–15 (London: A&C Black Ltd, 1920), 35.

  47. 47.

    IWM PST 12562.

  48. 48.

    Statesman, April 15, 1917, 13.

  49. 49.

    IWM PST 12514; IWM PST 12538.

  50. 50.

    IWM PST 12528.

  51. 51.

    Statesman, July 2, 1918.

  52. 52.

    Statesman, May 6, 1917.

  53. 53.

    Statesman, April 3, 1917; Times, 22 June 22, 1918, 7.

  54. 54.

    Statesman, April 8, 1917, 20.

  55. 55.

    Statesman, April 10, 1917.

  56. 56.

    Statesman, April 19, 1917.

  57. 57.

    The advertisement incorporated a list of prominent subscribers from Bengal. Well-known European businesses figured on the list, but so did the well-known firms of Pran Kissen Law and Baldeodas Jugal Kishore, the latter profiting hugely from jute shares (Ibid.).

  58. 58.

    Jyotindra Jain, Bombay/Mumbai: Visual Histories of a City, Centre for Indian Visual Culture, 2013, accessed September 2017, http://civicportale.org/manage/downloadminpdf.php?download_file=pdf...pdf.

  59. 59.

    IWM PST 12573.

  60. 60.

    India’s Services, Vol. IV, Bombay, 18.

  61. 61.

    Times, August 30, 1918, 12.

  62. 62.

    IOR/L/AG/14/17/1.

  63. 63.

    Statesman, April 6, 1917.

  64. 64.

    India’s Services, Vol. V, Punjab, 83.

  65. 65.

    In 1918 there were just 90 head offices and 300 branch offices of modern commercial banks in India (‘Banking Map of India’, in L.F. Rushbrook Williams, India in the Years 1917–1918 (Calcutta: Government Printing, 1919), 77). On the eve of war, India had 18,789 post offices, some of which offered savings bank facilities.

  66. 66.

    Geoffrey Clarke, The Post Office of India and its Story (London: John Lance, 1921).

  67. 67.

    ‘The Small Investor’, Times, May 5, 1914, 4.

  68. 68.

    IWM PST 12535.

  69. 69.

    ‘City Notes’, London Times, August 13, 1917, 11.

  70. 70.

    To encourage retention, interest would accrue only after a year.

  71. 71.

    Acts No. 17 and 18 of 1917.

  72. 72.

    ‘Students and Thrift’, Times, September 11, 1917, 8; Bhopal Political Agency, File 7/8, 1917.

  73. 73.

    Combatants and non-combatants returning with savings, mill-workers, and even ‘criminal tribes’ were also targeted as subjects for this pedagogy.

  74. 74.

    Capital, March 30, 1917, 760.

  75. 75.

    IOR/L/AG/14/17/1.

  76. 76.

    Ibid.

  77. 77.

    IWM PST 12555; also IWM PST 12595.

  78. 78.

    Kale, India’s War Finance, 67. Panandikar, Some Aspects, 263.

  79. 79.

    Annual report on the Posts and Telegraphs of India for the year 1916–17 (Simla, 1917).

  80. 80.

    IOR/L/AG/14/17/1.

  81. 81.

    The tickets netted Rs. 36,42,090/-, The Calcutta Turf Club Sweep netted Rs. 3,74,470/-.

  82. 82.

    Political, 96-I-W, 1917, MSA.

  83. 83.

    11 May 1917, in IOR/R/2/747/321, File R/C, 559.

  84. 84.

    Straits Times, April 21, 1917, 13.

  85. 85.

    Statesman, April 24, 1917; May 6, 1917. Malaya Tribune, April 17, 1917, 3.

  86. 86.

    Capital, July 6, 1917, 10–11.

  87. 87.

    Sir Dorabji Jamsetji Tata, vs Edward F. Lance And Ors. on 3 July 1917, accessed September 2017, https://indiankanoon.org/doc/509066/.

  88. 88.

    Capital, July 13, 1917, 70.

  89. 89.

    Ibid.

  90. 90.

    Ibid. Ritu Birla, Stages of Capital: Law, Culture, and Market Governance in Late Colonial India (Durham, NC: Duke University Press, 2009).

  91. 91.

    However, the feeling persisted that it was the excitement of windfall gains alone which would induce the Indian trader and the man on the street to invest in government paper. European Chambers of Commerce pressed continuously but unsuccessfully for a Premium bond scheme as a component of the First and Second Indian War Loans (Times, January 29, 1917, 11; February 10, 1917, 13; March 2, 1917. Capital, July 20, 1917, 129; July 27, 1917, 195; September 28, 1917, 732).

  92. 92.

    Political Department, 96-I/W, 1917, MSA.

  93. 93.

    Ibid.

  94. 94.

    Ibid.

  95. 95.

    See Report of the Commissioners appointed by the Punjab Sub-Committee of the Indian National Congress, Vol. 1 (Bombay, 1920), 17.

  96. 96.

    Capital, March 30, 1917, 760.

  97. 97.

    ‘Bombay and War Loan’, Times, June 13, 1918, 7.

  98. 98.

    Ibid.

  99. 99.

    ‘25 Lakhs from E.I Railway’, Statesman, April 5, 1917.

  100. 100.

    Statesman, April 1, 1917.

  101. 101.

    Ibid.

  102. 102.

    Times, June 3, 1918, 10; June 17, 1918, 5; July 22, 1918, 9.

  103. 103.

    Statesman, April 8, 1917, 20.

  104. 104.

    However, presidency banks could pay a brokerage of one-eighth per cent to ‘recognised bankers and brokers’ for bringing in subscriptions to war bonds (Gazette of India Extraordinary, May 11, 1918, 315). ‘Recognised’ broker was interpreted broadly in this context.

  105. 105.

    K-11, 1920, Finance Department, MSA.

  106. 106.

    Foreign and Political, Internal, B, September 1917, No. 245; Leigh, The Punjab and the War, 75.

  107. 107.

    Bombay Gazette, December 25, 1919, 968–69.

  108. 108.

    An investigation into the lynching of a mamlatdar in the Bombay Presidency revealed that he had followed ‘the not infrequent practice’ of sending out summonses on official printed forms, under the Land Revenue Code, calling upon people to appear before him ‘in regard to the War Loan’. He then made out a list and closed the village well until they paid (Benjamin Guy Horniman, British Administration and the Amritsar Massacre (Mittal Publishers: Delhi, 1984), 26–27; Times, June 2, 1917, 9).

  109. 109.

    Note by censor, 3 October 1917, IOR/L/Mil/5/828, Pt III, and IOR/L/Mil/5/827, Pt III, 472.

  110. 110.

    Ibid.

  111. 111.

    Shiv Ram to Sarab Narain Shah, from France, 22 January 1918, in David Omissi, Indian Voices of the Great War: Soldiers Letters, 1914–18 (London: Palgrave Macmillan, 1999), letter 639.

  112. 112.

    Slater, then professor of economics, Madras University, recalled that many large subscribers simply wanted to win official favour, they did not expect to see their money again. However, when they began to receive interest, and found that scrip was accepted as security for a bank loan, they subscribed more willingly to subsequent loans. Gilbert Slater, Southern India, its Political and Economic Problems (London: George Allen and Unwin, 1936), 292.

  113. 113.

    Kali Ghosh, The Autobiography of a Revolutionary in British India (Delhi: Social Science Press, 2013), 22.

  114. 114.

    ‘Wake up Bengal’, Statesman, May 25, 1917, 7.

  115. 115.

    Chelmsford to Secretary of State for India, 23 January 1918, Finance Department.

  116. 116.

    Douglas E. Haynes, Rhetoric and Ritual in Colonial India: The Shaping of a Public Culture in Surat City, 1852–1928 (Berkeley, CA: University of Calfornia Press, 1991), 174–75.

  117. 117.

    At Chikodi, (1918 nd), in Bal Gangadhar Tilak, His Writings and Speeches (Madras: Ganesh and Co., 1922), 238.

  118. 118.

    Aga Khan, India in Transition, A Study in Political Evolution (Bombay: Bennet, Coleman and Co., 1918), 286.

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Singha, R. (2018). India’s Silver Bullets: War Loans and War Propaganda, 1917–18. In: Abbenhuis, M., Atkinson, N., Baird, K., Romano, G. (eds) The Myriad Legacies of 1917. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-73685-3_5

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