The Company had a word for it ‘Territorial Revenue’ e.g. the revenue surplus from Bengal. Side by side the Company’s accounts showed “Commercial Revenue’, i.e. profits of business.
As the Company’s territory in India extended, the ‘territorial revenue’ expanded. The Company was able to use the territorial revenue from one region, e.g. Bengal, to pay for the military costs of acquiring other territories.
Further, the territorial revenue was used to provide the funds for the business which raked in ‘commercial revenue’. It was a perfectly self-contained system, needing no funds from England.
In fact the system was successful not only in financing the Company’s exports to Europe, but also to finance the Company’s investment in China to buy tea and silk the latter branch of business involved export of silver to China which caused monetary problems in this country is system operated in full swing from 1765 till 1813 when the Company’s Onopoly was abolished. In the next two decades the business of the Company sharply and ‘Territorial Revenue’ became their mainstay. Private traders, Company servants and non-officials now took the lead in export business.
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They had always been there had been remitting or sending out their profits to England in the form of goods through non-English or through the English. Company by means of bills of exchange thus, apart from the Company’s account, on private account there was transfer of funds to England.
Not a that was thus sent out to England was business profit, it included earnings 0f Englishmen from plunder and lost during wars, bribery obtained from regional principalities and fraudulent dealings with Indian business partners or underlings I A knowledgeable English businessman, GA. Pnnsep, calculated that between 1813 and 1820 the yearly average private wealth sent out to England from Bengal alone was about Rs. 1 Crore and 8 lakhs.
So, profits of business and other private earnings formed one part of funds remitted to England. Another part was the money paid to shipping companies, banks, insurance companies etc. in England. This amounted to about Rs. 57 lakhs in 1813-20 annually.
A third channel of transfer of funds was the Company’s remittance to England. This was to pay for the salary of the Company’s employees in England, the interest on loans taken by the Company in England, dividends to the stockholders of the Company etc.
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This amount varied greatly from one to three crore of rupees. This became known as ‘Home charges’ and was the sum total of the money sent to England by the Company’s government after it stopped trading in 1833. While the system, described above, to get funds out of India was being perfected, England was undergoing the Industrial Revolution.
Wealth from India added to the capital accumulation England needed for industrialisation. However, it does not follow that this was any more than one of a vast number of factors contributing towards England’s industrialisation. At any industrialisation in England radically changed the pattern of India’s trade.
Following the objective of the merchant capitalist trade by cheapest and sell dearly the Company begun its trading activity. In this, they needed the services of Indian native traders who were needed for procurement of goods for exploit, but soon the nature of British trade underwent a change when the English East India Company began to acquire political hegemony and dominant position as the chief buyer of export good.
The local trader’s position was reduced to that of dependent agent and to that of the status of servants of the English. ‘Drain of Wealth’ meant one sided transfer of wealth from one country another. In India’s context, it happened by employing Indian capital raised as land revenue in investment for purchasing raw materials to be exported Europe, remitting the profits of Company in England and dividends to stockholders of the Company was known as charges.