- Financing the Raj: The City of London and Colonial India, 1858–1940 by David Sutherland
This monograph’s subtitle is misleading. Financing the Raj is not about the city of London but about the India office’s management of the colony’s external finances through city institutions in London. For about nine decades until the late 1940s, the India office in London, which was a separate department of state headed by a member of the British cabinet with the title of “secretary of state for India,” managed the colony’s external debt and its currency and exchange rates. It was a major presence in London financial markets, investing India’s working balances and reserves, managing its currency, and issuing, managing, and collecting the colony’s debts with an eye mainly toward promoting the stability of these markets, and the stability or effective management of the pound sterling. By the early 1900s, the India office seemed briefly to offer an unsurpassed career at the intersection of high finance and high politics that attracted bright minds, such as the young civil servant John Maynard Keynes. Overseeing the India office’s management of Indian financial affairs was a finance committee made up of rising city figures and the odd retired bureaucrat. In India itself, finances were entrusted to a finance member, a position to which, by the crisis-prone interwar years, leading but locally unsuited Whitehall figures with political ambitions were exiled.
Much has been written about India, the India office, and the city of London starting with Keynes’ Indian Currency and Finance (London, 1913). Keynes wrote his book practically at the request of Lionel Abrahams, his former India office boss. Indian Currency and Finance put the best possible spin on Whitehall’s management of the colony’s currency affairs, offering in the process an elegant if anodyne account of bureaucratic intervention in financial markets to advance a liberal, metropolitan conception of the public interest. Keynes’ reward for his efforts [End Page 542] was a seat on the 1914 royal commission on Indian currency and finance.
Sunderland claims to have been “utterly appalled” at the start of his research by the picture of “ineptitude and dishonesty” in the India Office that witnesses before this commission painted, and he determined to expose this “depraved” institution. By the last year of his research, however, the India Office had transformed into an “efficient institution staffed and advised by committed and highly knowledgeable individuals” successfully protecting India from “City exploitation” (vii).
Sunderland need not have bothered to write a redemption. As the virtual author of the report of the 1914 commission, Keynes was quick to prick most of the criticisms that the India office faced before and during the commission’s proceedings. Keynes’s century-old apologia for his former department’s late nineteenth- and early twentieth-century rigging of the colony’s monetary system (which led to a period of prolonged instability through the interwar years) has also rarely been bettered.
Nevertheless, while offering few fresh insights, Financing the Raj undertakes an extensive reading of primary sources to reconstruct in considerable detail the India Office’s debt and monetary operations in London. That the former has been less well covered than the latter in the monographic literature provides one reason for readers to turn to this book. It also retells a known, if not altogether familiar, story in a simple and accessible manner.
This accessibility, however, comes at a price. Even where it seems informed of recent secondary research in its areas of interest, the monograph remains curiously disengaged from it. Colonial India was the site of numerous failed and successful experiments that have a bearing on a substantial body of our theoretical and practical knowledge of currency and exchange rates and central banking, but Sunderland makes no attempt to examine this side of the story. In taking economic knowledge and orthodoxies for granted as somehow sui generis, Financing the Raj misses an opportunity to add to our understanding of the constitutive role of Indian and other colonial institutions...