ABSTRACT
At the time when the crown took over the government of India, silver had once more started to pour into the country due to the investment in the railways. The first half of the nineteenth century, however, had been a period of deflation in India, because the country had been drained of silver by the East India Company. The silver rupee had been made the only legal tender in 1835, but since there was not enough silver around, prices fell to a very low level. Peasants engaged in subsistence agriculture and artisans producing for local markets could survive under these conditions. In southern India the handloom weavers who could buy cheap food and cheap cotton could even compete with industrial products imported from abroad. The Bengal weavers, however, whose production had been geared to the export market were severely hit by this competition. The bones of the weavers were bleaching in the plains of Bengal, as Governor General Lord Bentick had put it. Karl Marx then repeated this dramatic phrase and it has been quoted very often ever since. Actually, this was a local phenomenon which was not characteristic for the whole of India. The less dramatic but more important feature was the general depression of the deflated economy. Buying power was severely restricted. A modern Indian industry could not be expected to grow up under such conditions.
