Stigler may well be right, however, that Smith "certainly convinced all subsequent economists." If so, that is a comment on the dangers of illegitimate idealization that isolates some inquiry from factors that crucially affect its subject matter, a problem familiar in the sciences; in this case, separation of abstract inquiry into the wealth of nations from questions of power: Who decides, and for whom? We return to the point as Adam Smith himself understood it.

The wealth of the colonies returned to Britain, creating huge fortunes. By 1700, the East India Company accounted for "above half the trade of the nation," one contemporary critic commented. Through the following half-century, Keay writes, its shares became the "equivalent of a gilt-edged security, much sought after by trustees, charities and foreign investors." The rapid growth of wealth and power set the stage for outright conquest and imperial rule. British officials, merchants, and investors "amassed vast fortunes," gaining "wealth beyond the dreams of avarice" (Parker). That was particularly true in Bengal, which, Keay continues, "was destabilized and impoverished by a disastrous experiment in sponsored government" -- one of the many "experiments" in the Third World that have not exactly redounded to the benefit of the experimental subjects. Two English historians of India, Edward Thompson and G.T. Garrett, described the early history of British India as "perhaps the world's high-water mark of graft": "a gold-lust unequalled since the hysteria that took hold of the Spaniards of Cortes' and Pizzaro's age filled the English mind. Bengal in particular was not to know peace again until she has been bled white." It is significant, they remark, that one of the Hindustani words that has become part of the English language is "loot."¹²

The fate of Bengal brings out essential elements of the global conquest. Calcutta and Bangladesh are now the very symbols of misery and despair. In contrast, European warrior-merchants saw Bengal as one of the richest prizes in the world. An early English visitor described it as "a wonderful land, whose richness and abundance neither war, pestilence, nor oppression could destroy." Well before, the Moroccan traveller Ibn Battuta had described Bengal as "a country of great extent, and one in which rice is extremely abundant. Indeed, I have seen no region of the earth in which provisions are so plentiful." In 1757, the same year as Plassey, Clive described the textile center of Dacca as "extensive, populous, and rich as the city of London"; by 1840 its population had fallen from 150,000 to 30,000, Sir Charles Trevelyan testified before the Select Committee of the House of Lords, "and the jungle and malaria are fast encroaching... Dacca, the Manchester of India, has fallen from a very flourishing town to a very poor and small town." It is now the capital of Bangladesh.

Bengal was known for its fine cotton, now extinct, and for the excellence of its textiles, now imported. After the British takeover, British traders, using "every conceivable form of roguery," "acquired the weavers' cloth for a fraction of its value," English merchant William Bolts wrote in 1772: "Various and innumerable are the methods of oppressing the poor weavers...such as by fines, imprisonments, floggings, forcing bonds from them, etc." "The oppression and monopolies" imposed by the English "have been the causes of the decline of trade, the decrease of the revenues, and the present ruinous condition of affairs in Bengal."

Perhaps relying on Bolts, whose book was in his library, Adam Smith wrote four years later that in the underpopulated and "fertile country" of Bengal, "three or four hundred thousand people die of hunger in one year." These are consequences of the "improper regulations" and "injudicious restraints" imposed by the ruling Company upon the rice trade, which turn "dearth into a famine." "It has not been uncommon" for Company officials, "when the chief foresaw that extraordinary profit was likely to be made by opium," to plough up "a rich field of rice or other grain...in order to make room for a plantation of poppies." The miserable state of Bengal "and of some other of the English settlements" is the fault of the policies of "the mercantile company which oppresses and domineers in the East Indies." These should be contrasted, Smith urges, with "the genius of the British constitution which protects and governs North America" -- protects, that is, the English colonists, not the "mere savages," he fails to add.

The protection of the English colonists was actually a rather devious instrument. As Smith notes elsewhere, Britain "imposes an absolute prohibition upon the erection of slit-mills in any of her American plantations," and closely regulates internal commerce "of the produce of America; a regulation which effectually prevents the establishment of any manufacture of [hats, wools, woollen goods] for distant sale, and confines the industry of her colonists in this way to such coarse and household manufactures, as a private family commonly makes for its own use" or for its close neighbors. This is "a manifest violation of the most sacred rights of mankind," standard in the colonial domains.

Under Britain's Permanent Settlement of 1793 in India, land was privatized, yielding wealth to local clients and taxes for the British rulers, while "The settlement fashioned with great care and deliberation has to our painful knowledge subjected almost the whole of the lower classes to most grievous oppression," a British enquiry commission concluded in 1832, commenting on yet another facet of the experiment. Three years later, the director of the Company reported that "The misery hardly finds a parallel in the history of commerce. The bones of the cotton-weavers are bleaching the plains of India." The experiment was not a total failure, however. "If security was wanting against extensive popular tumult or revolution," the Governor-General of India, Lord Bentinck, observed, "I should say that the `Permanent Settlement,' though a failure in many other respects and in most important essentials, has this great advantage, at least, of having created a vast body of rich landed proprietors deeply interested in the continuance of the British Dominion and having complete command over the mass of the people," whose growing misery is therefore less of a problem than it might have been. As local industry declined, Bengal was converted to export agriculture, first indigo, then jute; Bangladesh produced over half the world's crop by 1900, but not a single mill for processing was ever built there under British rule.¹³

While Bengal was despoiled, Britain's textile industry was protected from Indian competition; a matter of importance, because Indian producers enjoyed a comparative advantage in printed cotton textile fabrics for the expanding market in England. A British Royal Industrial Commission of 1916-1918 recalled that Indian industrial development was "not inferior to that of the more advanced European nations" when "merchant adventurers from the West" arrived; it may even be "that the industries of India were far more advanced than those of the West up to the advent of the industrial revolution," Frederick Clairmonte observes," citing British studies. Parliamentary Acts of 1700 and 1720 forbade the import of printed fabrics from India, Persia, and China; all goods seized in contravention of this edict were to be confiscated, sold by auction, and re-exported. Indian calicoes were barred, including "any garment or apparel whatsoever...in or about any bed, chair cushion, window curtain, or any other sort of household stuff or furniture." Later, British taxes also discriminated against local cloth within India, which was forced to take inferior British textiles.

¹² Keay, Honorable Company, 170, 220-1, 321; Parker, op. cit. Thompson and Garrett, Rise and Fulfillment of British Rule in India, 1935, cited by Nehru, Discovery, 297.

¹³ Hartman and Boyce, Quiet Violence, ch. 1. Bolts, Considerations on Indian Affairs, 1772, cited by Hartman and Boyce and by the editor of Smith, Wealth, ii, 156n. Ibid., Bk. I, Ch. VIII (i, 82); Bk. IV, Ch. V (ii, 33); Bk. IV, Ch. VII, Pt. III (ii, 153); Bk. IV, Ch. VII, Pt. II (ii, 94-5). Trevelyan, Bentinck, cited by Clairmonte, Economic Liberalism, 86n., 98. Nehru, Discovery, 285, 299, 304.