Bharat Rakshak

SBajwa wrote:

nachiket wrote:I understand wanting to change the names of regiments like Skinner's Horse and Hodson's horse. But what exactly is to be gained by changing IA's name to INA? The IA already had a name change from the BIA to IA after WW2. It did not remain the same.

Let's not forget that the real colonial holdovers in need of reform are the IPS and IAS rather than the IA which is working fine.

Skinner's horse and Hodson Horse were made of the former soldiers of the Maharaja Ranjit singh Army that was disbanded in 1849 and then back these regiments created in 1857 due to revolt.

atamjeetsingh wrote:

Singha wrote:I dont know if skinners horse played a role in the brutal massacres the white british english unleashed in 1857 but looks like hodsons horse was raised expressly to put down the revolt

Fairly inglorious of “loyal” sikhs and gurkhas fighting purbiya units who revolted in the united provinces

Why keep the name of the “leaders” who led the madsacre of the revolutionaries. Its hardly documented how many alleged camp followers were also shot out of hand when delhi fell. It is known the old city of delhi became depopulated for monthsand people fled to countryside. Bahadur zafars young sons were executed in cold blood after being arrested. Dalrymple and many others have written of it

Who was doing all this? Only white british units or indian units also participated ?

The truth must be found and told

Wiki

It was raised by Brevet Major William Stephen Raikes Hodson during the Indian Rebellion of 1857, and exists today as the 4th Horse Regiment in the Indian Army. The first risala or troop was raised by Risaldar-Major Man Singh.

The force was raised as an irregular cavalry regiment to assist with putting down the rebellion, and continued as part of the British Indian Army.

There is a book by Hodsons brother which has extracts of letter written by Hodson to his family. Twelve years of soldiers life in India. It gives a good detials of events during 1857.

ks_sachin wrote:My grandfather was commissioned in the BIA - served in Malaya as part of Op Zipper.
After the war raised a militia bn in the valley which today is a JakLi battalion. Got his para wings as his Maratha bn converted to Para (2 Para).
He did it because soldiering was a calling and he did his DUTY.

There ar e 4 inf batalions that remember him fondly.

I wonder if Mr Suresh would call him a mercenary.

I won’t go into my views of the INA.

HODSON'S HORSE

Raising of the Regiment 1857

During the siege of Delhi, on 19th May 1857, the following order was issued by the C-in-C, General Anson: 'Lieutenant W S R Hodson, 1st European Fusiliers, and officiating Deputy Assistant Quartermaster General, is appointed Commandant of a corps of Irregular Horse, which he is directed to raise at Kurnaul'. This was later published in General Orders to the Army, dated Calcutta 24th October 1857.

On 25th May, Hodson wrote: "My commission is to raise a body of Irregular Horse on the usual rates of pay and the regular complement of native officers, but the number of troops to be unlimited - ie., I am to raise as many men as I please: 2000 if I can get them. The worst of it is, the being in a part of the country I do not Know and the necessity of finding men who can be trusted." The finding of men who could be trusted was certainly a problem as regiments had been disbanded and there were many ex-soldiers seeking employment, some mutinous, and some loyal to the British.

Hodson sought assistance from Robert Montgomery, Judicial Commissioner of the Punjab. Montgomery asked two Sirdars to raise a rissalah each and he raised one himself. The 3 rissalahs left for Delhi on 23rd June 1857 under the command of Man Singh who became the Risaldar-Major of the 1st Regiment from 1866-1877. Mr Montgomery sent two more on 9th July.

Delhi 1857

The British force was based on the Delhi Ridge where they were sometimes under attack from rebels who held the city. The rissalahs sent to Delhi by Montgomery were placed under the command of Lieutenant C T M McDowell, while Hodson was kept busy with his intelligence work and with command of the Guides.

Their first action was on 14th July in the Delhi suburb of Sabzi Mandi in which they fought alongside Hodson's Guides, as well as infantry and horse artillery, and drove the enemy back into the city. Another engagement in the same area took place on 18th July.

Rohtak 1857

Hodson's Charge

The first battle or skirmish that involved the whole of the newly raised regiment was on 17th/18th August. They were sent, with a squadron of Guides, to follow a group of mounted rebels who had come out of Delhi on the Najafgarh road. They left on the 14th and on the 15th were informed that the, rebels were in the village of Samplah, while at Khurkowdeh a troop of enemy cavalry were staying in one of the houses. They surrounded the village and entered on foot. A gunfight ensued which caused some sowars to be wounded as well as Lieutenant H Gough.

Captain C. J. S. Gough at Khurkowdah

On hearing that the main body of the enemy was heading towards Medinha, Hodson went to Rohtak to intercept them. On the 17th they found armed men ranged in front of the old fort who attacked them but were repulsed with the loss of 13 of their number. At 7am the next day a large body of horsemen issued from the town followed by 1,000 men on foot armed with swords and matchlocks. They dashed into a group of 25 Jind horsemen who had come to reinforce Hodson's Horse and this caused them to lose momentum. Hodson's men mounted up and the first 20 or so charged at them while the rest formed up in three lines. They expected another attack but it did not come so they lured them out of the town by feigning a withdrawl.

The rain had been very heavy the previous day and Hodson wanted to draw the enemy into an open and comparatively dry space. The ruse worked and the horsemen charged out to attack them but Hodson ordered his men to turn and they rushed at their attackers, the Guides at the front, followed closely by Hodson's regiment. They enemy were completely taken by surprise and fled back to Rohtak, losing 50 killed and many wounded. None of Hodson's men were killed. The three days of fighting had caused only six men to be wounded: Lieutenant Hugh Gough, Naib-Risaldar Hukm Singh, Jemadar Ahmad Beg, and three sowars.

The Storming of Delhi 1857

The regiment was not actively engaged for the remaining 3 weeks of the siege of Delhi. The opportunity was taken to drill the men and form them into a more military group of horsemen. Their first parade all together was on 2nd September which Hodson described as 'a respectable show'.

After an artillery bombardment that started on the 8th the storming of Delhi took place on the 14th September. The cavalry were formed into a brigade under Hope Grant of the 9th Lancers. There were 200 of the 9th Lancers and 410 men from the Guides, 1st, 2nd and 5th Punjab Cavalry and Hodson's Horse. They were required to form up behind the artillery and check any counter-attack by the enemy. When the rebels swarmed out of the city and into the suburbs of Kishenganj and Teliwara, the cavalry charged them and re-formed near the Kabul Gate. There they came under fire from small arms and artillery so had to retire a short distance. But this encouraged the enemy to advance and they were ordered to hold their ground.

What followed was the worst part of the battle for the cavalry. They bore the frustration of standing inactive, suffering casualties from constant fire. There was a degree of protection from the horse artillery but this went on for two hours in which time the brigade lost 10 officers, 116 men and 56 horses. The rebel fire was aimed mostly at the Europeans so Hodson's Horse suffered few casualties.

Capture of the King of Delhi

Bahadur Shah II

The British finally gained control of Delhi on 19th Sept, forcing the rebels out of the city. Hodson's Horse were kept busy once the enemy were out in the open. However, on the 20th Hodson received information that the King of Delhi, Bahadur Shah II, and his family were hiding at Humayun's tomb, 3.5 miles south of the city gate. He was given permission to capture him and bring him unharmed to General Wilson, C-in-C of the Delhi Field Force.

Hodson took 50 men from the regiment and rode to the tomb which is housed in in a magnificent building of red sandstone surmounted by a white marble dome 150ft high. In front of it are two huge terraces on different levels. Humayun was the 2nd Mughal Emperor who ruled India in the 16th century. His tomb is in a high vault below the centre of the building. There were thousands of people around the building when Hodson arrived so they hid in some nearby buildings and sent in emissaries, led by Maulvi Rajab Ali, to the wife of the King with demands for him to be handed over. After a tense two hour wait the King offered to come out. Then Hodson boldly stepped onto the road, in front of the gateway to receive him.

The King was carried in a palki (palanquin) which could only move at walking pace so the journey back was slow and very tense as a huge hostile crowd followed the whole way. It was made clear that any interference would result in the instant shooting of the King. On his return to Delhi Hodson was feted as a hero for this act but he had to return there the following day.

Execution of the Princes

Execution of Princes

On 21st Sept, Hodson returned with Lieut McDowell and 100 men to bring in the Princes. These were Mirza Mogul, the King's nephew, Mirza Kishere Sultamed (Khizr Sultan) one of the rebel leaders, responsible for the deaths of women and children, and Abu Bukr, heir to the throne.

Despite the thousands surrounding the building, the princes, encouraged by the safe passage of the King to Delhi, gave themselves up. As they progressed, Hodson and McDowell kept the crowd back and eventually had to order them to lay down their arms. They complied, much to Hodson's surprise and the two officers spent two hours collecting weapons. This gave the prisoners' escort time to get away, but when Hodson caught up with them he found them being threatened by a large crowd.

It looked as if the crowd were ready to seize the princes so Hodson decided that they had to be executed there and then. The manner of their execution varies from one account to another. One story claims that he took a carbine from one of his men and shot the princes one at a time, another claims that he shot two of them and 'pistoled' the last one. Whether that means he clubbed him to death with the butt or just shot him is not clear. Many people in India and Britain were appalled at this action but the circumstances on that day called for desperate measures. From Hodson's own re-telling of the story he had no regrets.

Bulandshahr

A force was sent out on 27th Sept 1857 to pursue rebels heading for Rokilkhand. This was led by Brigadier Greathed and contained artillery, engineers, infantry and the 9th Lancers, with detachments from native cavalry units. Lieutenant Hugh Gough commanded the detachment from Hodson's Horse. The action resulted in two wounded men and two horses killed. Gough was highly praised for his leadership and the regiment was also praised for their conduct.

The Agra Parade Ground

On 10th Oct 1857 they came to the end of an exhausting 44 mile march and were pitching camp when they were attacked by rebels who were unaware that the force was so large. The enemy was routed and Hodson's Horse pursued them across the Kala Naddi, killing many. One sowar was killed, an Indian officer and two sowars were wounded.

Cawnpore

Command of the force transferred from Greathed to Hope-Grant soon after this. Major-General Hope-Grant had been commanding officer of the 9th Queen's Royal Lancers until a few months previously so his expectations of cavalry were very high. The Sikhs under Gough's command were still undisciplined, so that when Hope Grant paid a visit to Hodson's Horse as they did picquet duty he was appalled at their laxity. The whole detachment was punished by making them ride as perpetual rearguard to the column, a position distinctly lacking in kudos.

Some time later, however, a party of around 200 enemy horsemen attacked the baggage carts and Gough was sent forward to find out what was happening. He only took 15 men and they were fired on but suffered no injury. Gough brought up more of his men and having now a group of 40, charged headlong into the enemy which caused them to break up and flee. They pursued them for a while and returned triumphant having demonstrated their bravery beyond doubt. Hope-Grant was proved wrong and from then on they were posted to the advance guard.

Alam Bagh

Alam Bagh

By 12th Nov the column was reinforced and Sir Colin Campbell had joined them. They marched towards Alam Bagh but on the way they encountered about 2,000 enemy infantry and guns. Hope-Grant ordered Hodson's Horse to capture or spike the two guns. Hugh Gough led his men around for a flank attack under cover of some sugar cane. The guns were on a mound with a mass of infantry behind them.
They approached under cover and managed to surprise the enemy completely. At the last minute they charged at the mass of men who were unable to realise how few of Gough's men there were.
The enemy were scattered and tried to run for it but were cut down by their pursuers. Hodson's Horse suffered few casualties but inflicted great damage. The guns were captured and brought back in triumph. The scene was witness by Sir Colin Campbell who recommended Gough for the VC for his courageous action.

Lucknow 1857

The force camped at Alam Bagh and set about relieving Lucknow. The cavalry were required to protect the flanks and communication, during the course of which they lost a British officer, Lieut Craigie-Halkett, and one sowar. Also in the course of the siege, Hugh Gough's detachment accompanied Lieut Frederick Roberts (the future Field Marshal Lord Roberts) on a dangerous mission to bring ammunition to Alam Bagh.

Suraj Ghat

Word arrived from Cawnpore that they were hard pressed by Gwalior rebels under Tantia Topi, so a force was sent off and arrived there on 30th Nov. In early December Cawnpore was attacked in an infantry operation. The cavalry were employed in the pursuit of the retreating enemy. They caught up with them at Suraj Ghat on 8th Dec, crossing the Ganges. Hodson's Horse fought against enemy cavalry that was trying to attack British artillery. They were completely successful and sustained no casualties.

Gangiri, 15th December 1857

On 7th Dec, a column left Delhi under the command of Brigadier General Seaton to escort a convoy to Cawnpore. This force contained British cavalry, one troop of the 6thDG, and a detachment of the 9th Lancers; 140 men. The rest of the cavalry was provided by Hodson's Horse, 550 men, commanded by Hodson himself who had been on leave in Ambala and been promoted to Captain. At Gangiri, in the Aligarh district, they were confronted by rebel infantry, artillery and cavalry. Their cavalry moved around to attack the British right flank while their artillery fired on them. The 9th Lancers and 6DG attacked their guns while Hodson dealt with the enemy cavalry. Although Hodson was completely successful and pursued the enemy for some distance, he lost an Indian officer, Muhammad Taki Khan, and three other men. Two NCOs and 17 men were wounded. Hodson was again mentioned in despatches.

A few days later there was a battle at Patiali which involved Hodson's Horse, causing the death of a daffadar and one sowar wounded. After this the column rested a few days but Hodson's men were kept busy with reconnaissance work. Another action at Mainpuri was over very quickly but required Hodson's to pursue for 16 miles before returning with six enemy guns.

Shamshabad, 27th January 1858

The regiment had a break from fighting for about 3 weeks until 25th Jan when Hodson, with 200 of his men and three other British officers were part of another column commanded by Brigadier Adrian Hope. They were up against an army of 5,000 rebels encamped at Shamshabad. The enemy position was well fortified and defended with artillery. When they arrived, Hope moved off the road with his staff and accompanied by Hodson and his 2nd in command, McDowell. The enemy guns opened fire on them and one shot took off McDowell's leg and passed straight through his horse. McDowell died a painful death a few hours later, he was 28.

Hodson's Horse positioned themselves the other side of a bridge beside a battery of Horse Artillery. Charles Gough tells in his memoirs of the terrible sound of enemy round shot flying past them.

They charged at the enemy cavalry and Gough levelled his sword point at their leader who was aiming his carbine. He suddenly found that his sword had gone. On looking round he saw it sticking out of the man's chest. For the rest of the battle he had to use his revolver. He was wounded twice in the melee and was saved by Hodson at one point. Hodson himself was badly wounded in the arm and on his thumb. Three other men were killed, 13 wounded and 3 missing. Gough's actions earned him another citation for the VC.

Mianganj, 23rd February

Charles Gough was in action again with a detachment of the regiment as part of Hope Grant's column sent from Cawnpore to protect the road to Lucknow. They laid siege to a town called Mianganj and the cavalry were placed around it to deal with anyone trying to leave. When they did make a run for it Gough was ordered to attack them in a field of dhal where they were hiding. It was not a task he relished but he led his men with great courage as they advanced through the crops and managed to clear it. They lost an Indian officer, Naib-Risaldar Hukm Singh and three men wounded. Charles Gough was again recommended for the VC.

Alam Bagh 25th February 1858

There was a build up of British troops, under the command of Lieut-General Sir James Outram, at Alam Bagh, about 40 miles south east of Lucknow. This army faced 96,000 rebels led by the Begum of Oudh. They attempted to attack both flanks of Outram's force simultaneously but the British advanced against the threat on their right and pushed them back to Lucknow. A cavalry force led by Colonel Campbell of the Queen's Bays attacked the left-hand column. Hodson's Horse was part of this force and numbered 374 men. Hugh Gough described the regiment at this stage:
'This was my first day in action with Hodson's Horse as a complete regiment, for when at the Siege of Delhi the corps was in it's infancy, and when I left Delhi with my wing it was certainly not weaned: but now we were a full-blown regiment, men better equipped, clothed and drilled, and the horses of a better stamp, and with decent saddlery and accoutrements.'

Hodson was back on duty after recovering from his injury but had his arm in a sling. As they approached it was clear that the enemy were withdrawing, having seen that the British were in greater numbers than they first thought. It all seemed too easy to Hodson's men who chased after them, but they soon became fragmented. The rebel leaders saw the vulnerable position that the cavalry was in and started to rally and form up. They still had the use of one gun which fired grapeshot at Hodson's Horse.

At this point it looked as if the regiment was about to retreat but Hodson and Gough gathered 12 men and charged the enemy infantry. The musket fire, however was too heavy and three men were killed, the rest wounded. Gough and Hodson lost their horses but Gough managed to find another and tried to rally more men. Just then the 7th Hussars and the Military Train came to their aid and put the rebels to flight.

After several miles pursuit, Gough found himself alone, facing two sepoys, one of whom shot him in the leg, the bullet also killing his horse. He was about to be bayoneted when a trooper from the Military train came up and killed the man with his sword.

The Death of Hodson, 11th March 1858

Hodson's Grave

While the regiment remained at Alam Bagh, Hodson went alone to Lucknow to army HQ for a meeting with Sir Colin Campbell. After having lunch with him he joined Brigadier-General Robert Napier who was inspecting a breach in the wall. They became separated and he went to look around the palace with a Captain Taylor. The enemy had been cleared from most parts of the city but areas remained where rebels were hidden. The two men had a look inside one dark room which turned out to contain sepoys. One of them shot at Hodson and he was hit in the chest. He staggered back a few paces and fell. A group of Highlanders, when they saw what had happened, went into the room and killed every man they found.

Hodson was taken to Banks's House and had his wound dressed. He was conscious and knew he was going to die. He left messages for his wife but became weaker and died around 1.30am that night. He was buried on the evening of 12th March in the grounds of La Martiniere School in Lucknow.

Reorganisation

The position of Commandant of the regiment was given to Henry Daly of the Guides. It was a difficult task, filling the shoes of Hodson, a man who was regarded as highly as any man could be by the men of his regiment. Although Hodson had been a wonderful leader and loved by his men, he was no good at writing things down.
There was no muster-roll apart from a few names noted by Hugh Gough, and no accounts written up. An officer had to be brought in to sort these out. Lieut R B Anderson of 1st Bengal Fusiliers along with the principal munshi, Dumichand, took nine months to make sense of it.

At this time the regiment, at Lucknow, numbered around 750. There were 400 more in Meerut, mostly without horses. Four more Troops arrived from the Punjab brought in by Man Singh. Daly reported at one stage that 1000 men had no saddles. There was clearly much to be done. The number of men was too great for one regiment so Daly at first suggested splitting it into two regiments, then later said that three would be better. He also wanted to recruit a squadron of Pathans for each regiment and sent an officer to the frontier for that purpose. Sir John Lawrence, however, vetoed the idea. In the end 100 Pathans were drafted into the third regiment.

Nawabganj, 13th June 1858

While all this was going on the regiment still had a job to do. An army of 15,000 rebels were in a well defended position at Nawabganj, 18 miles from Lucknow. Hodson's Horse were brigaded with 2nd Dragoon Guards , 7th Hussars, 1st Sikh Cavalry and a troop of Mounted Police. They were accompanied by artillery, engineers and two battalions of the Rifle Brigade. The whole column was commanded by Hope Grant.

After a night march they decided to attack the right flank of the enemy position which involved a further march of 12 miles. They arrived at dawn so were able to surprise them. There was a fierce struggle and a detachment of enemy troops tried to move around to the British rear to seize their baggage. They were met by Hodson's Horse who split into two. Major Daly made a frontal attack while Lieut Mecham went around to their left. Mecham had 100 men with him and during the attack he was severely wounded.

With the help of horse artillery the enemy were beaten back but another large group came charging at them and would have overwhelmed them but for the intervention of the 7th Hussars and more artillery. The rebels were driven off having lost 9 of their guns and leaving 600 dead. Regimental casualties were 3 men dead, the wounded included Mecham, Lieut the Hon J H Fraser, Risaldar Man Singh, Jemadar Hussain Ali Khan and 19 other ranks. Five members of the regiment were mentioned in Hope Grant's despatches.

Three Regiments

The date of the establishment of the 1st and 2nd Regiment of Hodson's Horse was 26th August 1858. The 3rd Regiment was officially formed on 9th September 1858 and disbanded following an order issued on 5th January 1860. A large proportion of the officers and men of the 3rd regiment removed to a new regiment, Fanes Horse, which became the 19th Bengal Lancers. This regiment was raised to serve in China.

Hodson's Horse Celebrate 39th 'Basantar' Day

JULY 31, 2014 by SALUTE

4th HORSE (Hodson’s Horse), one of the most highly decorated armoured regiments of Indian Army, celebrated Basantar Day to commemorate the 39th anniversary of victory in the fierce battle of Basantar river (known as Degh Nadi in Pakistan) during the 1971 India-Pakistan War, on Dec 18, 2010. For this battle, it was awarded the Battle Honour ‘Basantar River’ and Theatre Honour ‘Punjab 1971’ Raised by Major WSR Hodson in 1857 as an irregular cavalry unit, it became famous as the 4th Duke of Cambridge’s Hodson’s Horse.

With 159 years of glorious history, the regiment comprising of Jat Sikhs and Dogras, has the proud distinction of having over 40 second and third generation officers and other ranks serving today. Present during the nostalgic two-days celebrations were 80 War Veterans/ retired personnel, including, Lt Gen RM Vohra, who commanded the regiment in the 1971 Indo-Pak war and former as GOC-in-C, Eastern Command, Lt Gen Gurinder Singh, former GOC-in-C, Northern Command, Lt Gen PPS Bhandari former Deputy Chief of Army Staff and Colonel of the Regiment Maj Gen Anil Bhalla presently commanding an elite Armoured Division.

Suresh S wrote:The politicians who supported the deployment of Indian soldiers to wars for the britshit were bigger scoundrels than the soldiers who took part in these especially one so called Mahatama and the party he represented.But the soldiers were not children they were grown up men and they were responsible for their actions no matter the individual circumstances at the time. Nothing personal against anyone,s family is intended.

This forum does not entertain deliberate friendly fire. It's best to post under the presumption that no one wishes you ill personally, and there's no reason to take on any one else personally in order to make your point. Please do not address people personally in this manner in future.

Suresh S wrote:The politicians who supported the deployment of Indian soldiers to wars for the britshit were bigger scoundrels than the soldiers who took part in these especially one so called Mahatama and the party he represented.But the soldiers were not children they were grown up men and they were responsible for their actions no matter the individual circumstances at the time. Nothing personal against anyone,s family is intended.

ks_sachin wrote:Suraj,
Its personal.
He not only insults my family but a host of great men who took to the noble profession of arms and who are revered in our batallion.
He has no clue about soldiering but pontificates.
We dont need Pakistan do we!!!

Suraj wrote:

ks_sachin wrote:Suraj,
Its personal.
He not only insults my family but a host of great men who took to the noble profession of arms and who are revered in our batallion.
He has no clue about soldiering but pontificates.
We dont need Pakistan do we!!!

With all due respect, my point is to avoid taking something personally because he has not addressed you personally. You *chose* to take personal offence at something someone else said that was not directed at you at all. Given that *choice*, what I asked was to not choose that when it's a fellow forum member stating something about a very ambiguous time of history.

For what it is worth, I too had a grandparent who participated in WW2 in BIA, but I didn't go around offering a lecture here. We are in the same boat in one regard, but I can advise you from this perspective to not react the way you did. A discussion on that period - either in this thread or elsewhere - cannot be had if posters are more focused on defending their own personal/family honour first.

To give a related analogy, because our parents grew up in Nehru's time does that mean they personally kept the country down and kept it from developing ? No, they just earned a livelihood within the circumstances of that time. The decisions and adverse choices made that affected the country at large, were made at a FAR higher paygrade than that of some individual, and discussions focusing on those largescale decisions shouldn't be conflated with personal lives.

Vikas wrote:If there was no participation by Indians in WW-II, There was hardly any possibility of India getting complete freedom in 1947. In the end it wasn't Gandhi but the soldiers who got us freedom from Brits be it soldiers returning from BIA or INA.
The great wars do tend to have unintended consequences.

Lalmohan wrote:many Indians who volunteered in WW1 did so because they believed that dominion status would be granted (like the white colonies), but it wasn't. part of the breakaway of Australia from the crown was also driven by post ww1 disenchantment with the way the English treated them, especially after the (disproportionate) losses at Gallipoli

many Indians who volunteered in Ww2 were sure that they were doing so to defeat fascism and thereby win their own independence

there is quite a lot written about these topics

How India Paid to Create the London of Today

A sudden change in the currency with which old debts to the colonies had to be paid helped Britain consolidate its status as a financial centre



How India Paid to Create the London of Today
London skyline. Credit: London Eye/Twitter

Kannan Srinivasan
20/APR/2017

The UK is a tax haven closely connected to other tax havens it has set up. Its trade deficit is therefore offset by the money pouring in from its own tax havens. Almost 90% of net capital inflows to the UK come from just Guernsey, Jersey and the Isle of Man. So far, there has been no decline in such funds with the news of Brexit. Britain enjoys a significant measure of protection from the consequences of leaving the EU by virtue of this rush of cash.

How did London achieve this status of being a major financial centre? Knowing this history might be useful, especially for Indians, as the country played a role in it, thanks to the steps taken by Prime Minister Clement Attlee’s Labour government in 1947, employing the resources of newly independent India.

As war broke out in 1939, the trade surpluses run up by India, Egypt, Brazil and others trading primarily in sterling, were withheld by Britain. Total debt to all such creditors (excluding the US, which obtained British businesses and naval and aircraft bases in return for cash) amounted to £3.48 billion. In addition, two and an half million Indian soldiers fighting in Italy, North Africa, the Middle East and the Far East were paid salaries; when any died, their widows were to be paid pensions by the government of India, which remained uncompensated even as the war ended. All this made India (which included the future state of Pakistan) the largest Allied creditor after the US. Britain owed her £1.335 billion ($5.23 billion, which is about $59 billion today). Britain owed the next largest creditor, Egypt, £450 million. At a conservative estimate, the debt to India amounted to about a fifth of the UK gross national product, or seventeen times the annual government of India revenue at highly depressed prices.

India, and other such creditor countries, expected that their future economic development could be significantly financed by the money owed by Britain. But with a run-down industrial economy in 1945, the UK had little that such countries needed.

What the creditors wanted was dollars. They expected, with the money to be released by Britain, to import the plant and machinery they needed from the new leading industrial power, the US.

White plan

There seemed, at first, to be a way to get such convertible currency. Harry Dexter White, the chief adviser to US treasury secretary Henry Morgenthau, framed a scheme for the purchase of these balances, in stages, by the new fund to be set up after the war, the subsequent injection of liquidity, and re-purchase.

But, as White was aware, if Britain honoured her enormous debts in this way, that might have meant a more rapid disbanding of the British occupation of Aden, Greece, Malaya and many African countries. The Royal Navy would not have had the resources to play a role of any significance, nor would Britain become a nuclear weapons state. India, Egypt, Brazil and others might have fared far better than Britain did. And, as will be become clear, London would not have become the new hub of international finance.

The celebrated economist John Maynard Keynes had been appointed by the UK government to negotiate post-war arrangements with the United States and other countries. He fiercely resisted this White Plan. He set out to make sure that the sterling balances could somehow be conjured away.

Over the next year, he lobbied effectively in Washington DC — his hard work seemed to pay off. So when the great conference took place at Bretton Woods in 1944 to lay out the post-war reconstruction of the global economy, and the sterling issue was raised by Egypt and by India, the US treasury team abandoned its own commitment to “liberate blocked balances”.

Another ray of hope

Yet after these creditor countries lost out at Bretton Woods, they drew hope from a key provision of the Anglo-American Loan Agreement. Under that treaty, the US provided a credit of $3.75 billion repayable over 50 years at 2% on the specific condition that Britain made the pound sterling convertible into any other currency for current transactions. Accordingly, the pound sterling was made convertible the July 17, 1947.

So as India negotiated the terms of these sterling balances in London over the course of August 1947, her team expected to convert their assets into dollars.

Hope betrayed

But the Indians were unaware how much had changed in Washington DC. The new president, Harry Truman, had changed virtually the entire cabinet he had inherited from Franklin Roosevelt. The people India had thought it could count on to keep Indian interests in mind had been replaced by determined Cold Warriors entirely unsympathetic to India, such as Dean Acheson. At the same time, these new hawkish Truman aides saw Britain – with her enormous network of bases all around the world and large armed forces everywhere – as the key ally.

Emboldened by her new status, Britain is said to have secretly sounded out the US, and received a discreet assurance that she could avoid repaying India, Pakistan, Egypt and others their wartime debt in convertible currency.




Braj_Kumar_Nehru
President John F. Kennedy meets with then ambassador to the US from India, Braj Kumar Nehru, in the Oval Office, 1961. Credit: Wikimedia Commons

So, as India’s representative, B.K. Nehru wound up India’s negotiations in London for the transfer of the balances he was mystified by what his British counterpart murmured to him.

“Wilfred Eady ..said to me (August 15, 1947), ‘Watch your dollars’,” Nehru has written. Nehru did not understand.

“Why should he talk about dollars when the pound had become convertible? All the sterling would become available for purchases in the dollar area, so why did he want me to watch my dollars?”

He was to find out when Britain renounced the convertibility of the pound sterling on the current account within five days of signing the agreement with India.

As Nehru ruefully acknowledged, this “immediately changed the character of the agreement which we had entered into. The pounds released were no longer usable for what we wanted to buy.”

Britain then devalued the pound in 1949, diminishing the value of the claims of the creditor countries by thirty per cent.

What if?

Had Britain not defaulted on convertibility, many countries would have switched to the US dollar in order to finance their imports. Thereafter the central banks of the world would have cut back on their holdings, effectively exiting from the pound sterling.

It was not in Britain’s interest to allow that to happen. Given that the US dollar was the premier international currency, the pound sterling now had to survive at least as the secondary currency for the purpose of international settlement. So default on convertibility was the absolute precondition in order to ensure a gradual drawdown on sterling.

This gave London the time to re-invent itself. Since so many central banks around the world were compelled to hold sterling and therefore trade as much as they could with the UK, Britain survived as an important financial centre. As the stock of US dollars held outside the US grew, it was bound to attract the interest of innovative financiers, and the most innovative were in London. Merchant bankers in the city first saw the potential of trade and investment in this Eurodollar market. The enormous volume of transactions in the Eurodollar market enabled London to return to its role before the First World War, as the most important centre of international finance. Post-war Britain was on its way.

In the meantime, creditor countries such as India and Egypt had to settle for occasional drawings of pounds sterling that they could convert into no other currency. They therefore had to buy goods from nowhere else but the UK. But British industry however had in many areas ceased to be internationally competitive in terms of its prices or technology. So this arrangement suited not the holders of sterling, but the UK, in that she could sell them obsolete plant and machinery at higher prices than would been possible in any free market. The UK had found a captive export market for goods that could be exported nowhere else. India’s imports of the Ford Prefect, the Standard Vanguard, the Morris Oxford, the Indian Naval Ships Delhi and Mysore, all date from the golden age of sterling balances.

But as independent India faced acute food shortages, her stock of sterling could buy her none. She had to turn to the World Bank and IMF to make up the convertible currency she needed, and pay for imports of food courtesy the Aid India Consortium, composed of the World Bank and a group of countries that included, ironically, the UK.

Britain gained the opportunity to employ her former colonies, and possessions of the Crown, to organise capital flight from all around the world. The Cayman Islands, Cyprus, Dubai, Guernsey, Hong Kong, the Isle of Man, Jersey, Mauritius, Singapore and many other such tax havens enable wealthy individuals to conceal their liquid assets. Yet their close connection with London, that most efficient financial centre, enables the best possible returns for the super-rich. All this is possible because Britain avoided honouring her war time debts to India and other countries promptly, and in convertible currency. The enforced Indian loan acted as developmental finance to the UK economy. India’s sacrifices during the war and after may have benefited it but little. But they certainly made possible the London of today.

Kannan Srinivasan, who is working on a book on money laundering, wrote this article at the Wertheim Study, New York Public Library. kannansrinivasan.org

UlanBatori wrote:Crushing defeat for Bibi May. 442 to 218 or something like that.
What now? Can someone pls give a BREXIT primer? Great Britian going to become Gaandu Britain? Gnat Britain?

ramana wrote:So how is it going for May?
Is it December yet?

ramana wrote:So how is it going for May?
Is it December yet?

chetak wrote:

ramana wrote:So how is it going for May?
Is it December yet?

The EU may not really want the britshits out.

They fear that the EU will be left carrying the costs for the defence of europe which may become unaffordable for piddly socialist and welfare minded states like greece etc subsisting on the dole, as it were.

NATO is looking increasingly very shaky, especially if the amerikis are serious about minding their own business. France and germany won't stick around for very long if they have to foot most of the bills run up by the freeloaders and the easy riders.

Neshant wrote:

chetak wrote:
The EU may not really want the britshits out.

They fear that the EU will be left carrying the costs for the defence of europe which may become unaffordable for piddly socialist and welfare minded states like greece etc subsisting on the dole, as it were.

NATO is looking increasingly very shaky, especially if the amerikis are serious about minding their own business. France and germany won't stick around for very long if they have to foot most of the bills run up by the freeloaders and the easy riders.

Without the British in it, the EU won't be around in 10 years from now.

Trying to super glue a bunch of states together with bureaucracy and debt does not work.

Also trying to alter demographics with tons of legal & illegal migrants to bypass the resistance of the local inhabitants to forced integration has backfired.

If NATO dissolves, Eastern European states which turned nasty against Russia during the early/mid 90s when the country was at its weakest are going to get payback.

Long run, Russia has to reabsorb all of Ukraine and put a few more Eastern European states under its influence if it aims to maintain its strength against China.

Donald Tusk has made a thinly veiled call for the UK to stay in the EU, suggesting the prime minister’s historic loss in parliament left a deal looking “impossible”.

As the scale of the defeat was announced, the president of the European council called for Theresa May to urgently clarify her next move. Brussels had expected the prime minister to lose the vote on the deal she had agreed with the EU, but the size of the majority against – 230 votes – meant there was little hope of the agreement being salvaged.


Tusk tweeted: “If a deal is impossible, and no one wants no deal, then who will finally have the courage to say what the only positive solution is?”

May was expected to return to Brussels within days of the vote to consult with Tusk and the European commission president, Jean-Claude Juncker, but it is unclear now what those discussions would involve.

In a statement, Juncker echoed Tusk’s remarks by urging the British government to “clarify its intentions as soon as possible” while reminding the British parliament that “time is almost up”. The UK is due to leave the EU on 29 March.

Juncker, in a defence of Brussels’ role in the negotiations, said the EU and its chief negotiator, Michel Barnier, had shown “creativity and flexibility throughout” and that, in recent days, it had “demonstrated goodwill again by offering additional clarifications and reassurances”.

“The risk of a disorderly withdrawal of the United Kingdom has increased with this evening’s vote,” Juncker said. “While we do not want this to happen, the European commission will continue its contingency work to help ensure the EU is fully prepared.”

A senior EU official said that when May did return to Brussels, Juncker would simply ask her: “What’s next?”

That call for clarity was matched by EU leaders, in their responses to the news from Westminster.

In France, the president, Emmanuel Macron said the UK now had three options: a no-deal, which would be “scary for everybody”; seek to get an improved deal from the EU – to which he said “maybe we’ll make improvements on one or two things but I don’t really think so”; and finally an extension in order to “take more time to renegotiate something”, an option that he said “creates a great deal of uncertainty and worries”.

Michael Roth, Germany’s EU affairs minister, tweeted in response to the vote: “Disaster. Too bad. But EU’s door remains open”.

The Spanish government said it regretted “the negative result” but still hoped the deal would win approval, adding that a no-deal exit would be “catastrophic” for the UK.

A statement from the office of the Irish taoiseach, Leo Varadkar, warned that a “disorderly Brexit is a bad outcome for everyone, not least in Northern Ireland”.

“It is not too late to avoid this outcome and we call on the UK to set out how it proposes to resolve this impasse as a matter of urgency,” he said.

Poland’s prime minister, Mateusz Morawiecki, said: “No-deal Brexit is a bad solution, both for the UK and the EU. Together with our partners in the EU we will respond to new British proposals.”

Xavier Bettel, Luxembourg’s prime minister, called for the British government to find “solutions not problems”. “Now we need a fast and clear plan on how to proceed,” he said.

From The Hague, the Dutch prime minister, Mark Rutte, said: “Despite this setback, it does not mean we are in a no-deal situation. The next step is up to the UK.”

Barnier was engaged in late night talks with MEPs after the vote, but sources said Brussels would wait until after the weekend, giving British MPs time to coalesce around a clear plan, before engaging in substantive talks.

He told reporters: “Now it’s time for the UK to tell us the next steps. On our side we will remain united and determined to reach an agreement.”

EU officials predicted the first step wiould be for MPs to tell May to request an extension of the two-year negotiating period, removing the cliff edge of 29 March and setting off a debate among the other 27 member states on the terms of a prolongation.

Brussels has repeatedly insisted it would not renegotiate the 585-page withdrawal agreement and the political declaration on the future relationship. Last month the EU27 rejected a 2021 target for completing trade talks, a request May believed could break the parliamentary deadlock.

Juncker reiterated in his statement that the deal was “a fair compromise and the best possible deal”.

However, in a sign of growing anxiety at the prospect of the UK crashing out, earlier on Tuesday the head of the eurozone’s finance ministers, Mário Centeno, had said he believed the EU and Britain would talk further and adjust their positions to avoid a no-deal Brexit, as the latest data confirmed the 19-member bloc was moving towards a period of slower growth.

“We can adjust our trajectory,” Centeno said. “We can open all the dossiers … We need to take informed decisions with total calm and avoid a no-deal exit. Practically anything is better than a no-deal exit.”

Before the vote, Germany’s foreign minister, Heiko Maas, also hinted at the flexibility the EU would show in the final act of the Brexit talks.

“If it goes wrong tonight, there could be further talks,” he said, while adding that he could not foresee “fundamental” changes.

The European parliament’s Brexit coordinator said the British parliament had said “what it doesn’t want”, and asked MPs to tell the EU what it did want.