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Sri Lanka Economic Innovations
The Colebrooke-Cameron reforms had an immediate impact on the
economic development of the island. Many features of the economic
structure the reforms helped put into place still exist. The
commission advocated a laissez-faire economy. To encourage free
trade, the government monopolies over cinnamon cultivation and
trade were abolished. Traditional institutions, such as land
tenure by accommodessan (the granting of land for
cultivation, as opposed to its outright sale), was abolished, as
was the rajakariya system. Rajakariya was opposed
not only on moral grounds but also because it slowed the growth
of private enterprise, impeded the creation of a land market, and
interfered with the free movement of labor.
In the mid-1830s, the British began to experiment with a
variety of plantation crops in Sri Lanka, using many of the
technological innovations developed earlier from their experience
in Jamaica. Within fifteen years, one of these crops, coffee,
became so successful that it transformed the island's economy
from reliance upon subsistence crops to plantation agriculture.
The first coffee plantation was opened in the Kandyan hill region
in 1827, but it was not until the mid-1830s that a number of
favorable factors combined to make the widespread cultivation of
the crop a highly profitable enterprise. Governor Edward Barnes
(1824-31) foresaw the possibilities of coffee cultivation and
introduced various incentives for its cultivation, particularly
the lifting of coffee export duties and exemption from the land
produce tax. When slavery was abolished in the West Indies and
coffee production there declined, Sri Lankan coffee exports
soared, filling the gap in the world market. The problem of
limited availability of land for coffee estates was solved when
the British government sold lands that it had acquired from the
Kandyan kings.
The coffee plantation system faced a serious labor shortage.
Among the Sinhalese, a peasant cultivator of paddy land held a
much higher status than a landless laborer. In addition, the low
wages paid to hired workers failed to attract the Kandyan
peasant, and the peak season for harvesting plantation coffee
usually coincided with the peasant's own harvest. Moreover,
population pressure and underemployment were not acute until the
twentieth century. To compensate for this scarcity of native
workers, an inexpensive and almost inexhaustible supply of labor
was found among the Tamils in southern India. They were recruited
for the coffee-harvesting season and migrated to and from Sri
Lanka, often amid great hardships. The immigration of these
Indian Tamils began as a trickle in the 1830s and became a
regular flow a decade later, when the government of India removed
all restrictions on the migration of labor to Sri Lanka.
British civilian and military officials resident in Kandy
provided initial capital for coffee cultivation, provoking
contemporary observations in the 1840s that they behaved more
like coffee planters than government employees. This private
capitalization led to serious abuses, however, culminating in an
1840 ordinance that made it virtually impossible for a Kandyan
peasant to prove that his land was not truly crown land and thus
subject to expropriation and resale to coffee interests. In this
period, more than 80,000 hectares of Kandyan land were
appropriated and sold as crown lands.
Between 1830 and 1850, coffee held the preeminent place in
the economy and became a catalyst for the island's modernization.
The greater availability of capital and the increase in export
trade brought the rudiments of capitalist organization to the
country. The Ceylon Bank opened in 1841 to finance the rapid
expansion of coffee plantations. Since the main center of coffee
production was in the Kandyan provinces, the expansion of coffee
and the network of roads and railroads ended the isolation of the
old Kandyan kingdom. The coffee plantation system had served as
the economic foundation for the unification of the island while
reinforcing the administrative and judicial reforms of the
Colebrooke-Cameron Commission.
The plantation system dominated the economy in Sri Lanka to
such an extent that one observer described the government as an
"appendage of the estates (plantations)." Worldwide depression in
1846 temporarily checked the rapid development of the plantation
system. Falling coffee prices caused financial disruption,
aggravating the friction that had been developing between the
static traditional feudal economy and modernized commercial
agriculture. In order to make up for lost revenue, the government
imposed a series of new taxes on firearms, dogs, shops, boats,
carriages, and bullock carts. All of these taxes affected
Sinhalese farmers. Other measures that further alienated the
Kandyans included a land tax and a road ordinance in 1848 that
reintroduced a form of rajakariya by requiring six days'
free labor on roads or the payment of a cash equivalent. But the
measure that most antagonized the Kandyans (especially those
associated with the Buddhist sangha) was the alienation of
temple lands for coffee plantations.
British troops so severely repressed a rebellion that broke
out among the Kandyans in 1848 that the House of Commons in
London commissioned an investigation to look into the matter. The
governor and his chief secretary were subsequently dismissed, and
all new taxes, except the road ordinance, were repealed. The
government adopted a new policy toward Buddhism after the
rebellion, recognizing the importance of Buddhist monks as
leaders of Kandyan public opinion.
The plantation era transformed the island's economy. This was
most evident in the growth of the export sector at the expense of
the traditional agricultural sector. The colonial predilection
for growing commercial instead of subsistence crops later was
considered by Sri Lankan nationalists to be one of the
unfortunate legacies of European domination. Late nineteenth-
century official documents that recorded famines and chronic
rural poverty support the nationalists' argument. Other issues,
notably the British policy of selling state land to planters for
conversion into plantations, are equally controversial, even
though some members of the indigenous population participated in
all stages of plantation agriculture. Sri Lankans, for example,
controlled over one-third of the area under coffee cultivation
and most of the land in coconut production. They also owned
significant interests in rubber.
In 1869 a devastating leaf disease--hemleia vastratrix
struck the coffee plantations and spread quickly throughout the
plantation district, destroying the coffee industry within
fifteen years. Planters desperately searched for a substitute
crop. One crop that showed promise was chinchona
(quinine). After an initial appearance of success, however, the
market price of the crop fell and never fully recovered.
Cinnamon, which had suffered a setback in the beginning of the
century, was revived at this time, but only to become an
important minor crop.
Among all of the crops experimented with during the decline
of coffee, only tea showed any real promise of success. A decline
in the demand for Chinese tea in Britain opened up possibilities
for Indian tea, especially the fine variety indigenous to Assam.
Climatic conditions for the cultivation of tea were excellent in
Sri Lanka, especially in the hill country. By the end of the
century, tea production on the island had risen enormously.
Because of the inelasticity of the market, however, British
outlets soon became saturated. Attempts to develop other markets,
especially in the United States, were largely unsuccessful, and a
glut emerged after World War II.
The tea estates needed a completely different type of labor
force than had been required during the coffee era. Tea was
harvested throughout the year and required a permanent labor
force. Waves of Indian Tamil immigrants settled on the estates
and eventually became a large and permanent underclass that
endured abominable working conditions and squalid housing. The
census of 1911 recorded the number of Indian laborers in Sri
Lanka at about 500,000--about 12 percent of the island's total
population. In the 1980s, the Indian Tamils made up almost 6
percent of the island's population
(see Sri Lanka - Population
, ch. 2.)
The Tamil laborers emigrated to Sri Lanka from India not as
individuals but as part of family units or groups of interrelated
families. Thus, they tended to maintain their native cultural
patterns on the estates where they settled. Although the Indian
Tamils spoke the same language as the Sri Lankan Tamils, were
Hindus, and traced their cultural origins to southern India, they
considered themselves to be culturally distinct from the Sri
Lankan Tamils. Their distinctiveness as a group and their
cultural differences from the Sinhalese and the Sri Lankan Tamils
were recognized in the constitutional reforms of 1924, when two
members of the Indian Tamil community were nominated to the
Legislative Council.
As the nineteenth century drew to a close, experimentation in
crop diversification, on a moderate level in the years before the
collapse of the coffee market, became of greater importance.
Responding to international market trends, planters attempted to
diversify the crops they produced to insulate their revenues from
world price fluctuations. Not all their experiments were
successful. The first sugar plantation was established in 1837,
but sugar cultivation was not well-suited to the island and has
never been very successful. Cocoa was also tried for a time and
has continued as one of the lesser exports. Rubber, which was
introduced in 1837, became a major export during the slump in the
tea export market in the 1900s. The rubber export trade exceeded
that of tea during World War I. But after suffering severe losses
during the depression of the 1930s, rubber exports never again
regained their preeminent position.
Data as of October 1988
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