Racial Capitalism and Federal Finance in British India, 1920-1935

This paper analyzes the formation of the Reserve Bank of India and centralization of financial powers in the 1930s in relation to global patterns of racial capitalism in the Depression Decade. Tracing the role of two international financial “experts,” Henry Strakosch and Otto Niemeyer, in shaping Indian financial policy, it shows how race became a determining concept in determining financial powers in the years following the Great Depression. Once Indians were granted some political representation by the Government of India Act, 1935, the colonial state directed its energy towards keeping Indians out of the realm of financial activity: “the Reserve Bank,” as one official, Leonard Waley, put it in 1933, “should be white and neutral and not black and political.” I trace the lineages of this idea in a global context of racial capitalism in the 1920s, starting from South Africa, where Strakosch determined the gold standard policy, to Brazil and Argentina, where Niemeyer acted as an envoy before his Indian stint. I then show how these modes of segregating finance found new salience in 1930s India, when the Depression destroyed the commercial advantage that sustained the imperial dominance in India. Drawing on previously unexplored and under-explored archival collections in India, South Africa and the League of Nations archive in Geneva, I show how the key financial institutions of independent India— the Reserve Bank and the Ministry of Finance— were both shaped in a moment of imperial reconstruction after the Depression, which accounts for their extreme degree of centralization. In conclusion, I analyze the transition of these institutions from the colonial to the post-colonial era, arguing that the palimpsests of a form of racialized authoritarianism has stifled the possibility of sharing financial sovereignty among the various constituencies of the Indian Union.