Sri Lanka

The Singhalese and Tamil communities of Sri Lanka, an island off the southeastern tip of India, had long participated in the wide currents of Indian Ocean maritime trade. Before 1450 the three principal regional trades were to the eastern and western coasts of India, to southwest Asia, and to Malacca. These regional trades were complex in that a number of ethnic groups participated and employed a wide variety of currencies. Indian and Sri Lankan merchants, principally financed by Indian banking firms, handled the trade to India. Arab Muslim merchants carried on the commerce between Sri Lanka and West Asia. Malaccan merchants traded with Sri Lanka, on the edge of their Southeast Asian and Chinese nexus of commerce.

The Sri Lankan goods traded into these regional networks were areca nuts (a stimulant chewed with betel leaves), elephants, precious gems, pearls, chanks (a sea-shell), and cinnamon. The principal imports were rice and cloth. These patterns continued in the midst of political change throughout the period 1506 to 1796, during which the Portuguese and then the Dutch attempted to impose their administrative control over certain export goods. During the nineteenth century the British substantially altered these regional trades through the extension of their commercial control over India, parts of southwest Asia, and Malaysia, and through the creation of extensive export-oriented plantations in the Sri Lankan highlands.

In 1506 the Portuguese arrived on the southwestern coast of the island. In 1533 they established their control over the export of cinnamon through a contractual agreement with the king of the lowland state of Kotte. Both Portuguese and Muslim smugglers, however, regularly violated the Portuguese cinnamon monopoly, and the Portuguese Crown vacillated between a policy of royal monopoly and one of open trade in the spice. The Portuguese did succeed in binding new groups into onerous obligations to collect the tree's bark, and in increasing the volume of cinnamon exports to European, West Asian, and Indian markets, particularly in the seventeenth century. Individual Portuguese may have made fortunes in the cinnamon trade; the profits to the Crown appear to have been very modest. The Portuguese also attempted to impose on Singhalese farmers a system of the compulsory sale of areca nuts at below market prices, but with little success. The overall thrust of the Portuguese policies was to capture by administrative control a share of the benefits of these export trades.

The Dutch East India Company (Vereenigde Oostindische Compagnie, or VOC) ousted the Portuguese from the Sri Lanka littoral in 1658. The VOC attempted to impose a monopoly on Sri Lankan external trade in 1670 in all commodities except for rice. This exception was made because the volume of rice imported to the island was large, and the VOC lacked the shipping capacity to carry on the trade. The Dutch were unable to enforce effectively their monopoly, and as in the Portuguese period, a great deal of officially prohibited trade took place. The Dutch also reversed their policies more than once and never settled upon a course of action that worked to their satisfaction. The Dutch efforts to dominate the Sri Lankan export trades—again, with the exception of cinnamon, as in the Portuguese period—were only partly effective.

The British took control of the island littoral from the Dutch in 1796 during the course of the Napoleonic Wars. After their conquest of the mountainous kingdom of Kandy in 1815, the British carved roads into the highlands, breaching the dense rainforest barrier. From the 1830s, following the abolition of African slavery in the British Caribbean, British capitalists established coffee plantations in Sri Lanka, but it was not until the 1840s that British coffee plantations began to spring up in number and to produce more coffee for export than did the Kandyan farmers. Large numbers of Tamil laborers from southern India traveled annually to the Sri Lankan highlands to find employment on the plantations. Many of these laborers eventually remained resident on the plantations, constituting a separate population from the Tamils who inhabit principally the northern and eastern reaches of the island.

The coffee industry struggled with an expanding fungal blight from 1869 until the late 1880s, when the coffee industry spiraled into its final decline. In the late 1870s plantations of cinchona trees, from the bark of which the antimalarial medicine quinine could be isolated, began to be set out in the highlands. In the 1880s these cinchona plantations met ruin, owing to inadequate subsoil drainage and to overproduction. In the 1880s plantation owners and some Kandyan farmers turned their efforts to growing tea, and the highlands were soon carpeted in the leafy green shrub. Tea's late-nineteenth-century rise to predominance was spectacularly rapid, and it proved durable. In the early twenty-first century tea remains the island's principal agricultural export.

Other tropical crops also played important roles. In the first half of the twentieth century Singhalese owners expanded their plantations of coconuts in the lowlands for both domestic and overseas markets, and British planters took up the production of rubber. Both developed as significant exports through the twentieth century. The predominance of the tropical export crops was challenged in the second half of the twentieth century when Sri Lanka developed a major textile-manufacturing sector that benefited from low labor costs. This transition was driven in part by the declining terms of trade after independence in 1948, owing to a long-term relative decline in the prices of the major agricultural exports, and a consequent shortage of foreign exchange and burgeoning deficits. In 1986 the value of textile exports overtook that of tea exports for the first time.

Over the course of the twentieth century an increased demand for imported machinery, equipment, automobiles, and oil has accompanied the modernization of the economy. Imports of consumer goods have also risen sharply as the urban upper and middle classes have learned to participate fully in the international culture of consumerism. Rice imports, on the other hand, have declined greatly since the 1980s, when a massive state project to harness the waters of Mahaweli River succeeded in opening up new lands for irrigated rice cultivation.

In the late twentieth century, however, insurgencies fomented by the Singhalese People's Liberation Front (also known as the JVP) and by the ongoing civil war since 1983 against the Liberation Tigers of Tamil Eelam damaged the prospects for general economic growth. The political violence discouraged foreign investment and intermittently reduced international tourism. The lack of economic growth encouraged the emigration of Sri Lankan workers who sought employment abroad, often in domestic service or the building trades, and whose remittance of wages helped to sustain their families on the island.

SEE ALSO Bullion (Specie); East India Company, British; East India Company, Dutch; East India Company, Other; Empire, British; Empire, Dutch; Empire, Mughal; Empire, Portuguese; Imperialism; India;Indian Ocean;Laborers, Coerced;Mercantilism;Monopoly and Oligopoly;Rice;Smuggling;Spices and Spice Trade.

BIBLIOGRAPHY

Arasaratnam, S. Ceylon and the Dutch, 1600–1800. Aldershot, U.K., and Brookfield, VT: Variorum, 1996.

De Silva, C. R. "The Portuguese Impact on the Production and Trade in Sri Lanka Cinnamon in Asia in the Sixteenth and Seventeenth Centuries." In Spices in the Indian Ocean World, ed. M.N. Pearson. Aldershot, U.K., and Brookfield, VT: Variorum, 1996.

De Silva, Kingsley M. A History of Sri Lanka. Oxford, U.K.: Oxford University Press, 1981.

Ross, Russell R., and Savada, Andrea Matles. Sri Lanka. A Country Study. Washington, DC: Federal Research Division, Library of Congress, 1990.

Snodgrass, D. R. Ceylon: An Export Economy in Transition. Homewood, IL: R. D. Irwin, 1966.

Vanden Dreisen, I. H. The Long Walk: Indian Plantation Labour in Sri Lanka in the Nineteenth Century. Delhi: Prestige Books, 1997.

Webb, James L. A., Jr. Tropical Pioneers: Human Agency and Ecological Change in the Highlands of Sri Lanka, 1800–1900. Athens: Ohio University Press, and New Delhi: Oxford University Press, 2002.

Weerasooria, W. S. The Nattukottai Chettiar Merchant Bankers in Ceylon. Dehiwala: Tisara Prakasakayo, 1973.

James L. A. Webb Jr.