Antecedentes y Evolución

Successive representatives of European countries, namely Portugal, the Netherlands and Great Britain, administered part or the whole of Ceylon or Sri Lanka during this era. Colonial administration accompanied Europeans being involved in commercial, missionary, and related activities. At first they grew spices, for example, pepper, cinnamon, nutmeg, cardamom and cloves, and obtained goods for sale from Sri Lankans, such as gems, pearls and ivory. These activities expanded into plantation, economic, education, military and religious activities. Alongside these activities was the birth of a postal service (1832), a telegraph service (1859) and telephones (1880), initially to support colonial administration and commerce, and eventually to enable personal communication, including among Sri Lanka’s emerging elite. During the Second World War, just before the colonial era ended, there was significant development in the telecommunications industry. Sri Lanka then

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became a sovereign state, and inherited wide-ranging administrative, economic, social and technological institutions from the British, as explained in the following paragraphs. These institutions are important to the study of Sri Lanka Telecom’s establishment and how it was run until quite recently. An outline of events from 1796 to the present is presented in Table 4. The following sections describe and analyse events in more detail.

Early Influence of Europeans

At the turn of the sixteenth century, colonial agents began to interfere in the administration of the country. The Portuguese were the first. In 1505 they established a form of colonial administration covering part of the present country. A Dutch administration followed in 1653 and this lasted until 1796, when Britain took over control of the coastal areas without much difficulty.10 _{Studies of the period conclude that neither Portuguese or Dutch seriously}

intervened in the prevailing social system (Mendis, 1957).

The British Colony

The British administration took over the colonial arrangements established by the Dutch. Officially Sri Lanka only became a British Colony in 1815, on the signing of a treaty known as the Kandyan Convention, with Kandyan headmen. British rule lasted for nearly 150 years. Within a few decades of taking over, the British had changed the entire system of governance from that prevailing in 1815, including setting up an Executive Council and a Legislative Council in 1833 and an administrative system covering Sri Lankan natives (Mendis, 1957). The Executive Council was headed by the Governor and comprised another five members whom he appointed, namely, the Colonial Secretary, the Attorney General, the Auditor General, the Treasurer and the General Officer Commanding, all of them British. It exercised executive powers and advised the Governor. At the beginning, lack of knowledge of the Ceylon administrative system, the need to gain control of the Sri Lankan people easily and the need for a common administrative system in colonial countries might have been some of reasons for the introduction of an administrative system aligned with the British legal system.

10 _{The British action was taken under the Kew Letters of 1795, written by the Dutch monarch in exile in London. The Dutch} colony was supposed to be in the safekeeping of Britain but was not restored to the Dutch after the Napoleonic War ended in 1815.

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Table 4: Perceived Changes in the Context of Sri Lanka

11 Arrows in the table indicate events that had an impact over a number of years. The table is to help the reader appreciate the links among these different aspects and conditions, and their complexity.

Year Economic, Political and Socio-Cultural Changes in Sri Lanka11

1796 Britain asked by Dutch Government in exile to assume responsibilities for Ceylon; British East India Company act on behalf of British Government

1800 Madras Office of British East India Company controlled the country and military activities; Department of Public Works, Land Registry and several other important departments established 1801 Independence from British East India Company; Board of Revenue and Commerce established

1815 Ceylon became a British Colony, administered from London Colonial Office; Country divided into 9 provinces 1818 Rebellion against the Colonial Government

1820 Start of road construction

1823 Coffee plantations started in Kandy - rapid development in region

1830 Salaried administration system introduced; Change from a personal hierarchy of chiefs to British bureaucratic system; population just over one million 1831 Roads constructed to connect important towns

1832 First mail coach in Asia from Colombo to Kandy

1833 Colebrook Reforms introduced; Unified administration; Common system of law; Laissez-faire economic system 1835 Britain reduced import duty on Ceylon coffee

1839 More financial control assigned to Legislative Council

1841 Ceylon Bank opened; Discussions on imposing taxes to fund public work

mid 1840s Committee for the Review and Consideration of Colonial Reports on Finance and Commerce in Ceylon appointed 1847 Coffee plantations destroyed due to a disease

1848 Rebellion against the Colonial Government

1850 Resistance to westernisation by Buddhist monks; Development of infrastructure to support plantations; Developments in plantations, communications and trade; Growth of towns 1858 Ceylon Railway inaugurated

1859 Morse telegraph introduced

1861 Enactment of Joint Stock Companies Ordinance 1865 The Ceylon Railway established

1867 More financial control assigned to Legislative Council; Railway to Kandy completed 1868 Colombo-Kandy railway completed

1871 Buddhist schools established 1880 Telephone introduced

1884 Ceylon Currency Board established

1890s Colombo harbour expanded; Sri Lanka relatively wealthy compared to other Asian countries so able to maintain infrastructure in rural areas; Middle class growth in urban areas expanded as a result of plantations and communications; Creation of an educated class to provide administrative services and professional services

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Year Economic, Political and Socio-Cultural Changes in Sri Lanka

1908 Reforms in Legislative Council demanded

1931 Donoughmore reforms; Universal suffrage (male) in Sri Lanka

1932 Sri Lanka was among first Asian countries to recognise women’s suffrage 1938 Divisional Revenue Officers replaced Chiefs; Enactment of Companies Ordinance 1942 British used Ceylon as a centre during the 2nd _{World War, infrastructure improved}

1945 Free education system introduced 1946 Soulbury Constitution

1948 Dominion status granted; UNP Government (three prime ministers) – strong relationships with Western countries; Agricultural economy; >50% of 6.7 million population engaged in agricultural activities 1950 Central Bank established replacing the Ceylon Currency Board

1955 Became a member of UN

1956 Mahajana Eksath Peramuna (alliance led by SLFP) Government; Import substitution industries introduced; Development of agriculture; Relationships with socialist countries; Sinhalese language declared as official language

1958 Wealth and Gift taxes introduced to reduce inequality in income distribution; Private transportation and cargo handling nationalised 1959 Private sector encouraged to engage in development activities

1961 Ceylon Petroleum Corporation incorporated; Government took over Bank of Ceylon; Trade and financial controls and restrictions 1964 Government took over Insurance Corporation

1965 UNP Government; Export oriented industries introduced; Government borrowed US$30 million from International Monetary Fund for the first time 1970 SLFP Government; Import substitution industries introduced; New state corporations incorporated

1971 Population 12.7 million 1972 Sri Lanka became a republic

1974 High budget deficit, crisis in balance of payments, low income growth rate, high unemployment

1977 UNP Government; Open economic policies introduced – inequality of income distribution widens; Focus on raising standard of living, accelerating economic growth within competitive market structure; Private sector participation encouraged; New constitution with strong executive powers of the President

1978 Executive Presidency system introduced; Greater Colombo Economic Commission established 1980 First structural adjustment loan from World Bank

1981 Population 14.8 million 1983 Start of Terrorist war 1984 Internet facilities introduced

1987 Provincial Councils established - powers of Central Government devolved 1988 Industrialisation policy with diversified industries and geographical spread 1989 Poverty alleviation programme introduced

Late 1980s Reduction of export diversification led to decreased Government revenue; Sought other revenue sources, mainly from privatisation; Less private sector investment Early 1990s Attempts to attract foreign investments; High budget deficit - could not allocate capital expenditure to develop infrastructure

1992 Greater Colombo Economic Commission reconstituted as Board of Investment; Department of Customs introduced automated data processing system

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Year Economic, Political and Socio-Cultural Changes in Sri Lanka

1995-98 Significant increase in war expenditure

1996 Public Enterprises Reforms Commission established; Year of Productivity; Decade of Productivity 1999 Improvement in equality in income distribution

2001 Negative economic growth for the first time since independence UNP Government; Population18.7 million

2002 Electronic Data Interchange introduced

2004 United People’s Freedom Alliance Government; Emphasis on contribution of small and medium enterprises to growth of GDP 2006 Ten-year Development Framework to implement large scale infrastructure projects

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This is not clear from any contemporary history in Sri Lanka, but was not uncommon elsewhere in the British empire.

The situation of Sri Lankans was transformed from a localised form of government with a hierarchy of chiefs, to a bureaucratic administration, headed by the Governor in Colombo (see map in Figure 13), and ultimately, the King/Queen of the United Kingdom of Great Britain and Ireland in London. The Governor was responsible for the administration of the country and made routine reports to London. 12 _{For some}

decades, top administrative positions were held by British nationals. Some indigenous people began working in support positions to the British and were involved in administrative activities, such as collecting taxes from villages. New institutions were established and new public services were inaugurated. Increasingly these were staffed by Sri Lankans, but with British officials as their head, and so the concept of working for a salary in the civil service emerged. Further, infrastructure was developed and trading systems were overhauled. All these developments supported the administration of the British colony and commercial gains for British concerns, especially from the plantation sector (Mendis, 1957).

Regarding financial control, the Constitution of 1833 and revisions to it in 1839, 1867, and 1903 increased financial control and provided the Governor with wider powers in order to satisfy British interests. This was part of the British gradually executing their own laws and regulations that mirrored those prevailing in London and elsewhere in the Empire, as alluded to on p. 102. Assignment of more financial control to the Legislative Council was included in revisions to the constitution. This can be seen as a step taken to facilitate the growing business needs (see p. 109) in Sri Lanka by that time, and allowing the Colonial Government to make timely decisions instead of having to wait for decisions from London, which were often exacerbated by communication delays: this was several decades before the introduction of international telephone services in 1935.

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The economy and economic infrastructure under British Rule

As indicated above, ancient and early colonial Sri Lanka was known for growing rice and spices such as cinnamon, cloves, cardamom both for subsistence and for export purposes. However, as a British colony, tea became the most popular export, satisfying a high demand in Britain and elsewhere in Europe. Various other crops

Figure 13: Map of Ceylon

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were also grown, especially rubber, cinnamon and coffee. The plantations were concentrated mainly in hill country areas. The trees, seeds, etc., were introduced by the British from China, India (specifically tea) and Brazil (rubber).

The plantation economy had serious implications for the society and culture of Sri Lankans. It transformed their country from a traditional agricultural economy, in which trade was limited to importing goods such as velvet, silks, ceramics, horses and glass bottles, and exporting gems, pearls, ivory, elephants, valuable wood and spices. A commodity producing, export-oriented economy arose, which depended heavily on other economies nearby and in Europe. The gradual reduction of paddy cultivation resulted in the need for Sri Lanka to import rice and other essential food items, as is the case today (Corey, 1996). Expansion of commercial plantations created a “middle” class of traders and other occupations: landowners, planters, transport agents, contractors and businessmen. The administrative structure and the legal framework, including accounting bodies created by the British Colonial Government, were mainly focused on supporting the growth of the plantation sector. The sector was in the hands of British companies whose interests were looked after by British managers. The labourers employed in these plantations were brought from South India, a practice that continued from the Dutch period, as the locals preferred to work on their own land rather than in plantations. As the colonial period proceeded, towns were created around the few cities that already existed, which themselves grew significantly, particularly Colombo; and those areas became more influential than other rural areas.

In the early nineteenth century, the British Colonial Government developed infrastructure such as railways, roads, telecommunications and harbours. The main objective was to support the plantation economy, the military and other administrative activities. This objective resulted in infrastructure and other public activities being restricted only to plantation regions of the country and Colombo. Under British rule, Colombo received the bulk of new infrastructure, including a harbour. As such, Colombo developed as the centre of trading, administrative and service functions within the country. However, there were some infrastructure developments in other towns, where plantations were located and other trading activities took place, such as Galle, Trincomalee and Kandy. Elsewhere, rural poverty prevailed. This poverty was in stark contrast to before the colonial period, when villages were concentrated along

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river valleys that were more than able to support the agricultural lifestyle of people. Thus, the plantation economy changed the way of life prevalent in the country.

Despite the increasing availability of capital from the expansion of export trade during the early colonial period, the main source of funding for the development of infrastructure was the tax revenue collected from local people. The taxes that the British imposed on locals were heavy. Examples were taxes on paddy and grain, dogs, shops, boats, carriages, bullock carts and road ordinance. Some additional funds were received from the Colonial Office in London. Meanwhile, most of the income that this infrastructure permitted to be generated by plantations was remitted to Britain to cover the allegedly high cost of plantations.

The British Colonial Government needed an effective financial control system in order to manage the capital earned from plantations and the revenue earned from taxes. As early as 1801 (i.e. before the Kandyan Convention), it set up the Board of Revenue.13 _{A further development was that the first bank in Sri Lanka, using the}

British system, was established in 1841 to support the financial activities related to plantations. Moreover, there was a need for improved financial control systems to support the growth needs of business organisations owned by British people. Examples of these are House of Cargills (1844, a general warehouse and import and wholesale business), Aitken Spence (1868, trading and maritime services), E. John & Company (currently known as John Keells Group − 1870s, tea production and export), Ceylon Cold Stores (1894, carbonated drinks), Ceylon Brewery (1910), Ceylon Boot Manufactory (1923), American Engraving Works (1936) and Unilever (1938). These business organisations were located in Colombo, whereas the plantations were mainly located in Kandy, Badulla and Matale districts.

The British used Sri Lanka not only for plantation development but also as a regional centre of their trading and political activities in Southeast Asia. This is exemplified by events during the Second World War. Sri Lanka was situated in a strategically important point for the British Royal Navy, when fighting with the Japanese. The

13 _{The Board of Collectorship was abolished and Agents of Revenue and Commerce were appointed to various} districts under the Board of Revenue.

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British used Sri Lanka and the port at Trincomalee as a centre for their operations in Southeast Asia. Sri Lanka benefited during the Second World War from the British having to improve the infrastructure of the country for its strategically important role. According to the Administration Report for 1945-46, post and telecommunications became the first priority after war was declared. Health services and other facilities to support the large number of troops were improved. Thus the standard of infrastructure had improved by the end of the war.

Society and social infrastructure under British rule

By the mid-nineteenth century, a new society had emerged on the back of the colonial administration, the plantation sector and urban-rural change. Strict regulations separated the rulers from the ruled, creating a class division in society which had not existed before colonisation by Europeans. British officials of the Ceylon Civil Service were at the top of this social pyramid. The introduction of a British education system added to this change in Sri Lankan society. The British established schools with English language being the medium of instruction, a medical college, a law college and technical colleges in the late nineteenth and early twentieth century to train local people, as it was cheap to employ the locals and difficult to attract Britons to work in India and Sri Lanka. Most of the children of families (owners) in the expanding plantation sector were sent to these schools. The British promoted local people who had studied at British schools in Sri Lanka to high administrative positions.

By the end of the nineteenth century, the middle class had become more powerful and influential, and developed a national spirit united against governance by the British. As a result, several reforms were introduced which gradually gave more representation to the locals in administration until Sri Lanka gained independence in 1948.

A socialist movement, especially Trotskyism, grew among the people who had received a higher education in London during the late 1920s and early 1930s. During this period, the Sinhalese upper class was given some opportunity to get involved in the administrative system, and, to some extent, representation on the Legislative Council. The Donoughmore reforms in 1931 introduced universal adult (male) suffrage, which was a major turning point in the political environment in the country. In 1932, the country became the first in Asia to give women the vote. The free

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education system was introduced in 1945, which allowed everyone access to the secondary education system that the British introduced in 1815.

During the 1870s, Colonel Henry Steele Olcott, an American and cofounder of the Theosophical Movement, supported the campaign against the British and established Buddhist schools with a nationalist view. The objective of establishing these schools was to provide Sinhala students with an English education but with Buddhist values. The British syllabus was taught along with Buddhist culture, but it lacked the Sinhalese culture. Even the Sinhalese language was taught in the English medium of instructions during those days.

Implications of teaching in English can be seen even today. For example, English language proficiency is a key requirement for managerial jobs in business organisations, especially in the private sector. Thus, most university degree programmes and other professional examinations are conducted in English. In particular, candidates who had qualified with professional accounting examinations in