Abstract
This paper examines possible determinants of the long-run bilateral commodity terms of trade between the United Kingdom and British India during the Crown Rule period of 1858-1947. The potential influences of aggregate real incomes, price levels/money supplies, international transportation costs, and the exchange rate are included in the analysis, but we especially focus on the Home Charges that India was obliged to pay to Britain. The econometric results provide some support for the hypothesis that a rise in Home Charges was associated with an improvement in Britain’s terms of trade with India. In addition, a clear role was played by changes in transport costs and in the exchange rate.
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