Abstract

The growth of European colonial empires occurred during a period of intense international conflict. This article examines how the international position of colonial states altered the distribution of wealth within indigenous societies. Colonial administrators favored precolonial elites only if they were militarily and financially secure, a pattern that stems from balancing the advantages of working with these groups against their higher probability of revolt. This theory is tested using data on the wealth of Indian caste groups. In areas annexed at times of European war, precolonial elites are poorer than other groups, whereas they remain richer in areas annexed at other times and in indirectly ruled areas. These results appear not to stem from preexisting differences between regions. The results highlight the variable impact of colonialism within societies, and the importance of the international system in shaping colonial and postcolonial outcomes.