The American Civil War, which began in 1861, had a profound impact on the lives of ryots in India. When the war broke out, raw cotton imports from America to Britain fell sharply — from over 2,000,000 bales in 1861 to merely 55,000 bales in 1862. This created panic in Britain, and frantic messages were sent to India to increase cotton exports.

As a result, the ryots in the Deccan villages suddenly found access to seemingly limitless credit. They were given Rs 100 as advance for every acre they planted with cotton. Sahukars became willing to extend long-term loans. Between 1860 and 1864, cotton acreage in the Bombay Deccan doubled, and by 1862, over 90 per cent of cotton imports into Britain came from India.

However, these boom years did not bring prosperity to all cotton producers. While some rich peasants did gain, for the large majority, cotton expansion meant heavier debt.

When the Civil War ended in 1865, the situation reversed dramatically. Cotton production in America revived, and Indian cotton exports to Britain steadily declined. Export merchants and sahukars in Maharashtra were no longer keen on extending long-term credit. They closed down their operations, restricted their advances to peasants, and demanded repayment of outstanding debts. Thus, the temporary boom ultimately left most ryots trapped in deeper indebtedness.