Merchants, Traders, Entrepreneurs

Merchants, Traders, Entrepreneurs

Also by Claude Markovits: INDIAN BUSINESS AND NATIONALIST POLITICS THE GLOBAL WORLD OF INDIAN MERCHANTS THE UN-GANDHIAN GANDHI A HISTORY OF MODERN INDIA 1480 1950 (editor)

Merchants, Traders, Entrepreneurs Indian Business in the Colonial Era Claude Markovits

Claude Markovits 2008 Softcover reprint of the hardcover 1st edition 2008 978-0-230-20598-7 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London, EC1N 8TS Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. South Asian edition first published 2008 by PERMANENT BLACK 'Himalayana', Mall Road, Ranikhet Cantt Ranikhet 263645 perblack@gmail.com First published 2008 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin's Press LLC,175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademark in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-30234-5 ISBN 978-0-230-59486-9 (ebook) DOI 10.1057/9780230594869 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-publication Data Markovits Claude. Merchants, traders, entrepreneurs: Indian business in the Colonial Era p.m. Includes bibliographical references and index. 1. Business and politics India History 20th century. 2. Businesspeople India Social conditions 20th century. 3. India Commerce 20th century. 4. India Foreign economic relations. I.Title HC435.M3263 2008 381.0954 dc22 2008025123 10 9 8 7 6 5 4 3 2 1 17 16 15 14 13 12 11 10 09 08

To the memory of ALICE THORNER

CONTENTS Preface ix Part I: Business and Politics 1 1 Congress Policy Towards Business in the Pre-Independence Era 3 2 Indian Business and the Congress Provincial Governments 1937 1939 26 3 Businessmen and the Partition of India 75 Part II: Entrepreneurship and Society 103 4 Muslim Businessmen in South Asia, c. 1900 1950 105 5 Bombay as a Business Centre in the Colonial Period: A Comparison with Calcutta 128 6 The Tata Paradox 152 7 Merchants, Entrepreneurs, and the Middle Classes in Twentieth-Century India 167 Part III: Merchant Networks 185 8 Merchant Circulation in South Asia (Eighteenth to Twentieth Centuries): The Rise of Pan-Indian Merchant Networks 187

viii CONTENTS 9 Indian Merchant Networks Outside India in the Nineteenth and Twentieth Centuries: A Preliminary Survey 220 10 Epilogue: Returning the Merchant to South Asian History? 253 Index 271

PREFACE THE MERCHANT WORLD REPRESENTS A RELATIVELY NEGlected area in South Asian history. Merchants were, however, important actors in the economic, political, social, and even cultural life of India, and they deserve more attention than they have been given. This book aims at bridging a gap by bringing together a number of articles written between 1981 and 2003 which deal with the Indian mercantile world in colonial India, and its relationship with politics and the broader society. The book is divided into three parts. Part I, under the heading Business and Politics, looks at the relationship between the business world and the world of politics in the late colonial era, with special emphasis on the links between business interests and political nationalism. Part II, entitled Entrepreneurship and Society, looks at the position of merchants and big businessmen in relation to society and the economy. It focuses on particular groups, such as Muslim businessmen, particular locations (Bombay), and specific firms (Tatas). Part III, Merchant Networks, introduces a new dimension, that of circulation, and looks at the way in which specific trading networks with a regional base extended the range of their operations, during the colonial period, across the entire subcontinent as well as across different regions of the wider world. My original interest in the topic of Indian capitalism, in the early 1970s, owed a lot to the influence of a book by Charles Bettelheim, a French Marxist economist who had been seconded to P.C. Mahalanobis at the Indian Planning Commission: l Inde Indépendante, an

x PREFACE analysis of India s political economy in which the capitalist bourgeoisie figured in an important place. That is where I first heard about the Tatas and the Birlas, and, when I started doing research in Indian history at Cambridge, I immediately connected what I was reading about India s independence struggle with what I had learned from Bettelheim about Indian capitalists, and found that there was a gap in the scholarly literature, as, with the exception of A.R. Desai s very general treatment of the question in his Social Background of Indian Nationalism, no study had been done of the relationship between Indian capital and Indian nationalism. Little did I know then that one of D.A. Low s students, A.D.D. Gordon, was engaged in a study of the relationship between Congress and business in Bombay, which came out in the form of a book in 1978. My supervisor at Cambridge, Anil Seal, was encouraging when I sounded him out on the possibility of choosing such a topic for a Ph.D. Research on this subject, however, proved, to be a rather tricky proposition, as I started realizing how little was actually known about the history of the Indian business world, and how difficult it was to get access to private archives of business families. The existence of the important collection of private papers left to the Nehru Memorial Library by the heirs of prominent Bombay businessman Sir Purshottamdas Thakurdas, to which my attention was drawn by the then Deputy Director of the Library, Shri V.C. Joshi, proved to be a godsend. Added to the use of official archives in Delhi and London, it allowed me to acquire a decent grasp of the documentation then available which helped the writing of a Cambridge Ph.D. which served as a base for a book published in 1985. The first two chapters in the present book embody aspects of this work. Chapter 1, reprinted from the volume of a conference held in 1984 at the University of California at Los Angeles, under the stewardship of Richard Sisson and Stanley Wolpert, puts forward a general interpretation of the relationship between the Congress Party and the Indian business class during the period from 1885 to 1947, while Chapter 2, reprinted from a special issue of Modern Asian Studies, focuses more specifically on the period of the Congress provincial governments, 1937 9, which was a defining

PREFACE moment in the relationship. Chapter 3 represents an extension of the research into the immediate post-war years to look at the relationship between business and Partition, and was first presented at a conference organized in 1989 at the Indian Institute of Management, Ahmedabad, subsequently published in a volume edited by Dwijendra Tripathi. The four chapters in Part II represent separate forays into different aspects of business history in which I developed an interest while researching the book and elaborated upon at a later stage. Chapter 4 was published in French as part of an issue in the collection Purusartha on Islam and society in South Asia edited by Marc Gaborieau and put together some data and reflections about the place of Muslims in the business world of India, a little-researched topic. Chapter 5, a broad comparison between Bombay and Calcutta as business centres in the colonial period, was presented at the conference organized in Bombay in December 1992 by Sujata Patel and the late Alice Thorner, and published in the first of the two conference volumes, Bombay: Metaphor for Modern India. Chapter 6, a short piece on the history of the firm of Tatas, was first presented at a conference organized in 1992 at the School of African and Oriental Studies by Peter Robb and the late Burton Stein and subsequently published in one of the two conference volumes, edited by Sanjay Subrahmanyam and Burton Stein. Chapter 7, dealing in a broad fashion with the position of businessmen within the Indian middle classes, was presented at a conference held in 2001 at Neemrana Fort Palace, organized by Imtiaz Ahmad and Helmut Reifeld. The two chapters in Part III represent a novel orientation in my work towards the study of Indian merchant networks both within India and in the world at large. The history of circulation had been chosen as the theme of a research group which worked at the Centre d Etudes de l Inde et de l Asie du Sud in 1994 8, in which I was actively involved. Chapter 8 looks at merchant circulations in colonial India and was specially written as an article for the volume on Society and Circulation which I co-edited with Jacques Pouchepadass and Sanjay Subrahmanyam, which was the outcome of the labours of the research group. Chapter 9, a broad attempt at a synthesis on the history xi

xii PREFACE of Indian merchant networks outside India, was actually written in 1994 and published only in 1999 in Modern Asian Studies. In that article I try out some of the ideas which I developed more fully in my book, The Global World of Indian Merchants (2000). I have added as an epilogue a lecture which I gave in January 2006 at the Centre of Indian and South Asian Studies of the University of California at Los Angeles, Returning the Merchant to South Asian History?, which is a foray into recent historiographical developments. I am grateful to Sanjay Subrahmanyam, a friend of many years, for having given me the opportunity to air some of my ideas in front of a Californian audience. The book is dedicated to the memory of Alice Thorner, who, apart from encouraging me in my efforts, was always particularly kind to my wife and my family. I shall never forget the many lovely hours spent in 9 rue Guy de la Brosse. Paris, July 2007 CLAUDE MARKOVITS