The East India Company: The World's Most Powerful Corporation (The Story of Indian Business) (11 page)

Historians of Indo-European society (Percival Spear, P.J. Marshall, and, more recently, Durba Ghosh) have usually approached their subject from the angle of European ideas of race. But Indian ideas of purity and pollution formed an older and no less powerful a sentiment than race. The effect of these ideas in shaping hierarchy in this hybrid world remains unstudied.

East India Company factory, Sonargaon, Bangladesh, from the Archaeological Survey of India Collections, taken by W. Brennand in 1872. © Piyal Kundu and
http://oldindianphotos.blogspot.com/

AMONG THOSE INDIAN businesses and tradesmen that came in close contact with the European merchants between 1650 and 1850, five main classes deserve special attention. These were the great banking firms, merchants and shipwrights, officers and agents of the Company, artisans, and Indian partners of European private traders. There were also transporters, boatmen, caravan-runners and numerous other peoples besides who did business with the Europeans, but we have little systematic knowledge about these groups.

Who were the principal partners and agents of the Company in India?

The most prominent urban capitalists of the seventeenth century were the bankers and money-changers, known
as shroffs, kothiwals, mahajans, pedhis and other epithets. Money was scarce throughout India, and it was not surprising that bankers were the wealthiest capitalists. Few of these firms were deposit bankers. They brokered financial services required by the Company. The bullion for payment of Indian goods was imported in the shape of Spanish silver coins. The bankers arranged to have them recoined for a fee, or simply exchanged the peso for Indian money. The Company needed the moneylenders to borrow money when bullion ran out and convert the currency of one kingdom into that of another. In the eighteenth century profits and revenues earned in Bengal were sent to the other branches by means of bankers’ drafts, or hundi. The major operators in the hundi market were the Indian bankers.

The beginning of British rule had an ambivalent impact upon this class. With increasing unification of currency and coinage, the British needed them less than before for financial transactions like currency exchange and conversion. Thus illustrious bankers like Jagatseth of Bengal found the ground shifting beneath their feet under Company rule. On the other hand, new areas brought under the British fold enjoyed greater security of property that encouraged general trade and finance. The acquisition of Benares by the Company in 1775, for example, improved the commercial importance of
the city and that of its capitalists. This indirect stimulation to Indian business found its most flourishing expression not only in the interior towns such as Benares, but more significantly in the three port cities of Bombay, Madras and Calcutta.

The rise of Indo-European trade did not happen at the expense of Indian traders. It was quite the opposite, in fact. The ports where the Europeans had their stations were located too far away one from the other. The companies’ own shipping lines were insufficient to create necessary links between these ports, and between them and the smaller coastal markets where useful goods were available. This sphere of subsidiary or feeder supplies, called country trade, engaged a large number of Indians as well as Europeans. When the Company reduced its trading operations towards the end of the eighteenth century, the country traders moved into India-China trade.

Among merchants and shipwrights who gained from the European presence, the Parsis were the foremost. The Parsis had settled as agriculturists and artisans in towns on the south Gujarat coast before 1600. European trade drew some of these families to Surat. With the
growth of Bombay, some of the prominent Parsi families left Surat for Bombay. Members of this community would go on to achieve pre-eminence in the business, social and cultural spheres in the coming decades. Among the foremost entrepreneurs of these times were Framji Cowasji Banaji and Rustomji Cowasji, shipwrights of nineteenth-century Bombay and Calcutta, the founder of the mill-owning Dinshaw Petit firm, Nasserwanjee Cowasjee Bomanjee, and K.R. Cama, who partnered with Dadabhai Naoroji to set up a merchant firm in Liverpool.

The golden age of Parsi shipwrights and coastal merchants began towards the end of the eighteenth century and continued well into the nineteenth. Not only trade but also wars with China and Burma helped them as they supplied provisions to the army. The rising price of oak in Europe made Burma and Malabar teak a cheaper material to use in shipbuilding. The Parsis knew the coastal timber trade better than did the European traders. When the Company’s charter ended in 1833, a number of large ships were sold to the Parsis at a discount price which aided the coastal trading enterprise. Above all, Indian shipbuilding owed to the inherited skills of the Indian shipwright. Although the ships were on average smaller than the Europe-bound vessels, they were known to last a very long time.

Compared to Bombay, the shipbuilding trade was
less developed in Madras and Calcutta. But these cities too saw flourishing country trade. In Coromandel, the principal Indian groups dealing with the Company were the Telugu merchants who had migrated southward with the consolidation of power by the Telugu warlords. Many of them settled in Madras, and some in Pondicherry. Troubled conditions in the southern Deccan encouraged migration of weavers and merchants into the city. The weavers’ quarters, Chintadripet, was a settlement that dates from the 1730s. These traders engaged in trade on their own account as well as in agency of the Europeans.

Like the Parsis, a group that thrived almost solely on the strength of their position in Indo-European trade was the Armenians. From their base in Julfa Isfahan, Armenian merchants had come to India in the sixteenth and seventeenth centuries. Their reputation as traders made them respectable citizens of the merchant town. The Armenian settlement in Madras began about 1700. In the eighteenth century, they used their contacts in Persia to juggle between overland and maritime trade off the coast of Persia, and obtain silver from Manila for Madras.

Calcutta grew as a haven of private enterprise by drawing in Bengali, Parsi, Gujarati and Marwari businesses. That Calcutta was relatively sheltered from
the threat of Maratha attacks by the Company’s forces made it an attractive destination for capitalists and entrepreneurs of the mid-eighteenth century. Bengali textile merchants, Seths and Basaks, were among the early wealthy Indian settlers of Calcutta. Some of these families had migrated from Saptagram when the river port there began silting up. The early families were called ‘jangalkata’, clearers of forest. Some of the oldest localities, markets and bathing ghats in Calcutta (Sovabazar, Baishnabghata, Burrabazar) were named after these merchants or were started by them.

In the last quarter of the eighteenth century, Bengali merchants of the Suvarna Banik caste became prominent in trade. For instance, Nemaicharan De-Mullick, Ramkrishna Mullick and Gangabishnu Mullick traded in opium and salt, successfully though perhaps not at the same level as the Parsi merchants. At the turn of the nineteenth century, the confederation of prominent Indian merchants had diversified further to include individuals who had no previous experience in trade. Prankrishna Laha and Matilal Seal were the big names among several rags-to-riches stories.

A junior employee of one of these firms, Ramdulal Dey stands out as a most dramatic case of making a fortune from very humble beginnings. Dey was a Bengali merchant, philanthropist and social leader, and
benefactor of the greatest educational institution of early colonial Calcutta, the Hindu College, later the Presidency College. Having lost all during the Maratha raids in western Bengal in the 1740s, his parents settled in Calcutta and lived in poverty. While a teenager, Dey joined as a clerk one of the firms that supplied goods to European private traders. As an employee he showed evidence of entrepreneurial talent and extraordinary courage. Bengali children still read the story of how, returning home alone through forested roads with a large amount of money on his person, he fooled a band of robbers into thinking that he was a tramp of unsound mind. Dey’s meteoric rise in the 1790s owed to his status as the principal agent of the American trading ships in Calcutta. The Philadelphia merchants honoured him by naming a ship Ramdulal.

With a few exceptions, all of these Bengali merchant firms invested their profits in buying landed estate, which perhaps explains why a trade recession in the 1840s saw some of them withdraw from trade and become full-fledged landlords.

Till the early decades of the nineteenth century, a few Indian officers were hired by the Company to act as
informants. They kept the Company updated on the goings-on in the political field. Variously known as vakyanavis, hurkurra or vakeel, their relevance to European business was indirect, and this too declined after the last Anglo-Maratha Wars ended in 1818. Thereafter, the intrigues in the princely states concerned the Company less than before and were monitored directly by resident representatives.

A more important person was the salaried agent in charge of procuring goods. When the Company began operations in India, the chief agents were powerful political figures with influence in the local courts. In Coromandel, they were usually in command of a band of soldiers, and thanks to this militia, could undertake contracts to collect land revenue on behalf of weak kings. With the establishment of Madras, Bombay and Calcutta, the character of the brokers changed. They were more often individuals with superior financial resources commanding a good credit in the Indian market. They were recruited from the very groups that were already established in the commercial world of coastal India. The agents of the Company in Calcutta were recruited from the families of the Seths and Basaks; those in Murshidabad were north Indian merchants; those in Madras were the Telugu merchants; and the chief agents in Surat were usually Parsis.

The agents were a diverse group, but two types can be identified. One was a sort of secretary to the European factor, known as dubash (dubashiya or interpreter) in the Coromandel and banyan in Bengal, and the second was a head merchant with whom the Company contracted for the supply of goods, usually known as ‘broker’. Frequently, these roles merged in one individual. Europeans, in almost all dealings with the Indians, preferred to elevate one man over others. If this practice made contracting simpler, it left a large number of ambitious and aspiring merchants unhappy. The consultations and diaries of the time are replete with endless bickering over how brokerage should be shared between the bigger and the smaller merchants.

The best-known of all dubashes, somewhat disappointingly for the historian of the English Company, was an agent of the French. This gentleman, Ananda Ranga Pillai, kept a diary. For the most part, the diary is a tedious account of Pillai’s relations with his kindred and family. Pillai, nevertheless, reveals some of the pros and cons of working for the Europeans. Half the French Company’s trade in the 1740s passed through his hands, and so did the private trade of the leading officers. By his own admission, in order to maintain this empire, he had to employ so many subcontractors spread over so large an area, that his profits were small. Yet,
‘from Cape Comorin [to] Bengal,… Golconda, and … Mysore, there is not one who is not [his] friend, and there is none who will not honour [his] drafts and bonds.’ Alliance with a firm far larger in size than any Indian business of the time created a tremendous goodwill for an Indian merchant though the financial rewards may not have been sizeable.

Still, the relationship between the agent and the Company was far from an easy one. It was a relationship mired in dependence and distrust. It soured too easily and too frequently. There were many reasons for the relationship to sour. One of these is revealed in Pillai’s complaint that he needed to spend too much money trying to hold an empire of under-contractors together. Another bone of contention related to debts to the Company owed by the deceased predecessors in Indian merchant firms. Under Indian custom, the liability of such loans was open to dispute. By European law, the liability passed on to the next generation. These loans, therefore, were occasions for furious quarrels. A third problem was conflict of interest. In places like Hooghly or Masulipatnam, local merchants were often placed in an awkward position when the Company seemed at odds with the kings. In 1678–79, the dubash of Masulipatnam, Kola Venkadri, secretly negotiated with the king of Golconda, and was imprisoned by the English
in retaliation. Brokers who belonged in different communities used their leverage with the Company as a weapon to score over each other. The rivalry between the Parsi and Hindu merchants of Surat revolved around the Company. When a debt dispute arose between the Bombay Council and Jagannath Laldas, the leading Hindu merchant of Surat and broker of the Company in the 1730s, Laldas had to flee Surat and take refuge in the territory of the Peshwas. The dispute was engineered by his Parsi rivals.

More than anything else, it was overdependence on the agents that made the Company officers suffer from constant anxiety. The agent oppressed the subcontractors and weavers when he could, and defrauded the English whenever the opportune moment arose. Authorities in London warned the new recruit that, ‘while he diligently performs his Duty … don’t let him overtop you or be in effect Your Master’. And yet, there was little the headquarters in London could do to reform the system. Not only were the agents necessary, they were also at times supported by some of the English officers and the communities to which the brokers belonged. The feeling of powerlessness, then, expressed itself as abuses directed at an entire community. ‘They are wealthy, subtle and malicious, as well as powerful; can bribe, devide, menace and by ill acts remove those that oppose them, being
above shame and uncontroled by conscience’, wrote a Surat officer in the late-1600s. The word ‘dubash’, literally bilingual, was rudely translated as two-faced by some of the European friends of the dubash.

None illustrates this complex relationship better than the one the Company had with Kasi Viranna, the leading dubash in Coromandel, referred to in the consultation books of 1661–90 as Verona. The Company could hardly move without his help in managing transport, procuring goods, loading goods, bringing back runaway boatmen, negotiating discounts on contracted prices and collecting taxes in Madras. Viranna was not a man of small means. His own ships plied between Madras and Bengal, which made him an especially useful procurement agent. And yet, the appointment letter of Streynsham Master, the chief of Coromandel, expressly urged him to avoid any situation wherein ‘Verona, or any other one Man should be the Sole Merchant to Sell, buy and provide, for from thence many inconveniences may arise’. A similarly difficult relationship existed between the factors at Balasore and the chief broker in 1670, Chimchamshaw (Khem Chand Shah). The honesty of ‘Chimcham’ was not in doubt, but he was still found unreliable, because the poor man was squeezed between two masters, the Mughal governor who constantly harassed him for money, and the Company who found his loyalty
questionable. In the early eighteenth century, the three sons of Rustam Manock, the leading Parsi house of Surat and rivals of Laldas, had a dispute with the Bombay Council who accused them of overcharging on a previous transaction. The strained relations continued until, upon an appeal from one of them who went to London for the purpose, the Court of Directors set up a special tribunal that settled in favour of the brothers.