Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-15T05:40:37.708Z Has data issue: false hasContentIssue false
  • English
  • Français

The Emergence of Indigenous Industrialists in Calcutta, Bombay, and Ahmedabad, 1850–1947

Published online by Cambridge University Press:  10 April 2014

Gijsbert Oonk
Get access Rights & Permissions [Opens in a new window]

Abstract

This article describes and explains three patterns in the entry of Indian entrepreneurs in large-scale industries in South Asia, 1850–1947. It begins with Marwari businessmen in the jute industry in Calcutta. Then I discuss the success of the Parsi community in the Bombay cotton industries, and, finally, Gujarati (mainly Hindu) industrialists in Ahmedabad. I focus on three variables that might explain the timing, degree, and social and cultural variations in the emergence of indigenous industrialists in these cities. These variables concern: first, the colonial attitude towards indigenous industrialists in this field; second, whether or not these men belonged to a (religious) middleman minority; and, finally, their social and, in particular, occupational background.

Type
Research Article
Information
Business History Review , Volume 88 , Issue 1: Business, Networks, and the State in India , Spring 2014 , pp. 43 - 71
Copyright
Copyright © The President and Fellows of Harvard College 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Crouzet, François, The First Industrialists: The Problems of Origins (Cambridge, U.K., 1985).Google Scholar

2 Bagchi, A. K., Private Investment in India, 1900–1939 (Cambridge, U.K., 1972)Google Scholar; Chandra, Bipan, Nationalism and Colonialism in Modern India (New Delhi, 1979), 144–71Google Scholar; Banerjee, Debdas, Colonialism in Action: Trade, Development and Dependence in Late Colonial India (Hyderabad, 1999)Google Scholar; Kumar, Dharma, The Cambridge Economic History of India (Cambridge, U.K., 1982)Google Scholar; Ray, Rajat Kanta, Growth and Conflict in the Private Corporate Sector, 1914–1947 (Oxford, 1979)Google Scholar; Tomlinson, B. R., The New Cambridge History of India: The Economy of Modern India, 1860–1970 (New Delhi, 1993)Google Scholar; and Tripathi, Dwijendra, The Oxford History of Indian Business (New Delhi, 2004).Google Scholar

3 Among others, see Bagchi, Private Investment in India, esp. 163–69; Chandra, Nationalism and Colonialism in Modern India, 144–71; Banerjee, Colonialism in Action; and Bosma, Ulbe and Oonk, Gijsbert, “Bombay Batavia: Parsi and Eurasian Variations in the Middlemen Theme,” in Mediators between State and Society, ed. Randeraad, N. (Hilversum, 1998), 17–41.Google Scholar

4 Among others: Gadgil, D. R., Business Communities in India (New York, 1951)Google Scholar; Timberg, T. A., The Marwaris: From Traders to Industrialists (New Delhi, 1978)Google Scholar; Kennedy, Robert E., “The Protestant Ethic and the Parsees,” American Journal of Sociology 68 (1962): 11–20CrossRefGoogle Scholar; Mehta, Makrand, The Ahmedabad Cotton Textile Industry: Genesis and Growth (Ahmedabad, 1982)Google Scholar; Kulke, Eckhard, The Parsees: A Minority as Agents of Social Change (Munich, 1974)Google Scholar; and Tripathi, Dwijendra, ed., Business Communities of India: A Historical Perspective (New Delhi, 1984).Google Scholar

5 Claude Markovits makes a useful comparison between Bombay and Ahmedabad: “Bombay as a Business Centre in the Colonial Period: A Comparison with Calcutta,” in Bombay: Metaphor for Modern India, ed. Patel, Sujata and Thorner, Alice (New Delhi, 1995), 26–46.Google Scholar

6 For an excellent overview of this debate, see Rutten, Mario, Asian Capitalists in the European Mirror (Amsterdam, 1994)Google Scholar. In this article, I follow his lead.

7 See William Roger Louis, ed., Imperialism: The Robinson and Gallagher Controversy (New York, 1976); Gadgil, D. R., The Origins of the Indian Business Class (New York, 1959)Google Scholar; Gordon, A. D. D., Businessmen and Politics: Rising Nationalism and a Modernising Economy in Bombay, 1918–1933 (New Delhi, 1978)Google Scholar; and Markovits, Claude, Indian Business and Nationalist Politics, 1931–1939 (Cambridge, U.K., 1985).Google Scholar

8 See Weber, Max, Die Wirstschaftsethic der Welreligionen II: Hinduismus und Buddhismus (Tübingen, 1922)Google Scholar. For a fair summary of Weber's work, see Bendix, Reinhard, Max Weber: An Intellectual Portrait (London, 1966)Google Scholar. For a fundamental critique, see Morris, Morris D., “Values as an Obstacle to Economic Growth in South Asia: A Historical Survey,” Journal of Economic History 27, no. 4 (1976): 588–91.Google Scholar

9 Among others: Timberg, The Marwaris; Kennedy, “The Protestant Ethic and the Parsees,” 11–20; Mehta, The Ahmedabad Cotton Textile Industry.

10 Bagchi, Private Investment in India, 1900–1939; Ray, Growth and Conflict in the Private Corporate Sector, 1914–1947; Gadgil, Business Communities in India; Sen, Amartya K., “The Pattern of British Enterprise in India, 1854–1914: A Causal Analysis,” in Social and Economic Change, ed. Singh, B. and Singh, V. B. (Bombay, 1967).Google Scholar

11 Bonacich, Edna, “A Theory of Middleman Minorities,” American Sociological Review 38 (1973): 583–94Google Scholar; Dobbin, Christine, Asian Entrepreneurial Minorities (Richmond, U.K., 1996)Google Scholar. Simmel, Georg, “The Stranger,” in The Sociology of George Simmel, ed. Wolf, K. H. (New York, 1950)Google Scholar.

12 “Asian assumptions” refers to assumptions made by Asian historians as well as by European historians concerned with the industrialization debate on South Asia.

13 Karl Marx, Capital, vol. 3, 388–96, as quoted in Dobb, Maurice, Studies in the Development of Capitalism (New York, 1976 [1st ed. 1947, rev. ed. 1963])Google Scholar. For an excellent overview of how a selection of the European historiography influenced notions on the Asian transformation to industrialization, see Rutten, Asian Capitalists in the European Mirror.

14 Rutten, Asian Capitalists in the European Mirror.

15 I derive the image of the imperial sun, which I also use in the other sections of this article, from Goswami, Omkar, “Then Came the Marwaris: Some Aspects of the Changes in the Pattern of Industrial Growth in Eastern India,” Indian Economic and Social History Review 22, no. 3 (1985): 225–49.Google Scholar

16 Markovits, “Bombay as a Business Centre in the Colonial Period,” 31.

17 Ibid., 41.

18 Anne Hardgrove makes an interesting observation that the “contests between the government and the Marwaris over legislation concerning gambling, speculation, and commodity adulteration proved to be a rallying point for the emergence of Marwari political solidarity.” Hardgrove, Community and Public Culture: The Marwaris in Calcutta, c. 1897–1997 (New York, 2004)Google Scholar, 127.

19 Thomas Benthall, 12 Dec. 1928, Benthall papers, Center for South Asians Studies, Cambridge, U.K., cited in Goswami, “Then Came the Marwaris,” 150.

20 Morton Benthall, 16 Sept. 1935, Benthall papers, Centre for South Asian Studies, Cambridge, U.K.; Indian Jute Mill Association, Report of the Committee (1934), 12; as cited in Goswami, “Then Came the Marwaris.”

21 Thomas Benthall, 12 Dec. 1928, Benthall papers, cited in Goswami, “Then Came the Marwaris.”

22 Markovits, “Bombay as a Business Centre in the Colonial Period,” 43.

23 Bengali businessmen burnt their fingers in Indo-British partnerships in the 1830s and 1840s, and remained too cautious to become involved with further initiatives. Kling, Blair B., Partner in Empire: Dwarkarnath Tagore and the Age of Enterprise in Eastern India (Berkeley, 1976)Google Scholar; Bagchi, Private Investment in India, 203–6.

24 David McClelland developed a psychological test (Need for Achievement, or N-Ach test) to demonstrate the relationship between being a member of a minority and the need for achievement. This test did apply to the Parsis in Bombay, but no test was conducted on the Marwaris in Calcutta. See McClelland, David, The Achieving Society (New York, 1961).Google Scholar

25 The Marwaris belong to various Hindu and Jain castes. During the second half of the nineteenth century, they migrated from Marwar to East India and settled as petty traders and small businessmen. Within Marwar they were known by their specific caste name, while outside Marwar they are referred to as Marwaris. Sometimes even businessmen from Rajasthan or West India are referred to as Marwaris. For a general introduction, see Timberg, The Marwaris.

26 Timberg, Marwaris, 88; and Chattopadhyaya, Haraprasad, Internal Migration in India: A Case Study of Bengal (Calcutta, 1987), 336–43Google Scholar. Fluctuations in the number of Marwaris can be partly explained by the fact that counting procedures varied in the period between 1881 and 1931. For example, in the more recent censuses, traveling merchants were counted as living in the place where they were counted, not where they actually lived. Another limitation in the census data is the change in regional borders. However, it seems fair to state that there were between 30,000 and 55,000 Marwaris in Calcutta.

27 Bengal Chamber of Commerce, Annual Report (1894), 33.

28 Indian Jute Mill Association, Report of the Committee (1904), 103.

29 Goswami, Omkar, “Sahibs, Babus, and Banias: Changes in Industrial Control in Eastern India, 1918–50,” Journal of Asian Studies 48, no. 2 (1989): 292Google Scholar. Goswami estimates that the trading profits of the Marwaris were around Rs. 440 million per year in this period. This estimate excludes their profits from different future markets and from trade in jute bags and cloth; see Goswami, “Sahibs, Babus, and Banias,” 293.

30 Jain, L. C., Indigenous Banking in India (London, 1929)Google Scholar; Ray, Rajat Kanta, “The Bazaar: Changing Structural Characteristics in the Indigenous Section of the Indian Economy before and after the Great Depression,” Indian Economic Social History Review 25, no. 3 (1988): 263–318Google Scholar; Ray, Rajat Kanta, “Pedhis and Mills: The Historical Integration of the Formal and the Informal Sectors in the Economy of Ahmedabad,” Indian Economic and Social History Review 19, nos. 3–4 (1982): 387–96Google Scholar.

31 Goswami described this process well in “Sahibs, Babus, and Banias.”

32 The Jatia family, for example, developed close ties to the Andrew Yule Company. David Yule was a close friend of Onkarmull Jatia. The Goenka family had a close connection to Bird and Heilgers, and the Kanorias were connected to McLeod.

33 Goswami, “Then Came the Marwaris,” 228–36.

34 However obvious this may be, this observation developed after intensive discussions and correspondence with Dr. Raman Mahadevan, whom I thank for his time and insights.

35 Birla, G. D., In the Shadow of the Mahatma (Calcutta, 1953)Google Scholar, xv.

36 Taknet, D. K., Industrial Entrepreneurship of the Shekhawati Marwaris (Columbia, Mo., 1986), 179–228Google Scholar.

37 Sarupchand Hukumchand made his money in banking and speculating on the opium market. In the early twentieth century he settled in Calcutta, where he was very lucky in his speculative business. In 1910, he used borrowed money to buy Rs. 200,000 worth of opium, which within a month yielded him ten times that amount. In 1915, he opened a very profitable trading office in Calcutta. By then, he already owned a cotton mill in Indore. However, without much knowledge of jute industries, he became a partner in Birla's first jute venture. Nevertheless, speculation and the opium trade remained his most important sources of income.

38 For more details on success and failure stories of migrant businessmen see: Oonk, Gijsbert, Settled Strangers: Asian Business Elites in East Africa, 1800–2000 (Delhi, 2013)Google Scholar.

39 The term “English” is used here for the period prior to the 1707 Act of Union that created Great Britain and “British” for the time after 1707.

40 Chandavarkar, Rajnarayan, The Origins of Industrial Capitalism in India: Business Strategies and the Working Classes in Bombay, 1900–1940 (Cambridge, U.K., 1994)Google Scholar, 21.

41 Holden Furber in Desai, Ashok V., “The Origins of Parsi Enterprise,” Indian Economic and Social History Review 5, no. 4 (1968): 307–17.Google Scholar

42 Bombay Public Proceedings, 8 Feb., 13 Aug., 27 Sept. 1723; 18 Oct. 1728; 3 Sept. and 3 Dec. 1731. Maharasthra State Archives, Mumbai.

43 Gupta, Ashin Das, Indian Merchants and the Decline of Surat, 1700–1750 (Wiesbaden, 1979)Google Scholar, 8.

44 This is explained by their “minority status” in Kulke, Parsees, or by their supposed “Protestant Ethic,” in Kennedy, “The Protestant Ethic and the Parsees,” 11–20.

45 Gerald Aungier, Governor of Bombay, in a letter dated 1673, printed in Somerset Playne, compiler, Arnold Wright, editor, and J. W. Bond, assistant, Bombay Presidency, the United Provinces, the Punjab, Kashmir, Sindh, Rajputana and Central India: Their History, People, Commerce and Industrial Resources (Bombay, 1917–1920), 26–27.Google Scholar

46 Framjee, Dosabhoy, The Parsees: Their History, Manners, Customs and Religion (London, 1858), xGoogle Scholar.

47 The name of the Hindu trader was Motichand. See Wacha, D. E., Shells from the Sands of Bombay (Bombay, 1902),Google Scholar 102.

48 My discussion of numbers can be found in Oonk, Gijsbert, Ondernemers in Ontwikkeling: Fabrieken en fabrikanten in de Indiase katoenindustrie, 1850–1930 [Entrepreneurs in Development: Mills and Mill Owners in the Indian Cotton Textile Industry] (Hilversum, 1998), 75–76.Google Scholar

49 Wacha, Shells from the Sands of Bombay, 84, 85; Briggs, H. G., The Parsis, or Modern Zerdusthians: A Sketch (Bombay, 1852)Google Scholar, 85, Oonk, Ondernemers in Ontwikkeling, 76.

50 Bombay Dyeing: The First Hundred Years, 1879–1979 (Bombay, 1979).Google Scholar

51 Markovits, “Bombay as a Business Centre in the Colonial Period,” 44–45.

52 Kennedy, “The Protestant Ethic and the Parsees,” 11–20; Kulke, The Parsis in India; White, David L., Competition and Collaboration: Parsi Merchants and the English East India Company in Eighteenth-Century India (New Delhi, 1995).Google Scholar

53 Darukhanawala, H. D., Parsi Lustre on Indian Soil (Bombay, 1939).Google Scholar

54 Kennedy, “The Protestant Ethic and the Parsees.”

55 Rutnagur, S. M., Bombay Industries: The Cotton Mills (Bombay, 1927)Google Scholar, 54; Bombay Mill Owners’ Association, The Annual Report of the Bombay Mill-Owners’ Association (1878).

56 According to Markovits, the more “cosmopolitan character” of the Bombay business community (as compared with Calcutta) is a key factor in explaining its success. Markovits, “Bombay as a Business Centre in the Colonial Period,” 26–46.

57 Rutnagur, Bombay Industries.

58 See Appendix A in Oonk, Ondernemers in Ontwikkeling.

59 Ibid.

60 Natesan, G. N., ed., Famous Parsis (Madras, 1930), 217–21Google Scholar; Harris, F. R., J. N. Tata (Bombay, 1958)Google Scholar; Tripathi, Dwijendra and Mehta, Makrand, Business Houses in Western India: A Study in Entrepreneurial Response, 1850–1956 (New Delhi, 1990).Google Scholar

61 That the Bombay mill industry was merely a matter of the diversification of cotton and opium traders can be found in Chandavarkar, The Origins of Industrial Capitalism in India, ch. 6. However, Chandavarkar does not include its consequences for the industry.

62 A summary of annual reports of cotton textile mills can be found in the Indian Textile Journal 23, no. 267 (1913): 290Google Scholar. Similar examples can be found in various places in the Indian Textile Journal: “Annual Meeting of the Swam Mills and the Finlay mills were held. . . . Both have shown good profits thanks to adventurous variations in the price of cotton as the supplies have been bought greatly in advance of requirements and this proved profitable.” Indian Textile Journal 38, no. 449 (1928): 160Google Scholar. The Colaba Land and Mill Company was accused of speculating in land and raw cotton. The profits of these mills were not made by spinning and weaving, but by trading and speculating: Indian Textile Journal 10, no. 109 (1899): 2; 22, no. 253 (1911): 25.Google Scholar

63 I deal more thoroughly with this in Oonk, Gijsbert, “Motor or Millstones? The Managing Agency System in Bombay and Ahmedabad, 1850–1930,” Indian Economic and Social History Review 4 (2001): 419–52.Google Scholar

64 Desai, “Origins of Parsi Enterprise,” 307–17.

65 Gillion, K. L., Ahmedabad: A Study of Urban History (Berkeley, 1968)Google Scholar. Spodek, Howard, “The ‘Manchesterization’ of Ahmedabad as an American Research Worker Sees It,” Indian Textile Journal 4 (1965): 303–9Google Scholar. See also Lakha, Salim, Capitalism and Class in Colonial India: The Case of Ahmedabad (New Delhi, 1988)Google Scholar; and Leadbeater, S. R. B., The Politics of Textiles: The Indian Cotton Mill Industry and the Legacy of Swadeshi, 1900–1985 (New Delhi, 1993).Google Scholar

66 Office of the Registrar General and Census Commissioner, Census of India 9 (1921), 26.

67 Ranchhodlal was married at the age of seven. His sister became a widow when still a child and was never allowed to marry again. His grandmother performed sati, i.e., she immolated herself with the body of her dead husband. See Mehta, The Ahmedabad Cotton Textile Industry, 58n4. See also M. J. Mehta, “Ranchhodlal Chhotalal and the Ahmedabad Textile Industry: A Study in Entrepreneurial History,” PhD thesis, Gujarat University, Ahmedabad, 1976.

68 Shroff, A. D., Kasturbhai Lalbhai: A Biography (Bombay, 1978)Google Scholar; Tripathi and Mehta, Business Houses, 88–105; and Tripathi, Dwijendra, Dynamics of a Tradition: Kasturbhai Lalbhai and his Entrepreneurship (New Delhi, 1981).Google Scholar

69 Rice, A. K., Productivity and Social Organisation: The Ahmedabad Experiment (London, 1958)Google Scholar, 23; Mehta, The Ahmedabad Cotton Textile Industry, 87–89; Leadbeater, The Politics of Textiles, 66–71.

70 Mehta, The Ahmedabad Cotton Textile Industry, 87.

71 This changed after the First World War, when the Indian government sold government securities against a relatively high interest rate. The Ahmedabad Mill Owners’ Association complained about the loss of deposit holders. See, Report of the Indian Tariff Board, 1927, vol. 3 (Calcutta, 1927)Google Scholar, 396.

72 I found hardly any supplementary information in the sources about the role played by letters of credit in financing, so do not discuss this question.

73 Report of the Indian Industrial Commission, 1916–1918, vol. 2 (Calcutta, 1919)Google Scholar, 178. Basu also confirmed this, Industrial Finance, 99–142. For a detailed discussion on the role attributed to the Managing Agency System, see Oonk, “Motor or Millstones,” 419–52.

74 Indian Central Banking Enquiry Committee, Cotton Textile Industry, vol. 1 (Calcutta, 1927)Google Scholar, 270, 271, 776.

75 Meetings of the Boards of Directors of the Saraspur Mills, Calico Mills, Raipur Mills, and New Shorrock Mills over various years. Private Company archives of the respective mills, Ahmedabad. After the First World War, the pace of change slowed because the Indian government issued loans with high security and interest. The Ahmedabad Mill Owners’ Association accordingly complained about this. Indian Tariff Board vol. 3, 396.

76 Bombay Provincial Banking Enquiry Committee, vol. 3, 408–16. Rajat Kanta Ray has written an interesting but speculative article on this topic, in which he shows how formal and informal relationships were integrated in Ahmedabad. Ray, “Pedhis and Mills,” 387–96.

77 Indian Central Banking Enquiry Committee, Cotton Textile Industry, vol. 3, 480.

78 Prajabandhu, 4 Feb. 1909, 2.

79 Members of the Board of Directors, New Shorrock Mill, Company Archive, Ahmedabad, 1905.

80 Lokanathan, P. S., Industrial Organisation in India (London, 1935)Google Scholar, 182.

81 Mehta, The Ahmedabad Cotton Textile Industry.