This is a serious study of a theme of enormous importance – why was the Indian countryside devoid of any substantial capital inputs throughout the colonial period and beyond? What makes the question rather tantalizing is the hidden promise it holds. While pockets of the world saw unprecedented economic growth and capital accumulation through industry – notably the colonial metropole – India’s economy stagnated, productivity fell, and, above all, it remained primarily reliant on agriculture throughout the nineteenth and into the second half of the twentieth century. If only then the Indian countryside could have had enough capital investment, we could imagine an affluent South Asia. While counterfactual speculation of this kind is ahistorical, crass economic disparities necessitate analysis and explanation. Concentrating on the Madras Presidency and Tamil Nadu, Maanik Nath provides some intriguing answers that could be summarized in two main categories. First, there are the geographical endowments – or, more precisely, a lack thereof. The monsoon rains did not provide a reliable source of irrigation in India, and this was even more true in dry areas. This created a systemic hurdle for investment in the Indian countryside; in this case, some districts in South India provide evidence. A failing crop initiated a cascade of problems for both debtors and creditors, practically discouraging any substantial investments. While this argument has been well exercised since colonial times, Nath adds historical and economic nuance to our understanding of the ensuing cycle of further debt. Second, the book shows that the colonial state and, to some extent, the post-colonial state did not manage to alleviate the systemic problems stemming from the first point. On the contrary, regulation and intervention sometimes further stagnated the credit market. While I do not agree with all the conclusions the book has to offer, I think this is a commendable effort to bring clarity and structure to some highly complex issues. The book does so with enviable grace. Above all, I hope that Nath’s work will stimulate a further turn or return to issues of the South Asian agrarian economy and inspire a new debate among historians. In this spirit of admiration, I will first start with my criticism, move to the praiseworthy contributions the book has to offer, and conclude with a sketch of the possibilities now open for further discussion.
The literature employed in this book is selective, to say the least. Firstly, there are a number of regional and all-India studies not addressed, although they deal with similar issues. For example, Capital Shortage claims that the money market was more fragmented in the region studied than in other locales in India, i.e. capital did not travel up and down the Madras countryside and credit was provided primarily by other agriculturalists on the ground (pp. 38–71). This discussion would have profited immensely from connecting to earlier work by Claude Markovits, Jairus Banerjee, and Rajat Kanta Ray. What made credit networks more untenable in the South than in other places in India? One possible answer can be found by following the commodity chain – the marketing, storage, haulage of the various produce could illuminate the credit flows. The discussion of commerce, cash crops, and famine could have similarly referenced Laxman Satya’s work on cotton in Berar. While capital is the focus of the book and land is also extensively discussed in its function as collateral, the question of labour is practically ignored. This is particularly problematic for the South Indian countryside, as questions of bonded labour, caste, and slavery pose challenges to conventional economic approaches in historical analysis – Rupa Vishwanath’s work on the same region would have been a welcome addition to the bibliography. I was confounded to find one of my articles in the bibliography but no engagement with my work in the chapter on cooperatives – I assume the entry was a remnant of the original bibliography of a published article in the Business History Review.Footnote 1 I have raised many of the issues discussed in the chapter in two separate publications dating back to 2019 and 2020 (pp. 150–182). In terms of primary sources, Frederick Nicholson’s Report is quoted, but it seems only the second volume published in 1897 was consulted.Footnote 2 His discussion of nidhis and chit funds could have provided a historical corrective to the Madras Provincial Banking Enquiry Committee Report of 1930 – did credit allocation change between the late nineteenth century and the interwar period in the Madras Presidency? If not, why not? While some of these suggestions might seem beyond the premise of the book – since it focuses on some districts of the Madras Presidency between 1920 and 1960 – it should be noted that the title of the book promises a broad sweep. This being said, there are numerous temporal digressions – e.g. the battles of Plassey and Buxar (p. 75) – and spatial excursions – mentions of Bengal, Gujarat, the Bombay Presidency, and Germany are scattered throughout the text. Finally, while the style of the book and the prose employed are very clear and pleasant to the reader’s eye, there are some trying repetitions and unconventional decisions – the book is divided into eight chapters, including an introduction and a conclusion, followed by an epilogue, itself featuring a conclusion.
Now for the anti-thesis. The book excels in several ways. It gives a splendid comparison between the credit market in a wet and a dry district in the Presidency. In particular, the differences in segmentation and structure of the credit market are convincingly explained. One important revelation is that interest rates varied within districts as opposed to between districts, highlighting selective lending (pp. 55–70). The legal framework surrounding credit, its emergence and implementation by the executive and the judicial branches, are revealed in minute detail. Moreover, on the basis of a number of court cases, Nath shows that debt was a cyclical process, usually beginning with informal agreements and promissory notes. Defaults often meant a further extension of credit and more formal contracts including land as collateral or mortgage. The high costs associated with the proverbially inefficient colonial judiciary created bottlenecks, and only large credits were adjudicated in courts. The book is very persuasive in its general assessment of the role of the state. While interventions were usually meant to stabilize and create a more efficient credit market, they usually had a paradoxical and perverse effect in destabilizing capital allocation. Pumping public money into the countryside after 1947 brought further political complications and new environmental challenges but rarely solved the capital problem.
We need more books like this, and a lively debate on the issue of capital and lack thereof in India and the Global South. Nath shows convincingly that appropriating the land of defaulters was a last resort because of the court costs. The question remains whether moneylenders wanted this land in the first place. It will be particularly interesting to see whether agriculturalists-cum-creditors were more interested in gaining new land than professional moneylenders. How did this play out in different regions in India? While there was little difference in the interest rates between the districts studied, what were the principal variables for the convergence and divergence of capital markets in India? To what degree did proprietary class, caste, and region play a role? Can we draw any conclusions on the basis of cash crops for which there was growing demand, i.e. locales with demand-driven commercialization and growth where money usually streamed in? Finally, and perhaps most importantly, can we chart the study of such locales in global history? One fleeting example: while the credit market in rural India was illiquid because of the crash of commodity prices in the early 1930s, deflationary reactions on the ground and policies within the broader imperial circuit contributed to the flight of capital, making India’s peasants one of the worst afflicted economic actors in the Great Depression. Why was British capital flowing to Argentina and not to the jewel in the Crown? Were public investments properly allocated in rural India after 1947, and did they offer corresponding returns and a high/growing surplus? Nath’s book reignites a number of questions that have haunted historians and economists throughout the twentieth century and from which we are unlikely to have any respite in the twenty-first.
