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Impoverishing a Colonial Frontier: Cash, Credit, and Debt in Nineteenth-Century Afghanistan

Published online by Cambridge University Press:  01 January 2022

Shah Mahmoud Hanifi
Shah Mahmoud Hanifi*
Affiliation:
Department of History, James Madison University
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Iranian Studies , Volume 37 , Issue 2: Special Issue on Afghanistan , June 2004 , pp. 199 - 218
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Copyright © 2004 The International Society for Iranian Studies

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References

1 Braudel, Fernand, Capitalism and Material Life, 1400–1800, tr. from French by Kochan, Miriam, (New York, 1973), 328Google Scholar. Medieval here is delineated as 1400–1800.

2 Dialects of money is my phrase, but the cue comes from Braudel, Capitalism and Material Life, 357–372. Especially useful is Braudel's honing in on the “theoretical frontier separating money and credit,” 358. See Braudel, 367, for his claim about the bill of exchange.

3 The use of book money in Durrani state financial records is explored in Hanifi, Shah Mahmoud, “Inter-Regional Trade and Colonial State Formation in Nineteenth-Century Afghanistan” (Ph.D. diss., The University of Michigan, 2001), 167–201Google Scholar.

4 From 1995 to 1997 I consulted sources at the National Archives of India in New Delhi (hereafter N.A.I.), the North-West Frontier Provincial Archives in Peshawar, the Tribal Affairs Research Cell in Peshawar, the Punjab Provincial Archives in Lahore, and the National Documentation Centre in Islamabad. I gratefully acknowledge support for these research activities from the Social Science Research Council (with funds provided by the American Council of Learned Societies and the Near and Middle East Research and Training Act), the Council of American Overseas Research Centers (through the American Institutes of Indian and Pakistan Studies), the American Institute of Iranian Studies, and The University of Michigan Graduate School.

5 In the following I will alternate usage of the terms hawala and hundi in reference to bills of exchange.

6 The Indian merchant diaspora and their handling of hundis has been examined by a number of authors including Dale, Stephen, Indian Merchants and Eurasian Trade, 1600–1750 (Cambridge, 1994)CrossRefGoogle Scholar, Levi, Scott “The Indian Diaspora in Central Asia and its Trade, 1550–1900” (Ph.D. diss., University of Wisconsin-Madison, 2000)Google Scholar, and Markovits, Claude, The Global World of Indian Merchants, 1750–1947: Traders of Sind from Bukhara to Panama (Cambridge, 2000)CrossRefGoogle Scholar. Markovits prefers the phrase “merchant network with a center” to the concept of diaspora for the Sindi communities he examines.

7 Mounstuart Elphinstone was the first colonial official sent to secure a diplomatic relationship with the Durrani rulers of Kabul in 1809. From then until 1842 Alexander Burnes, Mohan Lal, and many other colonial officials and non-official functionaries visited and resided in the region. Most of these individuals commented on the prominence of the Hindki communities in Afghanistan, although that particular designation was not uniformly employed. See Elphinstone, Mountstuart, An Account of the Kingdom of Caubul … (Karachi, 1992 reprint of 1815 edition), I: 412–415Google Scholar; Burnes, Alexander, Travels into Bokhara … (New Delhi, 1992 reprint of 1834 edition), I: 168–170Google Scholar; and Lal, Mohan, Travel in the Punjab, Afghanistan, and Turkistan… (Calcutta, 1977 reprint of 1846 edition), 268Google Scholar. I have estimated that Hindkis comprised between 6% and 12% of the population in nineteenth-century Afghanistan. See Hanifi, “Inter-Regional Trade,” 108, footnote 146.

8 The British subsidization of Abd al-Rahman is addressed in Hanifi, “Inter-Regional Trade,” 255–299.

9 “New Exchange Rate Between Qandahar and Company Rupees,” N.A.I., Foreign Secret Consultation (hereafter S.C.), 11 Jan. 1841, Proceeding Nos. 58–60.

10 Braudel, Capitalism and Material Life, 358.

11 “New Exchange Rate Between Qandahar and Company Rupees,” N.A.I., Foreign S.C., 11 Jan. 1841, Proceeding Nos. 58–60.

12 It is unclear whether Army of the Indus maintained a mobile mint in its treasury. It is appropriate to describe the location of the Qandahar mint because it aids the understanding of indigenous surveillance structures and information networks that would likely have borne upon who came to know what and how about the planned exchange-rate change. The following description comes from “Qandahar: Account, Taxes, Duties,” N.A.I., Foreign S.C., 30 Apr. 1858, Proceeding Nos. 46–51: “In the Bazaar-i Shahi stands the ‘kotwali’ and mint. One kotwal, a naib, four jemadars and twenty six chupprassies with an additional five men for the protection of the charsook is the entire police force of the city. Each jemadar has his own beat extending over about 19 muhallas each of which has a muhalladar over them who looks after the internal management of his own portion, but seldom interferes in police matters, and is not paid by government but receives a trifle at all births, marriages, and deaths.”

13 “New Exchange Rate Between Qandahar and Company Rupees,” N.A.I., Foreign S.C., 11 Jan. 1841, Proceeding Nos. 58–60. These appear to be monthly interest rates, although their exact terms, such as when they commenced and how they were compounded, remain unclear.

14 “New Exchange Rate Between Qandahar and Company Rupees.”

15 A lakh was an extremely prominent unit of measurement in the British colonial world and it conforms to our “one hundred thousand” but is written with an extra comma that does not conform to our current rendering of numbers. In the following, numeric punctuation deriving from the British colonial designation of a lakh, or “one hundred thousand” rupees, as 1,00,000 will be retained only in quoted sources.

16 “New Exchange Rate Between Qandahar and Company Rupees.” See Hanifi, “Inter-Regional Trade,” 167–201, for more on the Durrani qafilabashi in Peshawar, and Burnes, Travels into Bokhara, I: 173, for the involvement of a domestic qafilabashi in the export of purported contraband Korans. Rawlinson also considered ridding the Indus Army treasury of Qandahar rupees through advances to local officials and in remittance of hundis drawn on the Company treasury in Qandahar by British officers and agents in cities such as Herat and Farrah.

17 Yang, Anand A., Bazaar India: Markets, Society, and the Colonial State in Gangetic Bihar (Berkeley, 1988), 238Google Scholar. Yang here refers to hundis as notes of credit whereas in another location, 257, he adopts the more common translation for hundi as a bill of exchange.

18 Braudel, Capitalism and Material Life, 368.

19 Braudel, Capitalism and Material Life, 368.

20 “Instructions to Political Officers Regarding the Drawing of Bills in Cabul,” N.A.I., Foreign S.C., 21 Dec. 1840, Proceeding Nos. 66–68, and N.A.I., Foreign S.C., 28 Dec. 1842, Proceeding Nos. 49–53. Todd's motives for using invisible ink included but were not limited to concealing financial information from local bankers and the identity of local collaborators.

21 “Instructions to Political Officers,” 28 Dec. 1842, Proceeding Nos. 49–53.

22 “Instructions to Political Officers,” 28 Dec. 1842, Proceeding Nos. 49–53.

23 “Instructions to Political Officers,” 28 Dec. 1842, Proceeding Nos. 49–53. The figures given are all British Indian or Company rupees. Other British officers conducted hundi exchanges in ways that led to accusations of impropriety. See “Resources of Afghanistan,” N.A.I., Foreign Political Consultation (hereafter P.C.), 30 Mar. 1835, Proceeding No. 46 for Sayyid Karamat Ali's alleged mishandling of hundis issued by Claude Wade. Wade was then the British political agent in Ludiana and Karamat Ali was serving as the British newswriter in Kabul. Karamat Ali's hundi impropriety contributed to his dismissal from that post. See also Lal, Mohan, The Life of Amir Dost Muhammad Khan of Kabul (Karachi, 1978 reprint of 1846 edition) I: xxvGoogle Scholar, where it is revealed that some of the bills Lal handled in Kabul were questioned by colonial officials and that Lal faced accusations of over-borrowing on General Pollock's account.

24 “Instructions to Political Officers,” 28 Dec. 1842, Proceeding Nos. 49–53.

25 See Yapp, Malcolm E., “The Revolutions of 1841–2 in Afghanistan,” Bulletin of the School of Oriental and African Studies 27 (1964): 381CrossRefGoogle Scholar, where he refers to “the jolt [which the occupation] gave to the whole economy by the import of bullion and the creation of new demands.”

26 See Hanifi, “Inter-Regional Trade,” 44–92 for more on Trevor's revision of the Durrani fiscal registers during the first British occupation of Kabul.

27 “Resources and Expenditure of Afghanistan, 1841,” N.A.I., Foreign S.C., 25 Oct. 1842, Proceeding Nos. 32–35. For more on Durrani coins see Dames, M. Longworth, “The Coins of the Durranis,” Numismatic Chronicle VIII (1888): 325–363Google Scholar; King, L White, “History and Coinage of the Barakzai Dynasty of Afghanistan,” Numismatic Chronicle XVI (1896): 277–347Google Scholar; and Singh, Ganda, Ahmad Shah Durrani: Father of Modern Afghanistan (Lahore, 1981, reprint of 1959 edition), 365–374Google Scholar. The Durrani minting techniques described here can be usefully compared to similar practices in Mughal India and Safavid Iran. For the Mughal era see Allami, Abul Fazl, The Ain-i Akbari, trans. Blochman, H. (Delhi, 1989), I: 16–39Google Scholar (ains 4–12, including drawings of various mint workmen). For coinage and minting in Safavid Iran see Tadkhirat al-Muluk, ed. and trans. V. Minorsky (Cambridge, 1980), 58–65 (of the English translation of the original Persian), and the commentary on that portion of text, 126–135.

28 See Khan, Sultan Mahomed, The Life of Abdur Rahman, Amir of Afghanistan (Karachi, 1980 reprint of 1900 original), II: 62Google Scholar for Abd al-Rahman's claim that each night he reviewed an abstract of the daily credits and debits of the central treasury.

29 Sultan Mahomed Khan, Abdur Rahman, 28. See 21–31, for Abd al-Rahman's comments on European machinery in general, and 15–19 for his opinion on the employment of foreigners in Kabul, some of whom accompanied the imported machines and instructed local officials in their use. A Mr. McDermot, formerly employed at the government mint in Calcutta, instructed Kabuli workmen in the new minting processes and Abd al-Rahman took pride that local personnel were soon able to function without McDermot's superintendence. Abd al-Rahman, likely through some kind of an interlocutor, states: “Not only do my workmen coin the rupees, but they also make the dyes and stamps; and since the first set of tools and dyes was brought from England we have never had to buy fresh ones, everything is made in Kabul itself.” See Hanifi, “Inter-Regional Trade,” 344–345 for scanned images of nineteenth-century hand-minted Durrani rupees.

30 Kakar, Hasan Kawun, Government and Society in Afghanistan: The Reign of Amir ‘Abd al-Rahman Khan (Austin, 1979), 217CrossRefGoogle Scholar, indicates that the new European minting machinery was capable of producing between 40,000 and 120,000 coins a day. Kakar also quotes a figure of 10,000,000 coins produced during the first year of the machinery's placement in Kabul, which would put daily production at about 27,400. Rupee production levels were uneven and determined by the availability of silver that Abd al-Rahman went to extreme lengths to acquire. See Hanifi, “Inter-Regional Trade,” 255–299.

31 For attention to other currencies circulating in nineteenth-century Afghanistan, their constituent elements and units of measurement, and their relative worth in relation to one another see Kakar, Government and Society in Afghanistan, 216 and 236, Gregorian, Vartan, The Emergence of Modern Afghanistan: The Politics of Reform and Modernization, 1880–1946 (Stanford, 1969), 401–402Google Scholar, and Gray, John Alfred, At the Court of the Amir: A Narrative (London, 1987 reprint of 1895 original), 294Google Scholar.

32 See Hanifi, “Inter-Regional Trade,” 201–255. The amount of the subsidy was regularized in 1882 and remained constant at one lakh per month until 1893 when it was increased to 18 lakhs per year. Upon Abd al-Rahman's death the British declared the subsidy and many other facets of Anglo-Afghan relations null and having been personal to that ruler. However, this decision was soon rescinded.

33 See Hanifi, “Inter-Regional Trade,” 255–299, where colonial subsidy-driven transformations in Kabul's local production regimen and Durrani state commercial agents operating in British India are addressed.

34 Despite the fact that most donated British Indian rupees were recycled into the British Indian colonial economy through extra-territorial purchases, in the case considered here and in many other instances, substantial sums of British rupees were conveyed from Peshawar to Kabul through the Khaibar pass under the direction of the Durrani state-appointed superintendent of caravans. This official, known locally as the qafilabashi, was stationed in Peshawar and was in charge of transporting government property from India to Afghanistan. See Hanifi, “Inter-Regional Trade,” 167–201, for more on the Peshawar qafilabashi.

35 Kakar, Government and Society in Afghanistan, 217.

36 See Kakar, Government and Society in Afghanistan, 215–220. The ban on cash remittances abroad was lifted in 1883 after which Abd al-Rahman imposed a three percent duty on such transactions. But this rate also changed, as did the mechanism of its realization, probably unevenly across regions. In this section of his book Kakar also discusses how ongoing currency debasement led to domestic inflation during Abd al-Rahman's reign.

37 Kakar, Government and Society in Afghanistan, 205.

38 Kandahar Newsletters, 1880–1905 (hereafter KN), ed. Government of Baluchistan (Pakistan) Directorate of Archives Department, (Quetta, 1990), 1889, 88–89.

39 KN, 1889, 88–89. From the Mirza title it appears the Qandahar police chief may not have been relying on physical coercion as much as accountant-based or bookkeeping tactics to mulct the local merchants. For more on Durrani state textual coercion during the reign of Abd al-Rahman see Hanifi, “Inter-Regional Trade,” 167–201.

40 KN, 1889, 106.

41 KN, 1891, 1.

42 KN, 1891, 1; and Hanifi, “Inter-Regional Trade,” 44–92.

43 KN, 8 June 1891, 25.

44 KN, 8 June 1891, 3. Abd al-Rahman's collection and confiscation of British Indian or kaldar rupees continued after the opening of the new machine mint in Kabul in 1890 and the closing of Qandahar mint early in 1891. The KN, 1891, 8 June entry also included the following: “A Tahsildar has been appointed to collect all the ‘Kaldar’ rupees procurable in Kandahar. He is to send his subordinates to the gates of the city and to the bazaar to search for and bring him all ‘Kaldar’ rupees, as they can find in the possession of the people. Kandahari and Kabuli rupees are to be given to the people in exchange. The ‘Kaldar’ rupees thus collected are to be sent to Kabul to be recoined. This puts the people to great inconvenience.”

45 Khan, Abdur Rahman, I: 202–203. The mirzas were the state appointed accountants, bookkeepers, and collectors who wielded such great power through their reviews and manipulations of various sets of financial records. See Hanifi, “Inter-Regional Trade,” 167–201, for more on the mirzas.

46 Stoler, Ann Laura and Cooper, Fredrick, “Between Metropole and Colony: Rethinking a Research Agenda,” in Tensions of Empire: Colonial Cultures in a Bourgeois World, ed. Cooper, Fredrick and Stoler, Ann Laura (Berkeley, 1997), 20Google Scholar.

47 See Hanifi, “Inter-Regional Trade,” 44–92 for Abd al-Rahman's cash advances to domestic fruit cultivators through the kuchi carriers, and Kakar, Government and Society in Afghanistan, 220–221 for money transfer facilities provided by the state in the form of drafts known as barats. See Khan, Abdur Rahman, II: 76, for merchant loans, and 208, for hundis issued by Abd al-Rahman.

48 See Khan, Abdur Rahman, II: 76, for Abd al-Rahman's remonstrance against Indians for this reason.

49 See Hanifi, “Inter-Regional Trade,” 142–167.

50 See Hanifi, “Inter-Regional Trade,” 167–201, for more on Abd al-Rahman's staff of mirzas, or state accountants/clerks/secretaries who formed an important sub-group of Durrani state revenue functionaries.

51 Hanifi, “Inter-Regional Trade,” 255–299.

52 See Burnes, Alexander, et al., eds., Reports and Papers, Political, Geographic, and Commercial (Calcutta, 1839), 160Google Scholar, for the proportion of 117 to 100 between Company and Kabul rupees, respectively, in 1838. See “Memorandum on Information Available in the Foreign Department on the Government, Revenue, Population, and Territorial Divisions of Afghanistan,” N.A.I., Foreign Secret Supplementary K.W., January 1880, Proceeding Nos. 536–544 for a Kabuli rupee being worth 12 annas or three-fourths of the British Indian coin in 1878. A Peshawar Confidential Diary report from June 1899 indicates a 6 to 11 exchange rate between the two currencies.

53 See Hanifi, “Inter-Regional Trade,” 142–167.

54 See MacGregor, M., Central Asia, Part II: A Contribution Towards the Better Knowledge of the Topography, Ethnology, Resources, and History of Afghanistan (Petersfield, Hampshire, U.K., 1995 reprint of 1871 original), 420Google Scholar; and Gazetteer of Afghanistan, Vol. 6: Kabul and Southeastern Afghanistan, ed. Adamec, Ludwig W. (Graz, Austria, 1985 reprint of 1914 original), 333Google Scholar.