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Banking Firms in Nineteenth-Century Hyderabad Politics

Published online by Cambridge University Press:  28 November 2008

Karen Leonard
Karen Leonard
Affiliation:
University of California, Irving
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Extract

The relationship between business and politics in preindustrial societies has seldom been clear from historical records. I have argued elsewhere that the major banking firms of Mughal India were central to the imperial system. These ‘great firms’ were not parasites, passively supportive of the state because it preserved the law and order necessary for trade; they were not self-contained caste communities interacting with the government through the leaders of panchayats or guilds. Their functions were as important to the government as those of its official treasurers, and their desertion of the Mughal Empire in the eighteenth century helped bring about its collapse.

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Articles
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Modern Asian Studies , Volume 15 , Issue 2 , April 1981 , pp. 177 - 201
Copyright
Copyright © Cambridge University Press 1981

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References

1 See my articles. ‘The “Great Firm” Theory of Mughal Decline’, Comparative Studies in Society and History, 21, no. 2 (1979), 151–67.CrossRefGoogle Scholar

2 The nominal Diwan from 1808 to 1832 was a high-ranking Muslim noble, Munirul-Mulk, but by agreement of the Nizam and the Resident, the deputy Diwan or Peshkar, Raja Chandu Lal, officiated. After Munir-ul Mulk's death in 1832, Chandu Lal was officially named Diwan and resigned in 1843.Google Scholar

3 Dr Brijen Gupta Pointed this out to me long ago in a personal communication; I am indebted to him for first directing my attention towards the bankers.Google Scholar

4 The following discussion draws on that of Rao, ManikRao, Vithal, Bustan-i-Asafiyah (Hyderabad, 7 vols, 1909–1932), I, 149–50.Google Scholar

5 Khan, Ghulam Husain, Tarikh-i-Gulzar-i-Asafiyah (Hyderabad, 1890–1891), 622–5. The manuscript was written in 1258 Hijri (1842–43).Google Scholar

6 Mudiraj, K. Krishnaswamy, Pictorial Hyderabad (Hyderabad, 2 vols, 1929 and 1934), II, 497,Google Scholar and a newspaper article just after Chandu Lal's period also mentioned the concept of five state treasurers: ‘The Englishman,’ March 24, 1847, in Ali, Mahdi Syed (ed.), Hyderabad Affairs (Bombay, 10 vols, 1883–1889), IV, 18. The latter source will hereafter be abbreviated HA, and the page numbers are those stamped in the volumes owned by the University of California, San Diego.Google Scholar

7 Khan, , Gulzar-i-Asafiyah, 628–9.Google Scholar

8 Ibid., 630. This firm moved from Karwan to Gulzar Hauz (in the old city) about 1900.Google Scholar

9 He, as well as three Gujerati bankers (Kishen Das, Lachmi Das, and Jaganath Das), sent ceremonial clothes for the 1839 wedding of one of the Nizam's daughters: Government of Hyderabad,Google ScholarChronology of Modern Hyderabad (Hyderabad, 1954), 217. Puran Mal's father, Mahanand Ram, is also mentioned in this translated Persian Court diary as giving out alms to stop a beggars' riot in 1811: 146.Google ScholarFor the jagir, ‘The Evening Mail,’ April 17, 1894, in the Clippings Collection, Andhra Pradesh State Archives;Google Scholar also, Mudiraj, , Pictorial Hyderabad, II, 507–8.Google Scholar

10 A good summary of the Palmer affair is given in Briggs, Henry G.. The Nizam (London, 2 vols, 1861), II; and see the manuscripts in the India Office Library by Edward Palmer, c. 1934 (Eur. D. 443).Google Scholar

11 Mudiraj, , Pictorial Hyderabad, II, 478–9, 480–1, and Khan, Gulzar-i-Asafiyah, 625–6.Google Scholar

12 Interest comprised 82 to 99% of the debt in 8 of the 9 cases filed against the Hyderabad government in 1890: India Office Library (hereafter IOL), Crown Representative Records, R/1/1/20, Document no. 9.Google Scholar

13 Cohn, Bernard S., ‘The Role of the Gosains in the Economy of Eighteenth and Nineteenth Century Upper India,’ The Indian Economic and Social History Review, I, no. 4 (1964), 175–82, is still the best coverage of the Gosains or Goswamis.CrossRefGoogle Scholar

14 Mudiraj, , Pictorial Hyderabad, II, 465A-B; and see table 5 below.Google Scholar

15 Karwan Sahu means Karwan of the bankers; sahu or sahukar in Sanskrit.Google Scholar

16 See biographies in Khan, , Gulzar-i-Asafiyah, 625–31, and Mudiraj, Pictorial Hyderabad, II.Google ScholarTimberg, T., The Marwaris (Bombay, 1978), 120, relates Oswal and Maheshwari migration to the rise of Maratha rulers at the end of the eighteenth century.Google Scholar

17 Christopher Bayly has found similarly fluid residential patterns in nineteenth century Benares: ‘Indian Merchants in a “Traditional” Setting’,Google Scholar in Clive Dewey and Hopkins, A. G., The Imperial Impact: Studies in the Economic History of Africa and India (London, 1978), 188–92.Google Scholar

18 Khan, , Gulzar-i-Asafiyah, 629.Google Scholar Bankati Das helped Palmer become a banker and was a partner in the firm begun in 1814: Davies, C. Collin (ed.), ‘Correspondence of William Palmer with Sir Henry Russell, Formerly Resident at Hyderabad, 1836–1847,’ Indian Archives, Vol. 13 (1959–1960), 58 and 60. In 1849, Palmer served as vakil to Puran Mal's son, Prem Sukh Das, in a dispute with Ramaswamy; the latter had started banking in the Cantonment with a French Partner. ‘The Englishman,’ November 17, 1849, in HA, IV, 290–1.Google Scholar

19 For Dighton's beginning as a clerk of the Palmers, see Cadell, Patrick (ed.), The Letters of Philip Meadows Taylor to Henry Reeve (London, 1947), 19.Google Scholar

20 ‘The Englishman,’ January 28, 1841, and ‘Bombay Times,’ April 17, 1841, in HA, IV, 3–7 and 279–83. Here we also learn that Dighton's agent, Azim Ali, was once Kishen Das's munshi (clerk).Google Scholar

21 Pestonji took on the responsibility of farming the Berar revenues and paying the Hyderabad Contingent from 1836–1841 (after Puran Mal, who took it sometime after the Palmers). For Pestonji, see IOL, Parliamentary Papers, Vol. LXIX, 1852–53, no. 996: ‘Copies of all papers relating to the Case of Viccajee Merjee and Pestonjee Merjee, British subjects and Parsee Inhabitants of Bombay and Hyderabad …’. Pestonji paid Makhdum Seth's son Syed Ahmed 100 rupees a month rent. Khan, , Gulzar-i-Asafiyah, 625–6.Google Scholar

22 Most ‘tradition’ appears to be accurate: the descendants of Shivdut Ram Jaisee Ram asserted in the 1930s that their firm had been state Treasurer under Siraj-ul-Mulk (Mudiraj, , Pictorial Hyderabad, II, 465), and as tables 3 and 5 show, their firm was his major creditor.Google Scholar

23 Reports of the Hyderabad Debt Commission, 1890–1912, can be found in the Andhra Pradesh State Archives, Documentation Room, and in the IOL: Crown Representative Records, R/1/l/20 for documents relating to 1890–98, and Crown Representative Records, Secret Internal, September and November 1898, R/1/1/228, R/1/1/212, and R/1/1/215 for the cases of Shivdut Ram Jaisee Ram, Surat Ram Govind Ram and Umarsi Sajan Mal respectively.Google Scholar

24 Report of the Hyderabad Debt Commission, 1301 F. (1890–91), 12.Google Scholar

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26 See Mishra, Kamala Prasad, Banaras in Transition (New Delhi, 1975), Chapter 6, for a good discussion of the hundi system. When transmitting money, for example, a drawer would give 1000 rupees cash to a banker, who would give him a hundi for 1000 rupees payable after 1 to 2 months in Madras. The bankers would take some 1 to 3½% for this service. The hundi could be used by the drawer almost anywhere to obtain cash—he could turn it over to a banker or moneylender at a discount for 800 rupees, because of a sudden need for cash. Here the banker's profit lies in the discount. As for its use as short-term credit, it functioned like a loan. In the case of the Hyderabad government, when sahukars gave the Diwan hundis made out to the East India Company and drawn on Madras, Calcutta, or Bombay, we know that the Hyderabad government did not give the sahukars cash; this was a loan transaction, and interest was added to the debt.Google Scholar

27 See the frequent references in the newspaper clippings published in HA, III and IV, for the 1840s.Google Scholar

28 In 1847, bankers were still being given land revenue assignments, although policy had turned against it. ‘The Spectator,’ March 30, 1947; ‘The Englishman,’ March 24, 1947, in HA, IV, 18. By December of 1847, the bankers were arranging to receive assignments on the revenues of particular talukdars: ‘The Englishman,’ December 30, 1847, HA, IV, 26–7.Google Scholar

29 The Palmers developed timber contracting (shipping timber on the Godavari to Masulipatnam) and the Berar to Bombay cotton trade; Pestonji Viccajee did the latter, as well as farming (contracting for) the land and sea customs and undertaking road work in the Bombay Konkan; Hari Das Kishen Das did timber contracting in the Central Provinces and had shipping companies at Masulipatnam and Bombay; Surat Ram Govind Ram had ships plying from Madras to London and Madras to Rangoon.Google Scholar

30 ‘Spectator,’ July 6, 1846, in HA, IV, 13.Google Scholar

31 This was actually a debt owed them by Khan, Ismael, Nawab of Ellichpur, but the recordkeeper, Lala Bahadur, had signed a guarantee (jokum chitty). Siraj-ul-Mulk, Diwan in 1847, paid the bankers, postponing a payment to the Resident to do so. ‘The Englishman,’ December 27, 1847, in HA, IV, 26.Google Scholar

32 These jamadars and bankers were close neighbors in Begum Bazar, according to names on the detailed municipal maps done in 1913. Munn, Leonard, Hyderabad Municipal Survey, old city maps nos 1–21.Google Scholar

33 The best account here is that of the Resident, in the book compiled by his son,Google ScholarFraser, Hastings, Memoir and Correspondence of General James Stuart Fraser (London, 1885).Google Scholar

34 ‘The Englishman,’ November 25, 1847, in HA, IV, 25, for this particular coalition (headed by Umarsi Sajan Mal). The Agarwal, Raja Shambu Pershad, seems to have succeeded Dighton's agent, khan, Azim Ali, in this position, which involved assignment to him of Medak district. ‘The Englishman,’ February 29, 1848, in HA, IV, 29;Google ScholarJung, Nawab Framurz, The Medak District (Secunderabad, 1909), 72. Shambhu Pershad later converted to Islam, just before his death in 1857. See Rao, Bustan-i-Asafiyah, II, 787;Google ScholarLal, Makhan, Tarikh-i-Yadgar-i-Makhan Lal (Hyderabad, n.d. [1820]), 69;Google ScholarBhandari, S. R., Agarwal Jati Ka Itihas (Bhanpura, Indore, N.D. [1938]), II, 86–8.Google Scholar

35 ‘The Englishman,’ November 9, 1848, in HA, IV, 41. The rate of discount was 2% per month, the same as the rate of interest customary then (24% annually).Google Scholar

36 ‘The Madras Spectator,’ November 28, 1853, HA, II, 38, for ‘jokum chitties’ and Lala Bahadur; ‘The Spectator,’ July 12, 1847, in HA, IVC, 21, for the attempt to secure the Resident's signature.Google Scholar

37 ‘The Englishman,’ November 21, 1850, in HA, II, 31–32.Google Scholar

38 ‘The Englishman,’ October 22, 1849, in HA, IV, 56, and ‘The Madras Spectator,’ May 3, 1850, in HA, IV, 59.Google Scholar

39 ‘The Englishman,’ March 10, 1848, in HA, IV, 285;Google ScholarRao, , Bustan-i-Asafiyah, II, 733–4. The date of the firm's failure is given as 1851 in Amalendu Guha, ‘Parsi Seths as Entrepreneurs, 1750–1850,’Google ScholarEconomic and Political Weekly, Vol. 5 (1970), M-113.Google Scholar

40 For Puran Mal, see ‘Nizam's Territory’ (see note 25), 82, 88; and ‘The Englishman,’ December 3, 1851, in HA, IV, 76,Google Scholar and Rao, , Bustan-i-Asafiyah, II, 734; for Shivdut Ram, ‘The Englishman’, January 8, 1852, HA, IV, 80.Google Scholar

41 Objection was to the fact that Mr Dighton was a British subject, legally barred from lending money to native princes. For the bank efforts, see Fraser, , Memoir, 389–91, and newspaper accounts in HA, IV, 22–6.Google Scholar

42 Report of the Hyderabad Debt Commission, 1301 F., 4, 12.Google Scholar

43 See HA, tables of content, vols III, IV, and V for references. These conflicts were bitter and long-lasting. A dispute of the 1800s between Puran Mal and Umarsi Sajan Mal was still being pressed by the latter in 1928: IOL, Crown Representative Records, Foreign and Political Department, R/1/29/503, file no. 473-P or 1929.Google Scholar

44 Contemporary newspaper accounts are in HA, IV, 65–79, and see source of table 5.Google Scholar

45 Bayly, , ‘Indian Merchants,’ in Dewey and Hopkins, The Imperial Impact, 179.Google Scholar

46 Gujerati bankers were in Madras by 1800: Parliamentary Papers, Vol. 6 (1812), 242–3, lists settlements of the Nawab of Arcot's debts, with the names of Gujerati bankers. The Marwaris arrived there later: Timberg, , The Marwaris, 225. Although Gosains were not lenders in these records of the 1851 crisis, we have a reference to Umraogir's providing hundis drawn on Calcutta in June and July 1851: Report of the Hyderabad Debt Commission, 1301 F. 1–3.Google Scholar

47 The Gujerati bankers and Palmer seem to have distrusted Siraj-ul-Mulk profoundly: Palmer to Russell, 1843, in Davies, ‘Correspondence’ (see note 18), 34.Google Scholar

48 ‘The Englishman,’ January 8, 1852, in HA, IV, 80.Google Scholar

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50 The text of the treaty is in Briggs, , The Nizam, I, 312–16.Google Scholar

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57 IOL, Crown Representative Records, Foreign Department, Confidential-A, Internal Branch, Section B, nos 23–9 of 1891 (R/1/24/5), 7; and see 1892 Proceedings (R/1/25/16).Google Scholar

58 See my article, ‘Mulki–non-Mulki Conflict in Hyderabad State,’ in Jeffrey, Robin (ed.), People, Princes and Paramount Power (Delhi, 1978).Google Scholar

59 See the articles in HA, II, 35–43.Google Scholar

60 ‘The Englishman,’ April 6, 1854, in HA, II, 40–1.Google Scholar

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64 Lachman Gir was the major banker there in the 1840s: Taylor, Meadows, Story of My Life, Chs 9 and 11, reprinted in HA, V, 409 and 430.Google Scholar

65 Jung, Salar, ‘Administration Report of the Dominions of His Highness the Nizam’ [1863], reprinted in HA, III, 151 on, and see 247–51 of same volume. Some banking firms assisted Salar Jung in 1857. Shiv Lal Moti Lal received a reward from the BritishGoogle Scholar (Mudiraj, , Pictorial Hyderabad, II, 465), probably for supplying the Resident with money, the new coinage Salar Jung was introducing then.Google Scholar

66 Benedict, Burton, ‘Family Firms and Economic Development,’ Southwestern Journal of Anthropology, 24, no. 1 (1968), 2;CrossRefGoogle ScholarLandes, David, ‘Bleichroders and Rothschilds,’ in Rosenberg, Charles E. (ed.), The Family in History (Philadelphia, 1975), 111–13.Google Scholar

67 Timberg, , The Marwaris, 127–9.Google Scholar

68 Guha, Amalendu, ‘The Comprador Role of Parsi Seths, 1750–1850,’ in Economic and Political Weekly, Vol. 5 (11 28, 1970), 1936.Google Scholar

69 Mishra, , Banaras, 98.Google Scholar

70 Ibid., 97; Cohn, , ‘The Role of Gosains,’ 180–1.Google Scholar

71 ‘Madras Spectator,’ February 22, 1850, and ‘The Englishman,’ March 15, 1853, in HA, V, and 742 respectively.Google Scholar

72 Khan, , Gulzar-i-Asafiyah, 630, for Radhakishen's son-in-law, Jagannath Seth.Google Scholar

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74 Agarwala, B. R., ‘Caste in a Mobile Commercial Community,’ Sociological Bulletin, Vol. 4 (1955), 141.Google Scholar

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76 Guha, , ‘The Comprador Role of Parsi Seths,’ mentions inbreeding for Parsis; Wechsberg, Joseph, The Merchant Bankers (Boston, 1966), tells us that of the Rothschild's 59 weddings in the nineteenth century, half were between Rothschilds (351).Google Scholar

77 Hall, Peter Dobkin, ‘Marital Selection and Business in Massachusetts Merchant Families, 1700–1900’, In Gordon, Michael (ed.), The American Family in Social-Historical Perspective (N.Y.: 2nd edn, 1978), 101–14.Google Scholar

78 Timberg, , The Marwaris, 35–7.Google Scholar

79 Khan, , Gulzar-i-Asafiyah, 625–31.Google Scholar

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81 See the names on the Municipal Survey Maps: Munn, 1913. Ghurye, G. S., Indian Sadhus (Bombay, 2nd edn, 1964) gives religious information about these and other ‘orders’.Google Scholar

82 Khan, , Gulzar-i-Asafiyah, 630 (Hari Das), and ‘Madras Spectator,’ November 24, 1848, in HA, V, 549 (Puran Mal's son, Prem Sukh Das).Google Scholar

83 ‘Madras Spectator,’ October 3, 1846, in HA, V, 602.Google Scholar

84 When a ‘coalition’ was being formed in 1847, one firm objected to the inclusion of Puran Mat (because the government's huge debt to him would reduce their dividends): ‘The Englishman,’ October 23, in HA, IV, 22. And in 1852, when the Nizam found it necessary to mortgage a fabulous diamond to the bankers, it was kept in a chest by Lal, Kishen (Shiv Lal Moti Lal), but the key was with Hari Das and it was guarded by 50 Arabs: ‘Madras Spectator,’ June 7, in HA, V, 715.Google Scholar

85 These were Puran Mal and Shivdut Ram Jaisee Ram, in 1851: see note 40.Google Scholar

86 Rao, ManikRao, Vithal, Khayaban-i-Asafi (Hyderabad, 1902–3), 20–1.Google Scholar

87 The best summary remains that of Rau, B. Ramachandra, ‘Organized Banking in the Days of John Company,’ Bengal: Past and Present, Vols 37 and 38 (1929), 145–57 and 60–80.Google Scholar