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A Tangled Jungle of Disorderly Transactions? The production of a monetary outside in a north Indian town

Published online by Cambridge University Press:  04 December 2017

SEBASTIAN SCHWECKE
SEBASTIAN SCHWECKE*
Affiliation:
Centre for Modern Indian Studies, University of Göttingen, Germany Email: [email protected]
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Abstract

This article argues that, starting from the late colonial period, the Indian state in its correlated attempts to regulate and streamline the operation of monetary markets in line with capitalist development policies and to remove exploitative credit market practices instead produced a binary between a monetary outside and inside. While the state's efforts were intended to delineate the boundaries of the outside produced in this way, removing competing segments of Indian capital from the expanding monetary system, this process of delineation contributed to an already existing divergence in the operational modes. Correspondingly, it reinforced a process of differentiation that centred on the removal of liberal-bourgeois contractual law from market governance on the monetary outside that was gradually substituted by a reputational economy of debt. The monetary outside so produced constitutes one specific form of capitalist outsides in the Indian economy, interpreted as economic arenas and (extractive) accumulation regimes that functionally and procedurally differ from the dominant capitalist economic sector in modern India with which they co-exist. Both historiographic and ethnographic approaches are used to study the related processes of delineation and differentiation in the production of a monetary outside, with a special emphasis on the United Provinces/Uttar Pradesh and the north Indian town of Banaras (Varanasi).

Type
Research Article
Information
Modern Asian Studies , Volume 52 , Issue 4 , July 2018 , pp. 1375 - 1419
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Copyright
Copyright © Cambridge University Press 2017 

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References

1 The expression ‘a tangled jungle of disorderly transactions’ is used by the United Provinces Banking Enquiry Committee Report (UPBECR) to describe the kaleidoscope of financial practices and monetary markets that made up ‘indigenous’ finance. The UPBECR attributes the expression to the earlier Lt Governor, Alfred Comyn Lyall.

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35 National Archives, Delhi. Letter from C. H. Cordeux, Esq., Registrar, Court of Judicial Commission of Oudh. File no. 347/1917. No. 1995/VII-82, dated Lucknow, 4 December 1917, in The Usurious Loans Bill. Office Memo from the Legislative Department, no. 314, dated 31 January 1918 (Home Dept., Judl.; Judl.–Mar.–342-345—Part B).

36 National Archives, Delhi. Letter of H. M. R. Hopkins, no. 556/XIX-1/17-18, dated Meerut 8 December 1917, in The Usurious Loans Bill. Office Memo from the Legislative Department, no. 314, dated 31 January 1918 (Home Dept., Judl.; Judl.–Mar.–342-345—Part B).

37 Sahukar, a trader cum moneylender.

38 Ibid.

39 National Archives, Delhi. No. 3750/47, dated Allahabad, 13 December 1917. Letter from B. H. Bourdillon, Esq., Registrar, High Court of Judicature at Allahabad, in The Usurious Loans Bill. Office Memo from the Legislative Department, no. 314, dated 31 January 1918 (Home Dept., Judl.; Judl.–Mar.–342-345—Part B).

40 Ibid.

41 ‘Move to control money lending: Punjab Bill’, Times of India, 23 June 1938.

42 U.P. Regulation of Money-Lending Act, 1976.

43 National Archives, Delhi. Resolution in the Legislative Assembly by Seth Govind Das recommending that immediate and effective measures be adopted for putting a stop to the entry of transborder moneylenders into India (1938). F. 20/38-Judl. National Archives, Delhi. Proposed question in the Legislative Assembly by Bhai Parma Nand, regarding convictions of Muslims and non-Muslims got by the police in the various provinces in cases of dacoities and murders of moneylenders . . . during the past financial year (1934). F. 11/XIII/34-Police.

44 National Archives, Delhi. Office order regarding the indebtedness to the Pathan moneylenders. F. 288/35-Public.

45 See, for example, National Archives, Delhi. Proposal to appoint a Commission of Enquiry . . . to enquire into the conduct of Mr. S. S. Bajpai, ICS, U.P., in the matter of his indebtedness. F.212/38/Ests.

46 Cf. Reserve Bank of India, History of the Reserve Bank of India (1935–51), Reserve Bank of India (prepared by S. L. N. Sinha), Bombay, 1970, pp. 213–18.

47 Cirvante, The Indian Capital Market, p. 38.

48 Reserve Bank of India, Report of the Study Group on Non-Banking Companies, Reserve Bank of India, Bombay, 1975, p. 113.

49 Interviews with Shri Radha Raman Prasad, co-founder of the State Bank of Banaras and one of the last living members of the old banking families of Banaras who conducted ‘indigenous’ banking before the decline of this banking segment in Banaras; interviews with Shri Navneet Raman.

50 Government of Uttar Pradesh, Uttar Pradesh District Gazetteers, Varanasi (Supplementary), Government of Uttar Pradesh, Lucknow, 1988, p. 38.

51 Government of India, Banking Commission, Report on Indigenous Bankers, Banking Commission (Government of India), Bombay, 1971, p. 92.

52 Ibid., p. 95.

53 Ibid., p. 98.

54 M. B. V. Martin, ‘An economic history of Hundi, 1858–1978’, unpublished PhD thesis submitted to the London School of Economics and Political Science, 2012.

55 Government of India, Banking Commission, Report on Indigenous Bankers, p. 87.

56 Ibid., p. 88.

57 UPBECR IV, p. 100.

58 Cf. Gregory, C. A., ‘Village money lending, the World Bank and landlessness in central India’, Journal of Contemporary Asia, vol. 18, no. 1, 1988, pp. 47–58.CrossRefGoogle Scholar

59 Roughly: usurer.

60 The predominance of the sawai rate, as depicted in the UPBECR, indicates changes in interest rates over the last decade. The Benares district gazetteer of 1909 argues that interest rates had been stable throughout most of the nineteenth century, with the derhi rate (50 per cent compound interest per season) being equally prominent, at least for loans in grain. (Government of India, Benares: A Gazetteer, Being Vol. XXVI of the District Gazetteers of the United Provinces of Agra and Oudh, Superintendent, Government Press, United Provinces, Allahabad, 1909, pp. 52–3.)

61 Instalment.

62 For Banaras, the UPBECR reports the following: ‘Four new types of loan are reported from Benares: in two cases the principal is repayable in monthly instalments of one rupee, in the other two it is repayable in daily instalments of one anna. The amounts are respectively Rs. 16 repayable in 20 monthly or 330 daily instalments; and Rs. 20 repayable in 25 monthly or 395 daily instalments’ (UPBECR I, p. 64).

63 Bayly, Rulers, Townsmen, and Bazaars.

64 Interviews with Shri Radha Raman Prasad.

65 Census of India 1961, District Census Handbook Uttar Pradesh, 53—Varanasi District, Lucknow, 1965.

66 UPBECR I, p. 124.

67 Ibid., pp. 118–20.

68 Kumar, N., The Artisans of Banaras: Popular Culture and Identity, 1880–1986, Princeton University Press, Princeton, 1988.Google Scholar

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70 See, for example, UPBECR I, pp. 38–41.

71 Bayly, Rulers, Townsmen, and Bazaars.

72 See, amongst others, Haynes, Small Town Capitalism; Sahai, N. P., Politics of Patronage and Protest: The State, Society, and Artisans in Early Modern Rajasthan, Oxford University Press, New Delhi, 2006CrossRefGoogle Scholar; Swarnalatha, P., The World of the Weaver in Northern Coromandel, c. 1750–c. 1850, Orient Longman, Hyderabad, 2005Google Scholar; Venkatesan, S., Craft Matters: Artisans, Development and the Indian Nation, Orient BlackSwan, Hyderabad, 2009Google Scholar.

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75 According to the lenders I spoke to, interest rates used to be lower, at around 20 per cent, in earlier times, typically referring to the first half of the 1990s, which often forms a threshold of clear recollection even among older lenders.

76 Lenders at this level are in my experience typically male, though this may be related to ethnographic difficulties in meeting female moneylenders.

77 Among infrequent debtors, I have come across a small number of examples in which the reliance on gossip actually reverses the organizational basis of this sub-regime of lending at the level of the neighbourhood: as gossip carries information on the need to borrow that is often considered shameful, some infrequent debtors have reported having made significant efforts to approach moneylenders in distant neighbourhoods in order to prevent their circumstances from becoming public knowledge. The depiction of the difficulties faced when contacting moneylenders beyond the neighbourhood boundaries, however, reinforces the general accuracy of the organizational principle. Local public knowledge of the shame of borrowing carried through gossip obviously increases the lender's chances of enforcing repayments, though it certainly does not help the lender in acquiring a positive public image.

78 A number of moneylenders I have met or interviewed had links with political parties, or were engaged in politics themselves, at least outside the segment of high-end informal finance. There is no indication, however, that politics assumes a significant role in moneylending or vice versa. Rather, local politics constitutes an area of engagement for entrepreneurs who are also active as brokers or moneylenders.

79 The code will often simply be constituted by the unique identification number of small-denomination rupee notes that are cut in half (with both sides remaining in possession of the code) in a way highly reminiscent of traditional hundi usages, depicted by, amongst others, Sinha, Early European Banking, p. 155.

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81 The name has been changed.

82 Whether or not an unregistered ‘Money Circulation Scheme’ is legal depends on the amounts involved, and most bisi circles are actually legal. The term bisi originated from the Hindi word for 20, the traditional number of players in one circle.

83 H. W. Wolff, Co-operative Banking: Its Principles and Practice (with a Chapter on Co-operative Mortgage-Credit), P.S. King and Son, London, 1902. Money-circulation schemes were never included in co-operative finance, though, in this way relegating them to the emerging monetary outside. I am highly thankful to Ritu Birla and Lakshmi Subramanian for their suggestions on the links between chit funds and the early co-operative movement.