The Chaos of Empire

by Jon Wilson

  Even if capital could be found, large-scale investment seemed poorly protected. Imperial law was more interested in asserting the power and status of the British government than protecting private property rights. Judges made what from the outside seemed arbitrary decisions, and had little capacity to enforce their judgments. As a result, even if capital could be found, large-scale investments seemed unsafe. Taxes were low, but those which were levied seemed arbitrary. There was, above all, no trust between Indian entrepreneurs and the British officers who managed the economic system they worked within.

  As a result, in the late nineteenth century Indian businessmen hedged their bets, limiting their risks, making sure they could afford to survive fluctuation in global prices. Their behaviour looked narrow and conservative to outsiders. They relied on sources of money and trade they knew they could trust. Indian trade relied on financial institutions which survived from pre-British days, or long-lasting local, ethnic and religious solidarities. Those few pockets where Indian entrepreneurs and workers created industrial prosperity were the result of a complicated relationship between long-standing Indian institutions and forces coming from outside.

  Manchesters of the East

  The two Indian cities which grew the fastest during these years of famine were Kanpur and Ahmedabad. Each had a population of around 100,000 at the end of the great Indian rebellion. Both expanded as centres of textile production, with the growth of spinning mills and cloth factories pushing them to grow by 60 per cent in the thirty years between 1871 and 1901, making Kanpur and Ahmedabad India’s third and fourth largest industrial cities after Bombay and Calcutta. Both were described as the ‘Manchester of the East’, along with Osaka in Japan and Singapore. Yet their stories could not be more different.

  Kanpur, in the centre of northern India’s Gangetic plain, began the 1860s as a cantonment town and a sacred site for Britons wishing to keep alive the gory memory of the Indian rebellion’s most famous massacre of Europeans. The city’s industrial growth was driven by the strong relationship between the city’s British traders and the nearby imperial army. The first large enterprise, Elgin Mills, opened in 1861 and made the cloth for woollen blankets. Three more huge textile mills and hundreds of shoe factories opened during the next decades, drawing labourers from the neighbouring countryside to make uniforms and boots for imperial troops. Kanpur boomed when war quickly increased the number of soldiers needing the goods it produced; 70,000 workers moved there during the First World War, another 110,000 during the Second. Until long after independence in 1947, this was a British city. The first Indian-owned factory was only opened in 1921, but Kanpur stayed a citadel of European capital until the early 1960s.32

  Ahmedabad, 250 miles due north of Bombay, and four days by horse from the port of Surat, had a far longer history as a centre of commerce. In the days of the Mughal empire it was the capital of the province of Gujarat. One European visitor described it in 1695 as ‘the greatest city in India, and nothing inferior to Venice for this trade; tho’ its houses are low and made of mud and bamboo’. The city’s wealth prevented it from being sacked by the Marathas then allowed it to survive as a commercial hub after the British took over in 1818. At the centre of its prosperity were hundreds of Jain and Vaisnava Hindu banking families and moneylenders, who took deposits from savers and lent money to merchants and weavers.

  It was these men who eventually financed the growth of Ahmedabad’s cotton mills, but it took a peculiar moment of risk-taking for the city’s cotton industry to take off. In the uncertain commercial climate of mid-nineteenth-century western India, there was little incentive for new enterprises. Local bankers could make good money from lending to cottage weavers or jewellery makers; they even started to offer credit so that small-scale manufacturers could use imported European yarn. Investing in factories producing yarn or cloth would have opened Ahmedabad to highly volatile worldwide prices, with no secure return. Change came a small distance from the ordinary patterns of money-making, from a Brahmin whose family were not merchants but government clerks.

  Ranchhodlal Chhotalal’s great-grandfather had been the chief minister of the Mughal governor of the province of Gujarat. His father was paymaster of Baroda state, and a close friend of the British Resident’s chief administrator. Born in 1823, Ranchhodlal was an intelligent child, a brilliant chess player from the age of eight and quickly fluent in the Persian, Marathi and English used in government offices. Through his family connection, Ranchhodlal began work as a clerk to the British collector of customs as a nineteen-year-old in 1842. In his mid-twenties, still a government servant, Ranchhodlal was writing about why, if it was cost-effective for English entrepreneurs to carry cotton back and forth 7,000 miles between Europe and India, ‘should not the manufacture of cotton in India pay’? In 1850, before a single cotton factory had opened in the west of India, Ranchhodlal approached the region’s bankers. He published a prospectus in a Gujarati weekly newspaper, and started to lobby the banks in Baroda. But the money did not materialize, and the factories were not built.

  Ranchhodlal’s career as a mill-owner depended on the fortunate coincidence of his dismissal from office shortly before the American Civil War briefly spurred on India’s cotton industry. By 1854, he had become chief officer of a large tranche of territory to the east of the city of Ahmedabad. He was suspected of taking a bribe from one side in a property dispute, and then accused of forging documents to prove his innocence. The local British political establishment was divided on his fate. He was eventually acquitted of any wrongdoing, but never reappointed. After his dismissal, Ranchhodlal was employed to manage one of Ahmedabad’s big banking houses, in the well-established and trusted role of Brahmin clerk. There, Ranchhodlal connected with two worlds. His confidence that money could be made by competing with British cotton manufacturers came from his government connections; the money to channel into his new enterprise came from his links to Ahmedabad’s traditional banking families. Ranchhodlal himself put up 10 per cent of the capital, his new employer Maganbhai Karamchand provided the same again, and the rest came from friends among Ahmedabad’s merchants and bankers.

  Ahmedabad’s first mill opened after a fraught process. Ranchhodlal ordered spinning and weaving machinery from London through the nationalist merchant-politician Dadabhai Naoroji, but the ship carrying it was lost at sea going around the Cape of Good Hope. The first engineer, an Englishman called Mr Dall, died before the plant arrived. When it finally arrived, the mill’s plant needed to be transported from the port of Cambay by bullock cart. Dall was succeeded by four more European engineers all of whom failed to get the mill running. Eventually, it took the collaborative effort of Ranchhodlal, a mechanically minded astrologer called Sankleshwar Joshi and a sixth European engineer, Mr Edlington, to get the mill’s 2,500 spindles turning.

  On 30 May 1861, eighteenth months later than planned, the leading citizens of Ahmedabad gathered at the new mill. Mrs Edlington, wife of the British engineer who completed the plant, smashed a bottle of wine on the machinery and the crowd cheered as the plant started working, manufacturing yarn for the first time. Spinning was soon followed by steam-powered looms which wove white cotton into material for sheets and dhotis. By the time Ranchchodlal’s Ahmedabad Spinning and Weaving Company opened for business, the American Civil War had briefly interrupted the supply of cotton to British mills and created an opportunity for Indian manufacturers.33

  A second mill at Ahmedabad opened in 1867. By 1900 there were twenty-seven in the city, directly employing 15,943 workers. Just like Ranchhodlal’s first factory enterprise, these mills were financed as entrepreneurs pieced together small amounts of Indian capital. Described by Sunil Khilnani as ‘the first modern city created by Indians’, Ahmedabad’s growth was fuelled by Indian capital and coordinated by Indian leadership. Once Ranchhodlal’s success set a profitable example, the city’s existing commercial families, its Jain and Vaisnava merchants, moved into steam-powered textile manufacture and started invest
ing in cotton factories. Reliant on new connections to the global economy, the mills were nonetheless managed in the old way, through face-to-face contact with large numbers of small investors. Ahmedabad’s old banking firms connected every part of the industry. Brokers not just capitalists, they bought raw cotton from farmers as well as providing capital, and then linked up with merchants selling yarn and cloth. Control over every element of the cotton trade was the only way Ahmedabad’s merchants felt they could avoid being exposed to abrupt shifts in global prices and demand.

  But Ahmedabad’s cotton magnates straddled trade and politics, easily stepping from their factories into the local government institutions which played a greater role in managing life in the city from the 1880s onwards. As the first Indian chairman of Ahmedabad’s municipal corporation after 1883, Ranchhodlal Chhotalal led the construction of one of India’s first underground sewage systems, lobbying British officials and harrying influential figures in Britain – including Florence Nightingale – for support. The city’s mercantile leadership funded Gujarat College, an institution to develop local arts and sciences which opened in 1879. It built schools and hospitals, and promoted organizations which supported Gujarati language and culture.

  Ahmedabad’s late-nineteenth-century civic leaders were proud of their city and their region, using the word swadeshbhakti, devotion to one’s land, to describe their actions. But theirs was the pragmatic politics of self-government. The British government was seen as inefficient and unreliable, a force which needed to be kept at arm’s length but not directly challenged. Trade unionists and capitalists in Britain started to lobby for regulations in India to improve factory conditions – and to increase the costs of their competitors. Ahmedabad’s mill-owners argued they should set up an association to monitor matters for themselves because interference by bureaucrats would be ‘injurious’. ‘He knew from experience what correspondence with Government on any subjects means’, the Ahmedabad mill-owner Bechardas Lashkari argued. ‘[T]he dilatory nature of the correspondence that would take place between the Government and the millowners, would in many instances prove detrimental to the regular working of the Mills.’34

  This self-governing Indian city hosted the eighteenth meeting of the Indian National Congress, in December 1902. The chairman of the Ahmedabad reception committee was the mill-owner Ambalal Sakarlal. He opened the session by pointing to the threat to Ahmedabad’s cotton industry from British power. ‘Gentleman, as you entered the city, you must have noticed the tall chimneys on both sides of the railway tracks. These are our textile mills,’ Sakarlal said. Despite their expansion, Ahmedabad’s factories had suffered from recent efforts by the imperial government to give an advantage to British manufacturers, duties having been imposed on Indian cotton. Beyond these particularly malign measures, Sakarlal talked about India suffering from the drain of wealth through pensions and home charges, and the British government’s ‘inelastic revenue demand’, which made it hard for peasants to survive. Having seen two terrible famines, which had killed a quarter of Gujarat’s population, ‘all asked “Why are we so poor?”’

  Sakarlal was proud of the growth of his city, but he thought it was not enough for Indian merchants to create an island of self-governing enterprise in Ahmedabad. The ‘inferior political position’ of India’s leaders ‘hampered their trade,’ he argued. ‘Commercial pursuits without political action were suicidal.’ The profitability of business and the prosperity of the country relied on more than laissez-faire. It needed a new kind of political leadership able to put Indian interests first. In these famine years, India’s destitution could only be undone by political agitation.35

  12

  GOVERNMENTS WITHIN GOVERNMENTS

  In March 1906, Haji Abdulla Haji Kasim started south-west India’s first modern bank. Abdulla was a wealthy merchant from the burgeoning coastal town of Udupi, 190 miles south of Goa and thirty miles north of Mangalore, the largest town in the Kanara region. He made his money buying and selling fish, fruit and matches. Haji Abdulla’s business linked him to both Britain and the Middle East. Abdulla was a cosmopolitan patriot. He was the first person to buy a car in Udupi, and the first to drink coffee at breakfast time. But the money he made was invested in his home town.1

  The bank Abdulla began was his response to India’s first great nationalist campaign, the Swadeshi movement. Literally meaning ‘our country’, Swadeshi was sparked by Viceroy George Curzon’s decision to split the province of Bengal, 1300 miles north-east of Udupi, an act seen as an attempt to emasculate India’s most articulate political leaders, proof that the British had no intention of involving Indians in their own rule. ‘We felt’, one Bengali leader wrote, ‘that we had been insulted, humiliated, and tricked.’

  Humiliation would be met by boycotting British goods and shunning all contact with the imperial regime. In Bengal, the boycott led to a 22 per cent drop in the purchase of British cotton, a near-total collapse in the consumption of foreign cigarettes and a shift in drinking habits from English dark ale to German light beer. The sale of most British goods quickly bounced back. More important was the spur Swadeshi provided to domestic institution-building throughout India. The movement led to the creation of new institutions, from schools to businesses. The idea, as the Bengali poet Rabindranath Tagore put it in 1905, was to fulfil ‘the country’s needs by the efforts of the people themselves’. In Mangalore, Abdulla Haji Kasim’s aim was moral transformation. The banks would help ‘not only to cultivate habits of thrift among all classes of people, without distinction of caste or creed, but also habits of cooperation among all classes’. Abdulla argued that ‘[t]his is Swadeshism pure and simple.’2

  On its first day of operation the Canara Banking Corporation, the bank Abdulla Haji Kasim created, occupied one room, had a single member of staff and took deposits of thirty-eight rupees (equivalent to £384 in 2016 prices). Two years later it had 2,648 subscribers, with a good cross-section of the region’s most prosperous classes depositing money, particularly Brahmins, Muslims and Christians. By then it had been joined by a second local bank, the Canara Hindu Permanent Fund. More followed over the next two decades. The banks of Kanara grew steadily, weathering the succession of banking crises which killed off most of India’s new banks in the 1910s, staving off competition from a growing number of local rivals. Today, 110 years on from its foundation, the renamed Corporation Bank has 3,200 branches and the Indian banking profession is dominated by men and women from Kanara.

  The rapid burgeoning of Kanara’s banking industry was one sign of the emergence of a new form of political action, designed to challenge the conquering force of the imperial state. From Mangalore to Bengal, Punjab to Madras, political leaders throughout the cities and small towns of the subcontinent talked of nationality and autonomy, of the need for people to cast off their subordination to British institutions and do things for themselves. Swadeshi politics was about the people who lived in India shaping their own destiny. But it was about them doing so by creating new social and economic institutions, not seizing sovereign power. Its slogan was ‘self-reliance not mendicancy’. Most hoped to construct a national social and political order without the need for a full-scale onslaught against British authority. Abdulla Haji Kasim was no great enemy of British power. The Madras newspaper Swadesamitram was genuine in protesting against imperial journalists who said political activists were ‘prompted by the desire to subvert the British sovereignty and to establish a purely Indian ascendancy’. Some did believe Indian society could only be regenerated if British power was challenged directly. But the priority throughout was to deny the conquering force of the British empire through self-help or ‘constructive work’, as Mohandas Gandhi later called it. It was an approach which would shape Indian politics for a generation.

  Frontier revivalism

  The effort to create self-reliance independent of British institutions began decades before Curzon’s partition of Bengal. It had roots in many different regions. Punjab, in the no
rth-west, was particularly fertile ground. Here, the new politics of self-reliance coalesced around a group of political leaders influenced by currents of religious revivalism, particularly by the effort to reform Hinduism. One such catalyst was the ascetic leader Saraswati Dayananda.

  Dayananda was born in 1823. His father was a Brahmin tax collector from Gujarat. He left home in his early twenties and became a wandering mendicant, eventually preaching to large crowds throughout India. His message was that Hindus needed to purify their society by returning to the Vedas, Hinduism’s earliest scriptures. Dayananda believed these texts defined a rational religion which had a clear creed and a single god. Hindus needed to abandon idolatry, elaborate rituals and their reliance on priests. Renewing the pure core of Hinduism would help the Hindu inhabitants of India free themselves from foreign influence and achieve self-mastery, or what he called swarajya.

  Dayananda died in 1883, poisoned by a dancing girl in the household of a Maharaja he dared to criticize. His followers created congregations and built meeting houses throughout north India. Dayananda’s story had particular resonance in Punjab, where he spent fifteen months in 1878 and 1879. The new teaching connected with the remarkable effervescence of political and religious debate occurring in the province during these years. Punjab was a ‘newly emerging frontier society’ as C. A. Bayly put it. Cultivation and trade were expanding. Canal settlements were attracting settlers, providing a source of men and wheat for the armies policing the continually violent border with Afghanistan to the west. Punjab’s prosperity was, though, uncertain, with bouts of famine. Migration, insecurity and economic change fuelled political and religious debate, and helped a plethora of Sikh and Muslim organizations to grow alongside the Hindu organization which Dayananda founded, the Arya Samaj.