The Marwaris Read online

  The leading Aggarwal families of Varanasi came from Rajasthan with the Mughals, though this did not prevent some restrictions on intermarriage between them and later Marwari migrants. The old Aggarwals included a number of pioneers of modern Hindi, and their house priests, the Malviyas, included Pandit Madan Mohan Malviya, the founder of the Banaras Hindu University. However, neither Varanasi nor Lucknow were major Marwari centres before the Second World War. Though there was a significant Marwari presence in Delhi, the Marwaris there were outpaced by businessmen from other business communities. Nonetheless, there were several Marwari-owned textile mills in Delhi. After Independence, however, many Marwari groups started operations in the Delhi area. Later, as the political situation became troubled in Calcutta in the 1960s with the rise of the Communist Party (Marxist), and with the beginning of trade union militancy in Bombay, other Marwari groups shifted their base to a calmer Delhi. In Punjab, too, there was an early and continuing Marwari presence, though indigenous Punjabi business communities were dominant.

  In Uttar Pradesh, there was a larger concentration of Shekhawati Marwaris in eastern UP, Hathras, Khurja and Kanpur. A Churu firm, Sadhuram Ramjidas (related to the Great Firm Tarachand Ghanshyamdas which is described at length later in this book) dominated the Kanpur market until the firm’s partition in 1840. This firm had earlier been partners with the Jatia family, which produced one of the leading Marwari banians (partners to foreign firms), Sir Onkar Mal Jatia.

  In Kanpur, one of the most important early firms was Sevaram Ramrikhdas, which belonged to the Singhanias (from which the modern J.K. group and its various descendants emerged). A city history of Kanpur lists twenty-seven Marwari firms, forty Punjabi firms and ten–fifteen others. Several firms, including that of Sevaram Ramrikhdas, arrived soon after the War of Independence in 1857 from Farrukhabad. Other prominent eastern UP Marwaris include the Khetans from Alsisar in Shekhawati, who started business in Padrauna. They opened a branch in Calcutta in 1893, one in Bombay in 1917 and another in Kanpur in 1921. They eventually had three sugar mills, a share in a jute mill and a textile mill as well as 9000 acres of sugar cane land. The role of the family of Motilal Jhunjhunwala, the silver king, in the UP sugar industry is detailed later in this book. There were other Marwari firms prominent in the grain and cloth trade.

  The migration of Marwari traders was furthered by the branch network of the Great Firms, which is explained in detail later. These firms already had branches in Calcutta in the first half of the nineteenth century, but it is in the second half of the century that Marwaris, especially the Shekhawati Marwaris, became the primary banians for foreign firms, controlling their supply chains, and played a key role in the development of the stock, commodity and other speculative markets. It was these roles which enabled them to become industrial entrepreneurs especially after the First World War and more so after Independence.

  Other Shekhawati Marwaris were involved in the development of the Jharia coalfields in Bengal. Firms connected with Fulchand Goenka, from Churu in Shekhawati, had two coal mines, one from 1910 and another which they took on lease in 1925.

  The 1945 Gazetteer for Darjeeling district reports:

  The Marwari dominates most of the exporting trades viz. cardamom, oranges and potatoes and practically all the import trade of consumption goods. In addition, he has an almost complete control of the retail sale of consumption goods to, and of the purchase of produce from the small consumer and producer.

  The Shekhawati Marwaris were already a major presence in central India in the eighteenth century, and by 1820 had a presence throughout the Indo-Gangetic Plain. This presence continued and grew throughout the nineteenth and twentieth centuries. However, it was only after 1820 that they appeared in large numbers in Calcutta and Bombay.

  Though the Marwari role in Bombay and Madras was less pronounced than in Calcutta, it was not negligible. But it was the indigenous south Indian and Gujarati business communities which controlled those markets that the Marwaris dominated in the east. Marwari firms in Bombay were major suppliers of cotton and opium by the middle of the nineteenth century but were less prominent than the Gujarati groups.

  The Bazaar Economy Copes with the Boxwallahs

  There were three major approaches by way of which Marwari businessmen related to the new British-dominated economy—these included the emergence of three types of enterprises. First, the Great Firms, the large state bankers and long-distance traders who had all along been active in long-distance trade, and who continued to play that role. Second, formal banians or guaranteed brokers to the large foreign firms. Third, firms which participated in and finally dominated the dynamic wholesale and higher level future and ready markets for shares and commodities, as traders and speculators.

  Great Firms

  The ‘Great Firms’ were large firms, often some centuries old. Some Somani and Poddar firms of today trace their main firms to the eighteenth century. These Great Firms were comparable in many respects to the European (many of them of Jewish origin) firms of families such as the Rothschilds, Mendelssohns, Philipsons, Bleichroeders, Warburgs, Koenigswaters, etc., which had served rulers in northern Europe and expanded, after the Napoleonic Wars, to form the framework for international trade and finance. The main Warburg firm and N.M. Rothschild were both founded in 1798, based on older family firms.

  The Indian Great Firms had a network of branches and affiliates all over India and sometimes in other parts of the world, within which they ferried commodities and transferred funds. Because of this they were able to offer banking facilities to other firms (for transferring and borrowing money), insurance (originally connected with the armed convoys they often organized), and probably most importantly, business intelligence. They explicitly provided the capital, management skill and business intelligence which otherwise was not available at that time.

  The Great Firms formed part of a more general business support system. Allan R. Cohen describes the mutual credit system used by Marwari traders in Varanasi:

  Firms in the system borrowed from each other whenever short of cash, loans were payable on demand, ‘even at midnight,’ and interest was tallied and settled once a year, with total borrowing offset by total lending.1

  To continue from my 1978 book:2

  Community banks provided accommodation for goods in transit and remittance facilities. Communal customs provided for apprenticeships in which youngsters could learn the techniques of business, and profit-sharing schemes by which they could accumulate enough capital to start their own enterprises.3 Communal or sometimes inter-communal institutions existed for adjudicating disputes.4

  Records recount two charitable messes for Marwaris working in Calcutta, in the early twentieth century, run by Nathuram Saraf of Mandawa and Surajmal Jhunjhunwala of Chirawa, two towns in the Shekhawati region from which many successful businessmen came. G.D. Birla’s grandfather, Shiv Narain, settled in a basa run on a cooperative basis by migrants from his home village of Pilani when he first arrived in Bombay in the 1860s. Besides providing food and a place to sleep, the messes were informal training schools and networking opportunities for newly arrived Marwari businessmen. One commentator says that a leading businessman compared them favourably with Harvard Business School. Perhaps they sometimes even used the ‘case method’ in their mess discussions.

  The Great Firms had elaborate systems for obtaining, transmitting and using business intelligence. It is interesting that historians of both the Rothschilds and the Birlas report various systems for relaying business news—carrier pigeons, signal mirrors and other means of transmitting news quickly—before the advent of the telegraph. The stories might be apocryphal but it is reported that the first British Rothschilds made their fortune when their communications system told them of the victory at Waterloo ahead of others and they were able to use the knowledge to score on the London Stock Exchange. One of the earliest uses of the English language by Indian businessme
n was to read telegrams, which could only be transmitted in English, as several report in their biographies. This element of special techniques for commercial intelligence keeps recurring in the histories of successes in the speculative markets. Motilal Jhunjhunwala, the silver king of the pre–Second World War period, was reported to have a radio system albeit illegal in operation.

  But the telegraph also provides the model for the assimilation of modern technology. It foreshadows the mechanization and routinization of previously arcane business processes such as bookkeeping, and financial management in general.

  The market itself was organized with various sorts of informal and formal panchayats and market committees which arbitrated and mediated commercial disputes, enacted various rules, maintained common facilities and represented the merchant community to the outside world, especially to the British authorities. As explained later in the book, mediation by larger businessmen continues in family-firm partition disputes, as exemplified by Jai Dayal Dalmia in the Motilal Jhunjhunwala case, and in various takeover bids.

  *

  The Marwari Great Firms were frequently state financiers and often began business as treasurers to one or more ruler. Historically, such firms combined state financing with trade, finance (which included insurance and remittance services) and even infrastructure investment. In Europe, the services of the financier to the feudal lord often extended to managing the owner’s mill, distillery and even inn. As the quote attributed to the Medicis has it, these business families used wealth to get power and power to get wealth.

  The Great Firms were companies with multiple activities, a large branch network involved in trade, state finance, banking (which included lending, borrowing and remitting money, insurance) and occasionally manufacture. Typically, family firms were prototypes of the modern ‘business group’. A number of the leading Great Firms by the eighteenth and nineteenth centuries originated from Rajasthan. Some of these were from Shekhawati, like Tarachand Ghanshyamdas. Bikaneri Marwaris also owned several important Great Firms, such as Bansilal Abirchand which became the key British banking firm in central India; several Bikaneri Marwari families became prominent as bankers to the Nizams of Hyderabad. Chief among these were the Pittys who arrived in Hyderabad in 1817, apparently from Jahazpur in Bhilwara. Another family firm conspicuous in banking belonged to the Daddas from Phalodi in Jodhpur State.

  Tarachand Ghanshyamdas: A Model Great Firm

  Tarachand Ghanshyamdas was one of the most famous Great Firms. The Calcutta Bengal Hurkaru newspaper (an early-nineteenth-century edited English newspaper) in 1834 reported:

  The only people who carry on regular trade in European commodities, with the countries beyond the Indus and the Sutlej, are the Banians of Jodhpur and Shekhavati countries, who are known by the general name of Marwaris . . . they may be said to be the only merchants in Upper India.

  The following instance will help to illustrate the extended scale of Marwari connections:

  Mirzamal, Fakirchand, Johurimal and Haikunt Rai are the grandsons of a person called Bhagoti Ram, who was the Podar or treasurer to then Nawab of Fatehpur in the Shekhavati country, as well as at Churu in the Bikaner country, which is only 5 kos [10 miles] off, and they live at either one place or the other . . .

  Someone or other of the twelve Poddars have Gomasthas or Agents in the following places . . . that is—Bombay, Surat, Muscat, Pali, Jodhpur, Nagore, Jugadri, Hissar, Indore, Nagpur, Hyderabad, Poona, Hathras, Chandausi, Farrukhabad, Mathura, Agra, Mirzapur, Benares, Murshidibad, Patna, Calcutta, Goalpura. These Gomashtas are all of them from Churu, from Bikaner and Ramgarh, Bisau, Fatehpur, and Jhunjhunu in the Shekhavati country. They are everywhere distinguished as foreigners by their language and dress, and their families reside in their own country.5

  Bhagoti Ram Poddar founded the firm which was the ancestor to Tarachand Ghanshyamdas in the early eighteenth century. He had been a banker to the Nawab of Fatehpur and also served the rulers of Bikaner and the Punjab. Following the defeat of the Nawab by Rao Raja of Sikar in 1731, the firm of Tarachand Ghanshyamdas was set up in its latter-day form. Other sources connect the foundation of the firm with the Pindari Nawabs, whom the Poddars also served as bankers.

  Bhagoti Ram had been living in Churu. A Jain monk told him to go to Bhatinda in the Punjab to trade in wool and it was there that he made his fortune. While trade with the British in the nineteenth century constituted a new key industry, wool trade out of Kashmir was an ancient arena of business. Bhagoti’s son, Chaterbhuj, set up branches dealing in wool trade in Amritsar, Bhatinda and Hissar. He also led a merchants’ resistance movement against a wool tax imposed by the thakur of Churu.

  As was the case with many such anti-tax movements in feudal India, this one led to the migration of the Poddars to Ramgarh in the neighbouring jurisdiction of Sikar, a premodern equivalent of the tax havens of Switzerland or Singapore. In Ramgarh, the Poddars and their allies built their own city state. Foreign travellers marvelled at the town’s prosperity and security.

  Among the prominent Poddar firms which descended from Bhagoti Ram were Sojiram Hardayal, Anantram Shivprasad, Harsamal Ramchandra, Sevaram Kaluram and Johurimal Ramlal, all of which had branches in Calcutta. The main firm was continued by Chaterbhuj’s son, Tarachand. Tarachand Ghanshyamdas was in the opium trade in Malwa through Bombay and dealt in gold and wool, banking and insurance. Tarachand died at an early age leaving two sons, Gursahaymal and Harsahaymal, known as ‘Gursa Harsa’ as a unit. The firm was divided between them in 1823–24. Harsahaymal’s descendants did business as Harsahaymal Ramchandra.

  Chaterbhuj had three sons: Johurimal, Jindaram and Tarachand. Johurimal founded the firm Johurimal Ramlal. Jindaram lived in Churu. A published extract from a ledger reveals the conclusion of an opium purchase for Rs 311 in Churu in 1787. Jindaram’s son Mirzamal was associated with Ranjit Singh, the last powerful ruler of the Punjab, from the time he was starting out as a local chieftain.

  Gursahaymal died in 1868 leaving a son, Tarachand Ghanshyamdas, who died in 1885 leaving five sons. The two eldest sons, Jainarain and Lakshminarain, separated from the main firm in 1868. Ghanshyamdas’s younger sons, Radhakrishen and Keshavdas, became the heads of the firm Tarachand Ghanshyamdas, while their youngest brother, Murlidhar, became an ascetic.

  Despite Tarachand Ghanshyamdas’s commercial operations being in Calcutta, the owners continued to reside in Ramgarh and later moved to various pilgrimage centres in northern India. The active management of the firm was in the hands of its chief managers, especially Harduttrai Prahladhka and Jainarian Poddar.

  The opium business was in rapid decline and abolished in the early twentieth century. In 1896, the firm started a selling agency for Asiatic Petroleum Company and its successors, the Burmah Oil Company and Shaw Wallace (a major British trading conglomerate and managing agency).6 This entailed setting up a network of 800 branches throughout India, many of which also engaged in other businesses. For example, the Karachi branch was a major commission-procuring agent for agricultural produce from the Punjab. The firm thus began to transform itself into the next category of firm, the banian or broker to foreign firms.

  Tarachand Ghanshyamdas: The Structure of the Great Firm

  The operations of Tarachand Ghanshyamdas around 1914 were typical. Everywhere the branches of the firm were located in rented premises with rooms decked with gaddis, white cotton cloth–covered mattresses stuffed with cotton or straw and strewn with business paraphernalia like traditional red cloth–covered ledgers and cash boxes. ‘Gaddi’ referred both to the mattresses and the rooms in which they were located, and could be comparable to a king’s throne. The branch was supervised by a chief manager or munim with several sub-managers or gomashtas. In the rear of the office there were warehouses or godowns for the storage of goods (the stock in trade). Also somewhere in the rear were the kitchens for the mess or basa. The gaddi was also used for sleeping. Keeping guard of the gadd
i were watchmen or ‘durwans’. They were doormen but with somewhat different functions than those in a Manhattan apartment in New York. This was a tradition common to many firms in Calcutta. The durwans were Chaturvedi Brahmins or ‘Chaubes’ from the Mathura region and were traditionally wrestlers. Later, some went into the stock exchange and did quite well. But in general, the Chaturvedis were an elite ‘service’ caste. In a sense, the Chaturvedis were like the Nepali Gurkha guards of today, a common sight in the posher areas of Indian cities.

  Each gomashta had a separate kind of ledger. There was a khatavahi containing separate accounts for each class of business; a hundi-nukl in which copies of all Hundis or indigenous bills of trade were entered and a jama-vahi holding a record of the physical goods’ inventory. There was a cash book or rokarvahi in which all cash transactions were entered and could be checked against other records, and a ledger, the final balance of the firm’s accounts. Telegrams zipped back and forth between branches to update these. Daily reports of the cash-and-credit position had to be sent to the main office. There was a traditional Gujarati banking firm in the 1980s where the brothers (partners as well) did a series of long-distance calls at the end of each day to update their cash position. The Reserve Bank of India did away with these traditional Gujarati bankers by a regulation it issued in the 1980s.

  Until the First World War, the Tarachand Ghanshyamdas office or gaddi at 18, Mullick Street in Calcutta took up an entire floor of Kaligodam, a large multistorey building near the old centre of the opium trade, built in the 1870s. The firm took up more than eight rooms, opening on to a balcony overlooking a central courtyard. There were eight–nine clerks working there. The head manager, Chhaganlal Bhavsinghka, was paid the princely sum of Rs 250 a month and owned his own grain mill over the main gate of the building. The regular clerks were paid between Rs 50–60 a month. There were several durwans. Five are recorded in 1872–73. None were paid more than Rs 200 a year. There were several Brahmin cooks for the basa. The salaries were generous for the era and remarked on as such by those who remembered the period in the early 1970s.