The Marwaris Read online

  Managers and clerks in 1914 were mostly Shekhawati Aggarwals like the Poddars themselves. The names that are recorded were from Ramgarh, Mukundgarh and Churu but we are told that 90 per cent of Tarachand Ghanshyamdas’s clerks were Aggarwals and about 10 per cent were Brahmins.

  Besides their pay, the managers often received a share in the profits of the firm. Jainarain Poddar, the chief manager, testified in court that he received Rs 2–3 lakh annually over a period of several years, probably his share of the profits. Other branch managers had variously defined shares in profits. The exact arrangements differed from firm to firm. Two other Great Firms, Bansilal Abirchand of Nagpur and Mahasingh Rai Meghraj Bahadur, the latter concentrated in Assam, did not offer a share in profits to their managers. Some other Great Firms preferred Brahmin clerks to those from their own caste because it was perceived that they would be less likely to enter into competition with the original firm and considered less aggressive.

  The managers were regularly rotated and promoted. Harduttrai Prahladhka joined the firm in 1860 in Calcutta, and moved to the Mathura and Ramgarh branches, before leaving the firm. He returned as a branch manager to Calcutta in 1896. Jainarain Poddar had been in the banking business with his father in Hyderabad from 1865 to 1873 and joined the firm in 1883–84. He seems to have worked for some time in branches concentrating on opium in Malwa. He later moved to Kanpur and finally to Calcutta in 1896. He succeeded Harduttrai Prahladhka as branch manager in 1912. In 1920, he received a share in the profits of the firm, and in 1930, this was increased to a five-sixteenth share.

  Bansilal Abirchand, another Great Firm, had its headquarters in Bikaner where its owners, the Dagas, had been located since 1598. However, its operations were centred in Nagpur and Indore. The firm assisted the British during the War of 1857 and was suitably rewarded. The offshoots of the Great Firms that prospered in the nineteenth century were often those that were the closest to the British in India. As a consequence, they reaped the considerable rewards that the British gave to those who could be counted among the loyal in 1857. By 1908, Bansilal Abirchand owned forty-seven villages, two cotton mills, twenty gins and presses, and a multiple-branch banking business. British officers in smaller towns often kept their accounts with the firm. During the post–First World War period, it would transfer Rs 3 crore every year to cover its seasonal trading operations in Burma. But the branch managers, as early as the 1880s, only submitted semi-annual returns to the home office. Each branch of Bansilal Abirchand would function as an independent unit. For example, though the firm’s four branches in Nagpur concentrated on banking, gold, grain and cloth, they dealt in whatever was opportune. The branch managers held wide-ranging powers of attorney to act on behalf of the firm. However, this degree of decentralization was exceptional. In contrast, Goculdas Malpani of Jabalpur spent nine months of the year on the road checking the books of accounts at his branches.

  The Malpanis of the firm Sevaram Khushalchand were Maheshwaris from Jaisalmer. Sevaram Malpani moved to Jabalpur in central India in the early nineteenth century. He started a series of branch offices and entered the banking business. Sevaram Khushalchand also served as a leading banking firm to the British and was rewarded for its assistance and loyalty during the 1857 War of Independence. A British official reports a transaction apparently in the early twentieth century:

  It would be untactful to start straightaway on business as the chief motive of the visit, though the motive is tacitly understood. So we exchange the usual elaborate greetings in the hyperbole of Hindustani—for the great man knows no English. Then general topics, such as the weather, crop prospects, the probability of epidemic disease in the city, and I make inquiry about the Raja’s stables, a favourite subject . . . Meanwhile the fountain plays . . . and time slips away. Then at last the question comes—is there any service which the Sahib wishes done? I reply that there is a trifling matter, a little money to be remitted. The great man beckons an attendant, who removes the sack without counting coin or notes. That doesn’t matter; I know it will be all right. More compliments and talk. The attendant reappears with the sack, now empty. We ignore him and continue the leisurely talk, till the Raja asks in feigned surprise, as though he had forgotten all about it, whether we hadn’t some small business to do. Ah yes; here it is. He takes a tiny scrap of paper from the attendant and hands it to me. All it contains are a few hieroglyphics in the obscure Marwari script. This I pocket with ostentatious negligence, well knowing that in a few days I shall receive an acknowledgement from the British bank in the capital of a neighbouring province.7

  The Malpanis also purchased several hundred villages in which they served as zamindars though, unlike some of the businessmen in Bengal, they did not give up their trading and banking. Their twentieth-century heir, Seth Gobind Das Malpani (1896–1974), was a Congress activist and Hindi literateur who served as a member of parliament—I met him in the 1960s, and our discussion revealed the extensive nature of his English education.

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  The Great Firms business groups operated in a context of business communities which embodied certain cultural traits and values which were functional to business and business continuity. These are values that are still manifest in traditional firms in the modern period. Some of these are well documented in a number of business biographies and autobiographies connected with the Birla family. The founder of the Birla family business group, Shiv Narain, had connections with Tarachand Ghanshyamdas as well as with the great Ganeriwala firm. He finally started his own firm which he passed on to his son, Raja Baldevdas, and his four grandsons Jugal Kishore, Rameshwar Das, Ghanshyamdas and Brij Mohan, and their descendants. Though they emerged from working with the Great Firms, the Birlas were more prominent first as business partners to British and other foreign firms, then as speculators on the Indian markets, and finally as industrialists following a trajectory which has been seen to characterize many of the leading Marwari family business groups of today.

  Banians: Making Lemonade Out of Lemons—Response to the Opportunities Offered by the British

  Family business firms, Marwari firms among them, responded to the opportunities posed by foreign businesses needing Indian partners. For example, Tarachand Ghanshyamdas became the selling agent for a major British firm, the petroleum giant, Burmah Oil. But many of the new partners, banians in particular, did not own any of the Great Firms themselves.

  All the large foreign, mostly British, firms, needed local partners—compradors as they were called in China or banians in India—to bridge them to the Indian market. As time went on, some of the proto multinationals like Unilever, Swedish Match and Singer Sewing Machines managed to create their own indigenous networks, going deeper into the market without such partners. Owning its distribution network or supply chain obviously gave a large firm greater control over its own supply or distribution chain albeit at a higher cost. The argument for Unilever doing this is recorded by Prakash Tandon in his memoir, Punjabi Century, 1857-1947. A key theme in business administration literature in the late twentieth century charts the costs and benefits of greater and lesser control of the value chain in building a corporate presence. For example, Vijay Govindarajan and Gunjan Bagla penned an article in the 19 October 2012 Harvard Business Review, ‘Watch Out for India’s Consumer Market Pitfalls’, arguing against relying on a single distributor for all of India, partly because of the regionally differentiated nature of Indian consumer markets. Gurcharan Das in India Unbound discusses at some length his discovery of the value of locally based stockists who know the local market as he worked to develop Vicks VapoRub’s market in India.8

  But new entrants still needed partners. Even today one of the standard pieces of advice to a new market entrant in India or elsewhere is the value of a local partner for navigating that market. In fact, even multinationals need lower level stockists and suppliers. Then, as it is now, a strong local partner was often a critical element in success.

 
Originally, banians had a broader function of intermediation but they were eventually reduced to ‘guaranteed brokers’, so called because they guaranteed the commercial soundness of various underbrokers. The banian’s approval was necessary for sales and they allocated the stock among dealers. Sir Badridas Goenka mentioned that underbrokers would visit his brother Sir Hari Ram Goenka in his suburban garden home on Saturdays to secure their allocation of imported cloth. Sir Hari Ram was the ‘sole broker’ to Ralli Brothers, a large commodity trader and cloth importer. The guaranteed broker was usually given a 1 per cent commission. Underbrokers only received 0.25 per cent commission on cotton piece goods. The guaranteed brokers were also expected to provide a large deposit which was, of course, a useful part of the foreign firm’s capital.

  The banians to British firms in Calcutta were originally Bengalis. An exhaustive list in 1863 shows only one non-Bengali firm. Later members of the Khatri caste from the Punjab displaced some of the Bengalis, adding this to the prominent role they had always played in the wool trade out of the Punjab in which the Marwaris too were actively engaged. In an interview with me in 1971, one of the heirs of a great Khatri firm attributed their decline to high overheads and the lack of a sufficiently extensive upcountry network. The Khatris were soon replaced by the Marwaris. Banians in Madras were usually from various local trading communities or Brahmins, and those in Bombay were usually Parsees or Gujarati Bhatias.

  In contrast to older industries like imported cotton piece goods in which indigenous firms played a dominant role, the presence of banians in the east Indian jute trade was lower because European firms were already better established. In the hessian and woven-fabric space of the jute industry, Indian firms had to fight for a place which was accorded to them only reluctantly. The jute mills and exporters dealt directly with European agents as late as the First World War. The Birlas report that they had to retain a European broker; a Calcutta Jewish broker, who counted as European for this purpose, was among their earliest business associates. Maria Misra in her seminal book, Business, Race, and Politics in British India, c.1850–1960, attributes the decline of the old British business houses, in contrast to the newer multinationals, to their reluctance to enter into full partnership with Indian firms.9 Dwijendra Tripathi suggests that the British groups’ decline responded to the general weakness of the Indian economy in the 1920s and 1930s. This exclusion of Indian firms was not possible in raw-jute trade, where the Marwari firms with their network across rural Bengal were critical.

  For raw jute, it appeared that only the Marwaris had an adequate upcountry trading network, including areas like Assam and Bengal which fed into Calcutta. In raw jute, the European sellers got a 1.25 per cent commission of which they passed 0.25 per cent to their Indian brokers. The 1915 Hisar Gazetteer notes that migrants from Bhiwani (an area adjoining Rajasthan) were already important hessian and fabric traders. The pioneers in hessian and fabric trade included entrepreneurs from areas other than Bhiwani as well such as Lakshmi Narain Kanoria, closely connected with McLeod and Company from 1887, M.D. Somani and G.D. Birla. The latter two were well known as hessian traders since 1915.

  By the First World War, the Calcutta market was dominated by a number of ‘big banians’ who did business as banians in the nineteenth century. Some of the Great Firms also became banians, like Tarachand Ghanshyamdas for Shaw Wallace and Burmah Oil. Devkarandas Ramkumar Chokhani of Nawalgarh was listed as a banian to Ludwig Duke in 1878. Gursahaymal Ghanshyamdas (related to Tarachand Ghanshyamdas) was already a banian to Crook and Rowe prior to 1860, and Sevaram Ramrikhdas, the firm originally based in Mirzapur from which sprang the Singhania family of Kanpur (one of the largest of contemporary business groups), was a banian to Ralli Brothers. But soon a number of others emerged—not descended—from the owners of the Great Firms. Ramdutt Goenka was the chief Calcutta clerk for Sevaram Ramrikhdas. Besides his own Goenka firm, the heirs of which are still prominent in Calcutta business, including the RPG Group, he gave initial support to Nathuram Saraf, who was by tradition the first Marwari banian. The newer banian firms and the old firms were closely linked by commercial and marital ties.

  The reputed first Marwari banian, Nathuram Saraf, came to Calcutta in the 1830s as a supercargo in one of Sevaram Ramrikhdas’s boats from Mirzapur. He became a banian to Kinsell and Ghose. This was a Bengali–European partnership of a sort, once common but which declined after the 1848 financial panic, and which sunk the fortunes of Dwarkanath Tagore (Rabindranath Tagore’s grandfather) whose firm, Carr Tagore, was the largest of them. According to historical accounts, Nathuram displaced Nikkamal Khatri, then a leading banian, to become a banian to Hoare Miller. Nathuram called upon a large number of fellow villagers from Mandawa in Shekhawati to enter business in Calcutta and set up separate basas for the Brahmins and Banias. In 1870, he retired to Rajasthan where he worked as a banker to a number of princes. His business passed on to his head clerk, Ganeshdas Musuddi (died 1882), whose family continued to work as banians well into the 1930s.

  Most banians did not retire to become bankers but continued as banians for several generations. The Goenka family, descendants of Ramdutt, produced many banians. Initially Ramdutt was associated with Sevaram Ramrikhdas as a banian to Kinsell and Ghose but after 1848, he became a broker to Kettlewell Bullen, founding his own firm, Ramdutt Ramkissendas. He also became a banian to Ralli Brothers, the largest cloth importer, as well as being an important participant in other markets. Apparently, Sevaram Ramrikhdas had been the banian to Ralli Brothers earlier. Shivbaksh, Ramdutt’s nephew, was working with Rallis as early as 1864. When Shivbaksh resigned in 1880 because of certain differences with the Rallis management, Ramchandra, a grandson of Ramdutt, was made banian, though the Goenkas continued their relationship with Kettlewell Bullen as well. Ramchandra was succeeded as banian by his sons, Sir Hari Ram (1862–1932), Ghanshyamdas (born 1868) and Sir Badridas (1883–1973).

  Similar to the Goenkas’ association with Rallis was Surajmal Jhunjhunwala’s relationship with Graham & Co. Lalchand Kayah (died 1875) came to Calcutta in the 1830s from Surajgarh. He established a firm, Lalchand Baldevdas, trading in commodities like opium and cotton throughout eastern India. Lalchand’s son-in-law Surajmal Jhunjhunwala (1850–1894) arrived in Calcutta in 1867, and by January 1868 had become a metal broker to the large Bengali-owned firm, Pran Kissen Law. He soon moved to cotton piece goods and then transferred his activities to Smellie & Co. In April 1868, he was back with Pran Kissen Law as senior broker and soon also became a broker to another Law family firm headed by Abhay Charan Law. In March 1879, Pran Kissen Law became sole piece goods broker to Graham & Co. Later, the banianship was taken over by Surajmal. At this time, Surajmal was also managing the Musuddi banianship at Hoare Miller and at Gladstone Wright as the heirs to the

  Musudi banianship were minors. On Surajmal’s death, he was succeeded by his son, Shivprasad (1878–1935).

  The Jatia family ranked among the major traders of Khurja, a grain market in north-west India well up the Ganga–Jamuna valley, and they continued to play a significant role there but they gradually developed a close relationship with Sir David Yule of Andrew Yule and Company in Calcutta. It is reported that in his youth David had differences with his father, and the Jatias gave him financial support. Sir David was known as the ‘White Bania’ because of his close association with Indians. His offices were one of the few where explicit racial discrimination against Indians in matters like seating was not practised. Though strictly orthodox in his behaviour (especially in matters regarding diet and worship), Sir Onkar Mal Jatia (1882–1938) dressed and lived in a Western style and was not as involved with the Marwari community as many of his contemporaries were.

  European firms in Bombay also employed non-Marwari banians, mostly Parsees and Bhatias. A few Marwari firms, generally from Shekhawati, like Ramnarain Ruia and Cheniram Jesraj Poddar became Bombay banians. The Ruia family had opened their firm in Bombay in 1853. Harnandrai
Ruia (1831–1912) separated from the business and specialized in opium. One of his four sons, Ramnarain, became a broker to the opium department of Sassoon J. David (not to be confused with David Sassoon or E.D. Sassoon and Company, though he married into the original David Sassoon’s family),10 one of Bombay’s leading Jewish firms in 1883. In 1891, Ramnarain became a guaranteed broker to that firm’s cotton department. The Ruias soon became major players in the cotton market though they did not start a mill of their own until 1934.

  Anandilal Poddar, one of the more prominent Bombay Marwari businessmen, was born in 1874 in Nawalgarh. He first went to Calcutta in 1891 and then to Dibrugarh in Assam but finally settled in Bombay in 1895. Though Anandilal started as a clerk in another firm he soon set up his own brokerage firm, dealing particularly with Japanese firms. In 1919, he became chief broker to Toyo Menka Kaisha (Mitsui), and in 1926 set up a cotton textile mill in association with them

  The Marwari firm, Cheniram Jesraj from Bisau, not far from Ramgarh, was founded in Bombay prior to 1880. The founder, who died in 1887, had been an opium broker to the Parsee Tatas. The firm provided the sole selling agency for four Tata textile mills.

  Following a stereotype, the banian firms were more socially and culturally conservative than non-banian firms, both in terms of overall cultural attitudes and in terms of new economic activities. Though they were not the first to start new industries, a number of them did emerge as major industrial firms when they acquired the British interests with which they had been associated, after Indian independence. Among the leading Marwari groups of today, many have descended from major banian firms. Consequently, many of the old banian families today have in their possession companies they acquired from the British. Of the large business groups of today, the Singhanias emerged from a Great Firm, the Birlas were pre-eminent in trading in commodity markets and the RPG Group is descended from Ramdutt Ramkissendas, a leading banian.