The story of merchant capitalists

Published : Feb 05, 2000 00:00 IST


The Trading World of the Tamil Merchant: Evolution of Merchant Capitalism in the Coromandel by Kanakalatha Mukund; Orient Longman, Chennai, 1999; Rs.265.

KANAKALATHA MUKUND'S exploration into the trading world of the Tamil merchant is a serious and interesting exercise in the economic history of South India, seeking to establish the evolution of merchant capitalism in the Coromandel region from A.D. 1500 to 1750 through a complex process of interaction between endogenous and exogenous factors. The work locates the genesis of commercial merchant capitalism in the pre-existing structures in the commercial organisation of the Tamils facilitated by the Europ ean advent into eastern trade. Mercantile activities, the author points out, provide one of the strongest links of continuity in economic history to which there is conspicuous lack of attention in historical research. The focus is on the development of w hat the author calls a "socio-economic phenomenon", that is, merchant capitalism, and the main thrust of the argument is that caste cannot be the "totalised and essentialised conception in Indian Sociology", for socio-economic classes have as much antiqu ity, and class solidarity, rather than caste identity, determined merchant behaviour, particularly the vertical division of the Right and Left Hand castes (the author chooses to call them Right side and Left side, for some odd reason). Here we are again into the familiar problem of the caste and class distinction as also the primacy given to sociological (Weberian in particular) explanation as against the Marxian emphasis on economic basis to upward social mobility.

The inspiration seems to have come from the recent researches on the state and agrarian histories of South India and hence the work stresses the need for going back in time to the past to understand the dynamics of change, institutional development, whic h contributed to the development of mercantile activities, institutions and practices, inter-relationships of commerce and politics, the complexities and specificities of regional patterns within the larger frameworks of world systems.

Theoretical frameworks derived from Marx, Maurice Dobb, Henry Pirenne and Paul Sweezy (and, following them, Irfan Habib for Mughal India) are set aside as based on a "negative view of merchant capitalism". The central place assigned by John Hicks to the market and specialisation in trade, as also the anthropological and sociological analysis of non-market trade and exchange in early societies (Karl Polanyi) and markets as a physical, spatial mechanism, hierarchically structured, with economic, cultural and political ramifications (Braudel and Chaudhury), are more directly relevant to the present study. The author is quite clearly unhappy with West European parallels and highlights variations due to region-specific and culture-specific developments in S outh India.

Following Frank Perlin's theory of proto-industrialisation and proto-capitalism as path-finding, Dr. Mukund argues that development of commerce and urbanisation for industrial capitalism (Pirenne, Braudel and Sweezy) has minimal application for non-Europ ean economies, whereas commercial capitalism is to be seen as an essential motor of the wider changes proto-capitalism suggests.

The author is careful not to decry European impact as is often done while emphasising endogenous factors or treating external trade as one of the variables (Sanjay Subrahmanyam). Nor does she contribute to the overemphasised role of pax Mughalica in increased exports, or treat the Indian Ocean as a holistic interconnected trade region (S. Arasaratnam) similar to the Mediterranean (F. Braudel). She is more in favour of re-evaluating the hypothesis of Frank Perlin and Chris Bayley that the smaller successor states (after the Mughal) had a revitalising effect on trade and economy and its applicability to the southern Coromandel under unstable political conditions after a short Mughal interlude. Furthermore, the Coromandel is not taken up as a singl e viable unit (Sanjay Subrahmanyam) due to substantial differences/variations between northern (Andhra coast) and southern (Tamil coast) Coromandel as implied in J.J. Brennig's study of textile production and trade.

Continuities from the past are traced to the distant Sangam Age characterised by intensive maritime trade and mercantile activity, notwithstanding poorly developed markets and the absence of specialisation in trade and money as a medium of exchange. More direct links are found in the early medieval (7th to the 13th centuries A.D) developments such as agrarian expansion and integrative institutions like the brahmadeya and the temple, the latter as a depository of resources and as the nucleus of ur ban activity, urban institutions like the nagaram (market centre) by the end of Chola rule (13th century A.D). Institutionalised commercial practices, monetisation with money-lending on interest, designated market areas (angadi, perangadi i n nagaram and mahanagaram), maritime trade (mainly in South Asia) after the 10th century A.D., merchant corporations, wide-ranging guild activities, links between merchant, the temple, trade and urbanisation, corporate trading and so on (vi de M. Abraham, R. Champakalakshmi and Kenneth R. Hall) provide impressive evidence of contexts and threads of continuity in the Vijayanagar and post-Vijayanagar periods (14th to the 17th centuries A.D) when traders had become highly visible and economica lly powerful. Admittedly it was a period marked by an expansion of commercial and artisanal activities, seasonal big markets (pettai and sandai) and attempts to enhance the economic influence and social position of craftsmen such as Kaikkolas and Kammala s, apart from migrant Telugu traders like the Komatis, Balijas and Beri Chettis to southern Coromandel. The author posits a segmentation of trade within Asian trade in which southern Coromandel was one of the intermediate points. The advent of the Europe ans was a major exogenous factor (Portuguese, in particular) in the Coromandel and Gujarat, which affected the pattern of shipping and trade in Malacca (South-East Asia), a major trading emporium, in which the Tamil merchants called "Klings" had substant ial settlements with positions of power and authority and acted as taragar or brokers. Moorish ships and Coromandel merchant ships vied with the European in carrying commodities from diverse parts of Asia and Europe. Portuguese enclaves like Santh ome emerged on the Coromandel coast.

THE centrality of the Coromandel in South-East Asian trade continued despite the post-Vijayanagar political instability, numerous "little kings", military encounters, growing presence of Europeans (Dutch, English and Danes) and their involvement in local wars, disruption and artisan migration and European naval power and monopolistic trade introducing an alien element of organised violence into intra-Asian trade. The emergence of merchant capitalism is located at this historical juncture, not as a bypro duct of European commerce but because of the merchants acting as the interface between the European and local economy and state, as chief merchants of the European companies. Their politicisation is attributed to the deteriorating state of centralised au thority and the need for resources and revenue at various levels. Four classes of merchants are identified - Komatis as bulk sellers of cloth, their agents, money-changers and poor shopkeepers with the exporters, buying wholesale at port cities. The merc hant capitalists were at the apex of this hierarchy.

In chapters Five to Seven, the emergence and story of the merchant capitalists from the early decades of the East India Company (that is, A.D. 1600 to 1670) to the middle of the 18th century (1750) is told with a well-articulated emphasis on the textile trade and structurally fragmented markets in which they played a major role. The well-documented careers of several such chief merchants of the Dutch, English and French are given in chronological detail. The more important among them were the late 17th century and early 18th century merchants like Kasi Viranna, the Venkatadri brothers, Chikka Serappa, Kelavi Chetti, Sunkurama Chetti of the leading Sunku family with a wide network, Thambu Chetti and Lingi Chetti. Anandarangam Pillai of Pondicherry comes out as the most interesting example of a merchant capitalist who not only traded with and for the French but had tremendous political and social influence in the region.

At the zenith of merchant capitalism, the merchants had complex organisational structures and commercial practices, partnerships and specific ventures, commenda or respondentia system in overseas trading in which merchants owning ships sent goods or mone y as respondentia arrangements and the captain used them in port-to-port trading, the risks being more than repaid at higher than normal interest. Even the English adopted this practice with its advantages and disadvantages. An active credit market emerg ed, although no banks were founded. Insuring of ships in overseas trade with merchants specialising in providing insurance, though not always without problems of dishonest practices.

As dominant merchants and intermediaries between the European companies and local economy and political authorities, these merchants are said to have been the ultimate survivors in the face of many hazards in a situation of political and economic fragmen tation and rivalry.

As "principal merchants" they manipulated the rivalry among the Europeans (for example, the Dutch and the English and the English and the French) and used the personal biases of the Presidents of Fort St. George to their own advantage. They negotiated wi th the local Nayaks and other Muslim chiefs, like the Arcot Nawab and Mughal governors, Golkonda rulers for trading rights and facilities. They took the lead in revenue farming of commercially strategic areas, a standard practice both among local rulers and the Europeans, who increasingly interceded in the tax and revenue collecting affairs. Santhome, Triplicane and Armagon were thus farmed for the Dutch and English. They controlled port towns like Tevanampattinam and Nagappattinam. They even financed t he Company's trade in cloth as in the case of Kasi Viranna and Beri Timmanna who were the chief merchants of the English and also as agents (Dubash) in the private trade of the English.

To call these merchants "political merchants" (Arasaratnam) or "portfolio-capitalists" (Sanjay Subrahmanyam) who were able to straddle the worlds of commerce and political participation is not acceptable to the author as she considers this view to be bas ed on an artificial dichotomy between the two which are integral parts of a composite system. Incidentally, the author makes only a marginal reference to the Nattukkottai Chettiars whose trading interests in South-East Asia are well known.

Initially, direct dealing with the weavers was beset with problems, the system which employed chief merchants to be in charge of all their trade with its inherent contradictions could not be changed or done away with. Hence for different reasons the Dutc h first and the English after them, introduced the joint stock company, the experimental "reincarnation of European organisational forms", in which merchants were brought together with shared capital, pooled resources with high credit, without the compan ies having to make advance payments to the merchants. However, this did not modernise the Indian economy as held by Raychaudhuri and Arasaratnam, for, the author points out, joint stock in the sense of "partnership trading" was not new among the Coromand el merchants but the innovation lay in the fact that the initiative came from the buyers.

THE author tries to show that textile trade, which was the focal point of the merchants' commerce, was marked by structural fragmentation, that is, two different markets - one, between the Europeans and local merchants as negotiating parties; two, primar y producers negotiating with the merchants. The first was an artificial market, where prices were determined by many considerations other than supply and demand while the latter was a more natural market following the logic of economics. The author's ext ended discussion of the price rise theory, its causes and the nature of fluctuation and the pattern of peaks and troughs in the periods 1696-1702 and 1732-1760, backed up by data set forth in tables and graphs, attributes it to a complex interaction of s everal exogenous factors and motivations, rather than to a consistent or logical causal relationship between cotton production, technology and prices, indigo prices and foodgrain prices or wage increases, and so on. In fact, there is no uniformity in tex tile price index in this period as markets were highly segmented and not transparent. Higher prices were forced due to a variety of factors like competition among the Dutch, the French and the English, negotiating strength of the bargaining parties, whic h were of critical importance, as interplay of prices and supply did not follow the normal behaviour of a market.

The Dutch were in an advantageous position and followed an aggressive expansion policy of textile investment and could negotiate a much wider circle of merchants from Fort St. David with no insistence on European goods as part payment which the English d id with their broad cloth. The English had an uphill task and had to seek alternative production areas and control over St. David merchants.

THE Coromandel experience, according to the author, shows that there was an absolute limit to the growth of economy that could result from foreign trade and demand, imposed by technological limits to productivity. A combination of economic and non-econom ic factors created the ultimate crisis which the merchants could not tide over even with all their resources.

The crisis in textile trade beginning from the 1720s practically marked their decline, although textile trade was only one among the many commercial ventures of this period in which these merchants dominated. With the breakdown of the joint stock system, the English went directly to the weavers and provided incentives to them: a separate weaving village (Chintadripet) and symbols and gifts of honour. The Europeans clearly showed an anxiety to have captive production of cloth by locally resident weavers and by securing weavers looms, that is, booking them and entering into direct contracts with them.

There is, however, a lingering trace of uncertainty and even contradiction in the author treating merchant capitalists' trade as virtually synonymous with participation in textile trade and attributing their decline to the crisis in textile trade from th e 1720s, while at the same time pointing out that it was only one among their diverse commercial ventures, which were more profitable.

Further, the author's criticism that organisation of cloth trade, from the weaver to the exporter is an area that has not received due attention from historians. Given the nature of sources available for the period under study and the complexities they e xhibit, interdisciplinary approaches have been well on their way to looking into a variety of aspects in the study of productive processes and trading patterns in the pre-colonial and colonial periods of Indian history.

The author re-examines two beliefs regarding textile trade: 1. That supply of cloth was a very profitable activity for the merchants and 2. Forced sale of European woollen cloth, especially broad cloth, in part payment for Indian cottons caused financial ruin of the merchants in the long run and concludes that the notion of high profits is not matched by actual situation, but the broad cloth which was in poor demand was accepted by the merchants only after Mughal rule and the artificial value created fo r it as a ceremonial gift and hence profitable to them.

Cotton cloth supply was only one of the many business ventures and their affluence came from the influence at local courts and from their large personal and extensive commerical empire. Their trade with Manila, Achin, Pegu and Tenasery in South-East Asia and West Asia in their own ships remained impressive.

The best example of this was Anandarangam Pillai of Pondicherry whose diverse commercial interests (cloth, yarn, indigo, arecanut, etc.) were more profitable and brought them concessions on tolls and customs as the Company's chief merchants. European enc laves like Fort St. George and Fort St. David were strongholds where they could take refuge in times of war (for example, the Maratha invasion after the Mughal decline) and security for money, all this despite the usual criticism of the English for their denial of basic liberties and prevalence of extortionary practices in their enclaves.

While the advent of the Europeans widened the horizons of the trading world and gave the merchants access to centres of power and enlarged their sphere of influence, it also provided the means for European intervention into local politics, that is, the p olitical/power struggle and made the merchants easier targets of extortion in times of feuds among the local chiefs. The merchants in turn were driven towards the Europeans in pursuit of their commercial and social ambitions.

Colonial enclaves were avenues for the merchant capitalists to enhance their social position, which the author believes was not open to them in indigenous society with its traditional and stratified hierarchies. As leaders of the respective caste groups, the Right and Left Hand, as the case may be, the chief merchants sought both economic and social privileges like the use of the roundel (parasol), palanquin, horse or elephant, annual ceremonial gifts by the Governor at Fort St. George. While the Englis h equated themselves with the local rulers and followed the age-old practices of allowing symbols of status to the merchants, the merchants in turn accepted the authority of the English on the same terms as they did the local rulers.

Caste conflicts between the Right and Left Hand groups gave the English the much-needed opportunity to intervene in local society's affairs as much as feuds among local rulers provided opportunities to intervene in political affairs and extend their own spheres of influence and power or playing one against the other in order to gain maximum trade benefits from the rivalry between the Right and the Left. Their social aspirations explain the choices they made in their relations with the Europeans more con vincingly than any analysis of them as a purely economic class. They used the same networks as the peasants, "kinship, religion, state and market interaction" (D. Ludden), for manipulating their own social space. Building temples, making donations and ma intaining the temples through cesses levied on the townsfolk (despite the English trying to prevent it), creating agraharams, patronising the arts and literature (Anandarangam Pillai on whom a Champu ode was composed), their influence with local rulers, in their perception, helped them to establish their status on par with the upper-caste landed elite. Increasing politicisation was also a part of this process. Hence the Weberian explanation of the author that it is the functioning of these merchants primarily as a social class and their attempts to enhance their prestige and status that supersede their economic interests. Yet, ironically, when they achieved the desired social status, the forces of colonialism and industrial capitalism dep rived them of the economic foundation of their social goals.

The author evinces a constant anxiety to play down the economic aspects of the power and influence of these merchants but ultimately returns to them to explain their decline.

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