Abstract
Trade can be imagined to have arisen when exchange of goods reached a high level of frequency among prehistoric communities, so that intermediaries began to act between sets of producers and consumers, thereby establishing more or less stable levels of exchange-values between different goods. Such a stage was reached with the Neolithic Revolution (of V. Gordon Childe’s perception), when, with the coming of agriculture and pastoralism, sufficient surpluses were generated so as to substantially expand the sphere of exchanged goods. When new materials came to be used, as when bronze began to supplement stone as tool material, requiring transport from more distant parts, trade and traders would become a still more important component of economy and society. 1
There is another aspect to be considered that affected the nature of trade. When peasants and herders began to produce a surplus, this began not only to enter trade, it also began to be forcibly appropriated by rulers and potentates by use of armed power. In other words, concentration of wealth developed simultaneously with commerce. To the demand for necessities by labourers and artisans was added the demand for rarities and luxury products by the surplus appropriators. The latter led inevitably to new specialised crafts catering to the requirements of the dominant few: The practitioners of the crafts, and traders in their products, along with the customers, their dependants and retainers concentrated in settlements that grew into towns. To this new development Childe gave the designation of ‘urban revolution’. 2
The sketch given above is admittedly not an uncontested one. As to the archaeological evidence, G.H. Possehl has argued, on the basis of absence of ‘clear signs of kingship in the form of sculpture or palaces’, that the Indus civilisation, the most extensive of the bronze civilisations of the third millennium BC, was not at all possessed of a ‘state’. 3 Surely, however, the fortifications at Harappa, the ‘Great Bath’ and the ‘Great Warehouse’ at Mohenjo Daro cannot be interpreted except as state buildings, nor can the uniform laws of town planning, system of drainage, etc., at these cities be explicable without our presuming the authority of a strong state.
What archaeology tells us of the commerce of the Indus civilisation also suggests a pattern for it that could only have been shaped by the demand from a wealthy ruling class. The isolated Indus settlement on the Oxus at Shortughai was obviously established for facility of supply of lapis lazuli from mines nearby, for the purpose of export to the main Indus cities: artisans at Chanhu Daro in Sindh worked to make beads out of them. Nor could an egalitarian countryside have supported trade with Sumer in Iraq. At Lothal in Gujarat, a ‘warehouse’ has been excavated, where 65 terracotta sealings have been found with traces of reeds, suggesting that packages bore seal impressions indicating ownership, presumably of merchants. 4 Clearly, profiting from such high-value commerce, a rich merchant class flourished in the Indus cities.
While archaeology thus attests to towns and trade in respect of the Indus civilisation, it equally attests to a decline of both thereafter. All commercial contacts with West Asia appear to have ceased. The Rigveda, datable to 1500–1000 BC, has references to vaṇij (trader) as also to ‘a wandering vaṇij’, but another possible mercantile community, the ‘Paṇis’ (the name connected possibly to paṇ, meaning barter), are held to be a wealthy, niggardly people, who could be subjected to rapine and slaughter. 5 Clearly, early Vedic society was not without its class of merchants, but they could also be tempting objects for plundering chiefs.
By the late sixth century BC the scene had changed much, at least over the Gangetic basin. The Iron Age had dawned, and powerful kingdoms, like Magadha and Kosala, had arisen, and towns appear once again in our record. These towns had rich merchants like Anāthapiṇḍaka, who would buy a garden-retreat at Śravasti (Kosala) for the Buddha’s stay there, allegedly by covering its entire ground with money. 6 D.D. Kosambi had noted that ‘early Buddhist scriptures’ also mention ‘debt and interest’, the latter not being found in the Vedic corpus. 7 About 350 BC Pāṇini (IV. 4.3) even refers to usury, which he takes to mean the charging of interest (kusīda) at one-tenth of principal (presumably per month). Increased commercial activity and use of credit created the need for a recognised common medium of exchange, and this was provided by the punch-marked coins of coarse silver, unique to India, whose origins are assigned to the period 650–400 BC. It is noteworthy that the finds of the earliest issues are practically all located within the Gangetic region. 8 The Mauryan Empire, c. 322–185 BC, by uniting practically the whole of India (excluding south India), was probably mainly responsible for the spread of the use of punch-marked coins throughout the country.
In the post-Mauryan centuries (second century BC to third century AD), there is considerable evidence for the growth of both external trade and internal commercial organisation. Externally, the ‘Silk Road’ connecting China with Iran through Central Asia and North Afghanistan (Bactria) was established by the closing centuries BC; and the monsoons began to be used, by the first century BC, by sailing ships to carry on trade across the Arabian Sea between India’s western coast and the Red Sea and the Mediterranean world. 9 The discovery of a 23-metre long vessel wrecked near the south Sri Lankan port of Godavaya suggests that sea-borne trade with Southeast Asia across the Bay of Bengal could also be dated back to the second or first century BC. 10
Epigraphic evidence datable to the first–third centuries AD introduces us to bodies (śreṇis) of artisans or their employers, that accepted deposits with interest to be paid monthly, the two rates quoted being 1 and 0.7 per cent, that is, 12 and 9 per cent per annum, if uncompounded. It is possible that the śreṇis lent these sums to the actual artisans at still higher rates of interest. 11 There is little doubt that commerce greatly gained by the circulation of standard royal coinages introduced by the Bactrian and Indo-Greek rulers, and then minted by their Iranic (Śaka and Kushān) successors in the north-west and imitators in the rest of the country that gradually supplanted the older punch-marked coins. 12
It has been held, notably by R.S. Sharma, that commerce began to decline during the time of the Guptas (fourth and fifth centuries AD), a notable piece of evidence for this being seen in the contraction of coinage, especially of gold and silver. 13 Though the impression of the extreme scarcity of coinage gained from the small number of type-coins preserved in museums may be modified somewhat by the numbers found in ‘hoards,’ as Deyell urges, 14 the fact remains that gold and silver coins now became extremely scarce, if not non-existent during the period, 750–1200. The absence of silver coinage, despite it being necessary for the conduct of large transactions, is remarkable when one considers that there was active silver mining carried on by some 10,000 miners at the head of the Panjshir valley in Afghanistan, in the tenth century. 15 Clearly, there must have been substantive decline in commercial demand for silver money rather than an innate scarcity of the metal. Sharma related such decline of commerce to the decay of towns during the period. 16 Trade in the north-west might also have suffered owing to insecurity from salve-raiders. 17
It is likely that, despite a long-term contraction in commercial activity during the period before the thirteenth century, commerce must still have remained an essential part of the economy, however ‘feudal’ the latter might have been. Its organisation almost certainly had assumed the caste-configuration that has survived into modern times. The Banya septs of Dhūsars, Rohatgis (‘Rohitaka’) and Agrawals (‘Agrotaka’) are recorded in inscriptions of East Rajasthan and Delhi, in 807, 1291 and 1328 respectively. The ‘Multanis’, so prominent as merchants in the narration of the historian Baranī (c. 1356), were presumably Khatrīs. Ibn Battuta’s ‘Solis’ of South India encountered by him in 1340s, apparently represent the Chettis (the earlier name derived from ‘Chola’), the ‘Che-ti’ of Mahuan (1433). 18 In Andhra, the Komatis, forming a separate caste, were described in 1618–22, as ‘Banians transplanted and grown up in the country by another name’. 19 At a level lower than the Banyas were the nomadic semi-pastoral communities of Banjāras, who engaged in local and long-distance grain trade, travelling with their pack-oxen. 20
The Delhi Sultanate (established, AD 1206) found these merchant castes ready to collaborate with the new rulers: the Multanis, on the one hand, lent money to the Turkish nobles in exchange of drafts on the revenues of their territorial assignments; and, on the other, obtained loans from the state treasury of Sultan ‘Alāuddīn
It is in the period of the Mughal Empire that our knowledge of commerce and credit expands considerably. The opening of trade with Europe led to a silver influx and a huge expansion of coined money supply in India on which much research has already been undertaken. 23 It is possible that this silver influx represented, in part, a real (doubtless multi-stage) capital movement into India, which caused a fall in the interest rates in India around the mid-seventeenth century. 24 At the same time the expansion of currency supply might have led to a ‘profit inflation’ to the advantage of merchants.
There is also much evidence for advanced commercial techniques including brokerage, deposit-banking, traffic in bills of exchange (hundīs), merchandise insurance (bīma) and a form of bottomry (avag).
25
The merchants also laid out much capital in making advances to artisans in order to ensure supplies of processed material, the advances being made in both money and raw material, while, in the case of expensive material, the merchants could bring numerous workers to work under the same roof in kār
What led to the triumph of the English East India Company was surely not its superiority in trading practices, but its superior gunfire. It is often forgotten even by some western Marxist historians that, according to Marx, ‘the genesis of the industrial capitalist’ in Europe took place partly through a process of ‘primitive (or primary) accumulation’, of which ‘the colonial system’ was an essential component, one that depended entirely on ‘brute fore’. 30
There is no doubt that the English conquest of India, under the aegis of the East Indian Company, adversely affected the domain of ‘indigenous’ capital. The main lines of trade shifted to completely new channels, by the creation of new networks for tribute payment to Britain; and the earlier relationship between the state and Indian merchants–bankers collapsed as the Presidency banks and European banks took over state business in the nineteenth century; and, finally, much merchant-capital was swallowed into the colonial state’s coffers as merchants turned into auction-purchasers of tax-defaulting landlords’ properties. 31 Nevertheless, Indian-owned capital was large enough for it to be said in 1898 that indigenous bankers (‘shroffs’) ‘finance nearly the whole of the internal trade of India’, despite such trade having by then expanded so greatly due to railways. In 1899–1900 indigenous bankers and moneylenders paid ₹38 lakh in income tax while persons from the modern or corporate sector paid just ₹13 lakh. 32
The ultimate transformation of a part of Indian merchant capital into industrial capital has a tortuous and not an entirely creditable history. The place where this transformation originally occurred, namely, Bombay, owed the prosperity of its business initially to opium trade. Indian opium exports to China for the large part of the nineteenth century were essential for the maintenance of India’s tributary relationship to Britain, which undertook the Opium Wars (1839–42 and 1856–60) to force the drug down the throats of the Chinese people. As Amar Farooqui has underlined, since the opium passing through Bombay originated in Malwa, within territories of princely states, it was outside the clutches of the East India Company’s monopoly, unlike opium from the middle Gangetic basin located within the Bengal Presidency. The traffic in Malwa was thus controlled by Indian tax-farmers and merchants, who finally congregated at Bombay, the main port of export. 33 In 1854 the first textile mill, with ₹5 lakh raised as capital from 50 Bombay merchants, was established at Bombay; and the age of Indian industry dawned.