The rural moneylender,1888: The Dufferin Report for west UP

During the viceroyalty of Lord Dufferin, the Government of India by a circular dated 17 August 1887 ordered an enquiry into ‘the condition of the lower classes of the population, especially in agricultural tracts’ in all provinces, including the North-Western Provinces and Oudh (the present-day Uttar Pradesh [UP]). Reports from lower district officers were to be routed through the provincial governments. The detailed reports received from districts were to be reduced to summaries at the provincial level; it was apparently these summaries that were actually sent to the Government of India. The only exception to this was formed by the reports from the North-Western Provinces and Oudh, which were also sent to the centre, along with a summary. These therefore proved to be the only portion of the original reports that were printed. The volume still remained in restricted circulation (Fortunately, a copy was obtained by the present writer through a colleague from the office of the district collector of Aligarh in the 1970s).

The actual reports from the districts in UP are of various kinds. Some are most detailed and the results of conscientious field enquiries while others are rather brief and impressionistic. Three of the detailed reports are those on the Etah district by William Crooke, on the Muttra (Mathura) district by A. Cadell and on the Pilibhit district by T.W. Holderness. These three reports meet any reasonable criteria set for accuracy of data and detail that one can think of. The present article aims at surveying the information these reports provide about moneylenders and their operations and clients in the rural localities of the three districts concerned.

First of all, these reports show that the class of moneylenders was by no means confined to the professional ‘banking’ and commercial castes (designated ‘Banya’, ‘Sahukar’, ‘Mahajan’ and so on). Zamindars, lambardars (headmen) and even plebeian villagers too could take to the business of moneylending once they had some capital and solicitous clients in the vicinity.

In this respect, a very interesting case is that of Narayan Singh, a Thakur zamindar in Etah district (pp. 91 ff.). His annual income from landed property amounted to over ₹271 plus income from cart-hire estimated at ₹50. To add to this income, he had borrowed ₹2,000 from a Bohra (Banya) on interest at 0.75 per cent per month (9% annually), the moderate rate being set obviously because of the security he could offer by his property. He then lent the amount in smaller sums at 3.12 per cent per month, yielding an annual return of nearly 37.5 per cent. His income from moneylending was computed at ₹750, which thus dwarfed the income he received from his land. The case is interesting in showing how money capital bearing lower rates on secured loans could be utilised for local moneylending where larger returns could be secured by investing in small credit transactions. A zamindar like Narayan Singh moreover would have more easily secured repayment from his tenants, when he lent money to them.

We are told of another moneylending Thakur zamindar, Dhaukal Singh of village Charpai in the same district who lent between ₹80 and 90 to a Lodha cultivator from another village, Barchua, where there was no regular moneylender (p. 119). Unlike Narayan Singh, his capital originated apparently from savings from rents or previous profits from usury rather than from any loan taken from a professional banker.

Zamindars also lent seed grains to their peasants; the loan set in money according to grain prices prevailing at sowing time, and so insisting on the return of a larger amount of seed grain, based on prices ruling at the next harvest, in addition to interest charged at half-anna per rupee (16 annas going to a rupee) per month, yielding a rate of 37.5 per cent per annum. The same Lodha cultivator, mentioned above, borrowed seed grain from his landlord at these very terms (p. 119).

In mauza (village) Mathena of Pargana Puranpur in district Pilibhit, Puran, Ahir, the village Muqaddam (headman) stated, ‘I owe my landlord ₹55 on which I pay two pies per rupee per month. I have just repaid ₹3, It is an old debt, and runs from year to year’ (p. 151). The rate of 2 pies meant a rate of 12.5 per cent per year (192 pies going to the rupee), which seems a rather low rate for the times. It is possible therefore that there is an error in reporting here. The debtor probably said ‘two pice’ (paisa, not pāī)), which would give (64 pice/paisa going to the rupee) the precise rate of 37.5 per cent per annum, this being the usual rate for such loans in other districts.

From the same village, another Ahir cultivator, Buldas, owed ₹60 to this zamindar, the same rate of 2 pies per rupee per month (₹12.5% per year) being also given here. This too was a running debt as in the previous case. Buldas further says, ‘Whenever I want money, I get it from him at the above rate. Don’t borrow from anyone else’ (p. 151).

If our supposition that a confusion between pice and pie is involved here proves to be mistaken, the strikingly lower interest rate (12.5% per annum) might have been due to the fact that in Puranpur tahsil, containing large stretches of government forest, land was available for cultivation at very low rents varying from ₹1.50 to ₹1.25 per acre (contra Mathura and Etah, where rent per acre in some places was as high as ₹18 [p. 70] and was hardly anywhere lower than ₹3.4 [p. 91]). The low rents in forest areas in district of Pilibhit might have reduced the demand for credit there and so this may explain the low rate of interest reported from the locality of Puranpur.

A cultivator Hamid Khan Pathan of Pilibhit district stated that he owed his zamindar ₹40, and has just repaid ₹10, will repay the balance from standing rabi crop and then borrow again from him at the usual rate. ‘Owe nothing to any bania.… Will borrow bijh–khad (seed and food grain) from zamindar for next kharif’ (p. 152). The rate of interest is not given, though the source of credit is again the zamindar.

A further instance of a non-Banya lender also comes from Etah district: Tika Ram Brahman, a cultivator holding 7 acres of land besides dealing in grain, also carried on moneylending, from which he earned an estimated income of ₹100 a year out of a total income of ₹241 (p. 110).

Another non-Banya usurer from the district of Etah was a more plebeian character, being an oilman (pp. 83 ff.). He carried his own trade and cultivated his holding of three acres; along with this, he dealt in moneylending. His family’s annual income from cultivations and oil extraction was only ₹166, fairly low compared to moneylending that brought him ₹1,200 on a capital of ₹3,500, or a return of over 34 per cent per annum. The oilman’s capital originated presumably from his savings or previous profits from usury. No mention is made of his borrowing any money from a banker to add to his working capital.

An interesting example of the variety that the moneylender’s class consisted of comes from Mathura district: Kamle, Chamar (‘leather-worker’, depressed caste), was a peasant who also worked as a hired labourer (pp. 52 ff.). He owed ₹70 or ₹80 to various creditors; ‘Chamars and Thakurs as well as Banias’ at 6 pies on Re 1 per month, that is, 37.5 per cent per year at the simple rate.

In the district of Pilibhit too, we are introduced to a non-professional lender. Himself a lessee of village Sirsa Sardar, Badri Prasad lent ₹50 at Re 1 per cent per month or 24 per cent per annum to Gyan Kisan (pp. 152–53), a low rate compared to the rate of 37.5 per cent prevalent in this district. He also lent ₹40 to ₹46 to Medhi carpenter, who held 31.5 bighas, rate not stated (p. 153).

In the same district, we find Munji Banjara, who had come from Jaipur state a year ago and was cultivating 30 bighas after borrowing seeds from other Banjaras at sal-sawai, that is, at 25 per cent per annum. But he also borrowed grain for food from a Banya at deroha (misspelt dorha) rate of interest, that is one and a half maund for each maund of grain lent, repayable at the end of the harvest (p. 149), the interest amounting to 50 per cent per harvest, but in fact much lower since grain prices fell considerably at harvest time when the repayment was to be made.

From the district of Etah, we get valuable descriptions of big moneylenders, the so-called ‘Mahajans’, for example, Bajai Mahajan (pp. 115 ff.) who held over 29 acres of land, combined cultivation with sub-letting land to tenants and with usury, obtaining a total annual income of ₹479 out of which ₹350 came from moneylending. He made a saving of ₹102 over the year to add to his usury-capital.

Narayan, another Mahajan in the same district (pp. 110 ff.), is reported to have moneylending as his sole profession. He had an estimated annual income of ₹600 with an annual saving of ₹130. There were two granaries in his house that could jointly hold 400 maunds of grain while mustard and cotton were stored in the kothas (cells). Presumably, he frequently gave loans and received payment of interest in kind, so that he needed much space for storage.

The Mahajans, indeed, often lent seed grain to small cultivators: Bakhsha Chamar of village Mohunpur, tahsil Jalesar, district Etah, had to borrow grain from the Mahajan for seed for both harvests on payment of interest at the rate of 2 annas per rupee for each half year, that is, 25 per cent per annum (p. 73). Chita, a Lodha cultivator, borrowed seed grain from the Mahajan at an interest of 2 per cent, presumably per month (p. 74), which would yield nearly the same annual rate (24%).

The practice of lending seed grain appears to be so widespread in the area that in the case of the family of Rup Ram, Brahman, it is noted that ‘since they can also spare grain for seed, [they] have therefore not to borrow from the Mahajan’ (p. 71).

In tahsil Kasganj, at mauza Abhaipura, Baley carpenter borrowed grain worth ₹10 from the Mahajan on interest at 3 annas per rupee for every half year (i.e., 37.5% per annum). At the time of contracting and repaying the debt, the value of grain was calculated only at the current price rates (p. 82), so that besides the high interest rate, the principal in terms of kind was also much higher at the time of repayment.

Some lambardars too advanced seed grain. In district Mathura, Pargana Kosi, Kushhal, a lambardar, lent seed to Sukhi, a Jat cultivator, with which he sowed gram in 6 kachiha bighas (p. 48). From the outturn Suki intended to pay the lambardar his rent and price of seed as well. Interestingly, there is no mention of interest.

According to Babu Sanwal, deputy collector of Kalpi (Jalaun district), a large majority of agriculturists took advances from the sahukars at the time of sowing to repay it at the time of harvest. They borrowed seed generally at sawai rate, that is to repay one and quarter (25%) of the principal in money at harvest, the principal being computed at grain prices at sowing time when the loan was taken (p. 194). This really meant a rate as high as 50 per cent per annum in terms of money.

A more complicated relationship existed between lender and borrower in the case of Hari Singh, Chamar of tahsil Etah. He borrowed grain for sowing from a sahukar, and also took loans from him for payment of rent, besides borrowing from the same sahukar low-priced grains such as juar, bejhar and mung as well as carrots for food (pp. 114–15).

Babu Sanwal was therefore perhaps not wrong in remarking that the Sahukar, for petty cultivators everywhere, ‘was a person of great importance’. If he did not advance them seed or money when they required it, even if his terms be extortionate, the small peasants would be ruined and the land would lie uncultivated (p. 197).

The Banyas, despite competition from other castes, still formed the main body of usurers in the countryside, whom the rural borrowers had to deal with. Some of the Banya usurers were itinerant professionals. A Jat peasant of Mathura district borrowed ₹50 ‘in cash and grain’ from ‘a banker of mauza Hatin in the district Gurgaon’, in the adjoining province of Punjab (p. 44). Another Jat peasant in Mathura district took loan in grain and seed from another ‘banker’ living in village Bartai within Bharatpur State (p. 45). A Banya from the adjoining town of Amanpur lent ₹500 to Ballu Singh, Chauhan Thakur of village Nadarmai. The latter simultaneously owed ₹60 to the village Banya for seed grain and food (p. 120). Obviously for a larger amount, he had to go to the town.

In village Chakeri in district Etah, there were at least two professional lenders, Kishan Lal Bohra and Mohan Lal Bohra, about whose dealings we learn much. The former, as already mentioned, had lent ₹2,000 to Narayan Singh, a Thakur, at the moderate rate of 0.74 per cent per month (= 8.9% per annum), apparently because of high security offered by the borrower (p. 91). Another Thakur landowner Newal Singh Chauhan had borrowed ₹165 and ₹115 from Kishan Lal Bohra under two bonds of ₹90 and ₹25 each and ₹59 from Mohan Lal Bohra at 2 annas per rupee for half year or 25 per cent per year (p. 95). Obviously, the loan was not considered as secure by the two Banya moneylenders as in the case of Narayan Singh Thakur (pp. 94–95).

The same moneylenders are again referred to in the case of Jhabu Teli, a cultivator of mauza Chakeri, tahsil Kasganj, who owed ₹400 to Mohan Lal Bohra and ₹200 to Kishan Lal. He had entered into an agreement to pay annual instalments of ₹40 and ₹50 respectively on account of these debts (pp. 97–98). No rate of interest is mentioned with reference to these transactions but it is stated that on money borrowed for seed grain Jhabu Teli paid 2 annas per rupee per half year (i.e., 25% per annum) (p. 98).

In the villages of district Pilibhit where rents in kind at the rates of one-half and one-third prevailed, cultivation of sugarcane as a cash crop appeared to be gaining in importance. As a consequence, a different kind of moneylender, the ‘sugar boiling bania’, emerged, owning vat (bel) for boiling cane juice (ras). Holderness remarks that ‘the sure test of the prosperity of the sugar cultivator is his making gur himself from his cane juice and the absence of a bania’s sugar boiling vat from the village’ (p. 146).

The acuteness of this observation is borne out by the fact that out of the ten cultivators growing sugarcane, four who made gur (jaggery) and sold it reported that they were indebted only to their zamindar and none else, while two of them explicitly stated that they owed nothing to any ‘sugar Banya’. Even those three who sold cane juice to the Banya did not take advances from him so as to escape the usurious net of the ‘sugar Banya’.

But Birla Murao (p. 154) who sold cane juice at ₹27 per 100 Kachcha man (maund) to a ‘sugar Banya’ at ₹2 – 11 – 9 (~ ₹2.75) owed ₹25 to the ‘sugar boiler Banya’, since, as he admitted, ‘I agreed to deliver more than my fields produced’ and took advance money.

Munni Chamar too owed ₹27 at Re 1 per cent per month (12% per annum) to a sugar-boiler owner. ‘I borrowed more than my sugar outturn and according to the written agreement (tamassuk), I have to pay Re 1 per cent per month on the balance’ (p. 154).

The most interesting case is that of Gayan, Muqaddam (pp. 152–53) who sold cane juice to a Banya, whose sugar boiler (vat) was in the village, at ₹27 per 100 kachcha man for ₹80 (he cultivated sugarcane on about 14 bighas). He owed to the sugar boiling Banya ₹80 at Re 1 per cent per month and to another sugar-boiler owner ₹40 at the same rate. These loans were old. He admitted that ‘As Muqaddam of the village they let me off the interest, and I help them in their sugar-dealings with other tenants of the village’. He further adds that ‘if I was not in debt to them, they would given me commission (dallali) as the Muqaddam’. Such complex relationships also influenced the terms at which credit was extended.

In the village Sudderpur in Pargana Jahanabad where irrigation from canals was available and hence much sugar cane was grown, the cultivators said they did not deal with any Banya but made their own gur. They further added that their zamindar had tried to induce them to sell their cane juice in advance to a ‘sugar-boiler bania’, as the banya would give commission to the zamindar out of his profits, but they had refused to do so (pp. 145–46).

On the other hand, in village Mirpur, tahsil Bilaspur, the cultivators sold their sugar crop to a sugar merchant under a registered contract promising to deliver stated quantities of cane juice for money advanced and in case of default to pay interest. They were reported to be never out of debt (p. 157).

In mauza Rupur in tahsil Pilibhit some 8 or 9 years earlier, similar situation was reported to have occurred when a Banya of Pilibhit had established his vat, all cultivators were on his book. But it is reported that the zamindar, who happened to be a retired deputy collector, freed all the cultivators from the Banya by paying their debts and settling instalments. It is reported that the tenants had begun to run away as they had been almost ruined until this particular zamindar freed them of debt and so saved the village (p. 157).

Clearly, therefore, the sugar boiler was another means by which a moneylender could entwine his usury with a ‘capitalist’ enterprise: Besides purchasing the raw material from independent sellers, the ‘boiler Banya’ tried to establish a secure and cheaper source of supply by extending loans to the producers. This was one illustration of how complex rural usury relations could become.