It started with Plassey...


Bhupesh Bhandari New Delhi
Thomas A Timberg
Allen Lane, Penguin
184 pages; Rs 499

Agrasena was the legendary king of Agroha (now in the Hisar district of Haryana). It is said that 17 of his sons decided to become tradesmen. As their profession was vanijya, Hindi for commerce, they came to be called the Banias. When north India was hit by waves of invaders, the community spread to towns and villages in other parts of the country. For centuries together, they controlled commerce in the country as traders, shopkeepers, moneylenders and bankers. Some of them even financed wars and military campaigns. The most famous of them are those from the arid regions of Rajasthan - what was once called Maru Desh, or desert. Over time, they came to be collectively called the Marwaris.

The rise of the Marwari community has been documented very well by several researchers. Thomas A Timberg is an old expert on the subject. His Harvard doctoral dissertation was on the rise of the Marwaris as industrialists. In 1978, he wrote The Marwaris: From Traders to Industrialists, which is recognised as one of the most authoritative texts on the community. The Marwaris: From Jagat Seth to the Birlas is his second book on the subject and the fifth in Penguin's "The Story of Indian Business" series.

The all-important question is, what is it that has made the Marwaris so successful in business? Gurcharan Das, in the foreword to the book, says it is something akin to the Protestant ethic, which, according to Max Weber, made Europe progress faster than others: belief in hard work, thrift and rationality. Apart from that, the readiness to postpone instant gratification, coupled with the ability to take risks, has stood the Marwaris in good stead. They are practical people who stay away from disruptive confrontations as much as possible. The Marwaris have given to the world the hundi system of bill discounting, the parta way of accounting, and established the importance of trust in business (in other words, the importance of protecting one's honour, or saakh, by sticking to one's word). The Marwaris were vilified for long in popular culture as bloodsuckers; it is only in the post-liberalisation era that people have woken up to the contribution that the community has made to economic growth.

The most famous of all Marwari families are the Birlas. Before them was Jagat Seth of Murshidabad, who, along with Omichund and Mir Jafar, is said to have conspired against Siraj-ud-Daula, the Nawab of Bengal, in the Battle of Plassey in 1757. That gave the East India Company its first decisive victory in India and helped establish its first colony. Various travellers of that time wrote about Jagat Seth's enormous wealth (one traveller described him as "the greatest shroff and banker in the known world") and his clout in the Bengal court. But who really was Jagat Seth? Mr Timberg tells us that Jagat Seth (the name means banker to the world) was an honorific given to one Fateh Chand by the Mughal emperor in 1722.

The founder of this house was Hiranand Sahu, who came from Nagaur in Marwar to Patna in 1652. He lent money to local chieftains as well as foreign traders there. His eldest son, Manik Chand, moved to Dhaka, the capital of Bengal and a key centre of commerce, in the later years of the 17th century. When Murshid Quli Khan, the Nawab, moved the capital to Murshidabad, Manik Chand too went along with him. On his death, in 1714, Manik Chand was succeeded by Fateh Chand - or Jagat Seth. Between 1718 and 1730, he lent on an average Rs 4 lakh a year to the East India Company. But he knew how to hedge against his risks. As late as 1757, he was also lending Rs 4 lakh a year to the Dutch East India Company and Rs 15 lakh to the French East India Company.

Though Jagat Seth supported the British in the politics around the Battle of Plassey, his importance began to decline soon thereafter. The capital moved to Calcutta, which left the family (Jagat Seth died in 1763) stranded at Murshidabad. It failed to diversify into new areas like inland trade. Splits led to costly litigation and some serious erosion of the family's wealth. Even in Murshidabad, by 1971, the largest banker was not the house of Jagat Seth but Manohar Das Dwarka Das, a Varanasi Agarwal. By the 19th century, the Jagat Seth family was forced to seek a pension from the British government in order to survive.

Gurcharan Das, in the foreword, says that in his childhood, elders would take three names while talking about fabulous wealth: (JRD) Tata, (Ghanshyam Das) Birla and (Ramkrishna) Dalmia. Thus, two of the three richest Indians were Marwari gentlemen; the third, Tata, was a Parsi. Since then, the world of business has become more open. Other communities have made serious inroads into Marwari territory. In "The Billionaire Club", Business Standard's annual listing of stock market wealth, there were just two Marwaris among the top 10 in 2013 - and three among the richest 25. Their representation was particularly weak in sunrise sectors, such as information technology, pharmaceuticals, financial services and real estate.

If their importance has reduced, how relevant is Mr Timberg's book? This series of books is meant to introduce the reader to the country's business history. It serves that purpose.

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First Published: Jun 12 2014 | 9:25 PM IST

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