India’s Money Lenders – The Colonial Stereotypes
“Families have lost land, farmers have been asked to prostitute their wives to pay off debts …” writes Krittivas Mukherjee / Reuters.
Outdated Bollywood Style
I wonder what is the source of Krittivas’s article. I wonder how many prostitutes these money lenders have – from their 2,00,00,000 farmer-borrowers. Which era are you in, Bro. Krittivas? Apparently, the ghost of East India Company is alive, well and kicking. Is this the kind of grovelling that has to be done to be a part of Reuters, Krittivas? Friend Krittivas is reading a lot of colonial era propaganda – and seeing old Bollywood movies.
Even Bollywood has stopped this kind of portrayal of money lenders now. TV serials these days have business families as stars of the show.
A financial newspaper, The Mint, dutifully carries this Reuters article. Published jointly by The Hindustan Times and The Wall Street Journal, The Mint, regularly carries such bloopers. In yet another article that the Mint carried, for instance, writes how Indian “cities began suffering chronic milk shortages soon after independence in 1947” – implying that colonial India was the land of milk and honey. This kind of editorial blindness nearly makes me believe that the Indian Government got it right with the previous policy of excluding foreign media.
Some Stats About Money Lenders
There are 34,000 money lenders – and they have lent money to more than 2,00,00,000 farmers. They account for nearly 30% of the rural credit flows – and more credit than all the nationalized banks put together. They charge between 18% to 36% p.a. interest generally. Lesser than what most ‘educated’ credit card users pay – and what ‘modern’ banks charge their English-speaking customers.
So much about ‘usury’ by money lenders.
The Seths Who Funded The East India Companies
The vilification of the money lender by the British Colonial Raj at various times for political and economic gains has unfortunately been carried forward in post-colonial India. The English East India Company (EEIC) was initially funded and grew on Indian capital. The House Of Jagat Seth was most famous – and one of the largest banking families in the world. Virji Vora, Shantidas were other merchant bankers who funded the various European Indian Charter Companies in their trade. EEIC officials could not forget their supplicant status with these ‘seths’ – when they were desperate borrowers.
After 1757, and the occupation of the Bengal, Bihar and Orissa, transactions with the East India Company caused the ruin of many Indian lenders.
The other reason why money lenders were portrayed as villains by the the Colonial administrations was merchandise. Instead of bonded producers of Europe, Indian producers were free to sell their product to the highest bidder. The EEIC found that their contracts could be annulled by repaying the advance amounts. And the weavers and other producers could repay the advances by borrowing from the local money lender.
20th Century Vilification
Later during the Great Depression and the so-called ‘Indian currency crises’, Britain was extracting gold from Indian peasants, to overcome its own problems. For British loot to happen and to make their policies effective, they needed to leave the peasant without options. The only way to do that was to curb the money lender. To achieve this aim, between 1925-1940, enquiry commissions were created – and propaganda ‘reports’ flooded the system.
The colonial India Government passed many of the laws restricting money lending activities. These reports – Central Banking Enquiry Committee (CBEC) report (1929) and its associated Provincial Banking Enquiry Committee reports (of Assam, Bombay, Burma, Ceylon, Central Provinces, Bengal, Punjab, et al) of which the Madras Provincial Banking Enquiry Committee (MPBEC) report is cited by lazy academics and out-moded bureaucrats as authoritative – even in post-colonial era.
April Fool Jokers?
April Fool Joke – The RBI
On April 1st, 1934, while the ‘Squeeze India’ campaign was under execution India’s banking authority was set up – choreographed by Montagu Norman, Neville Chamberlain, Winston Churchill (some sickness … some racism) Lord Willingdon. From that April Fool’s day till now, RBI’s character has not changed. It remains isolated, out of touch with the India – and looks at India through colonial viewing glasses.
The tragedy is that RBI is not alone. The IAS (a successor to the ICS) and the Planning Commission are the other two. Compare that with the brilliant track record of modern Indian regulators and organizations like the SEBI, TRAI.
Legalized Harassment & Extortion
Debt Conciliation Acts were passed between 1933 and 1936 by the governments of Assam, Bengal, Central Provinces and Berar, Madras and Punjab; the Punjab Regulation of Accounts Act (1930) and the Debtors Protection Acts of 1935 and other such burdensome laws buried the money lender in mountains of paperwork and licences. These laws required money lenders to comply with extensive and prolonged compulsory licensing and registration – and extensive recording of transactions and accounts.
What these laws achieved was what was desired – a license for police and other ‘inspectors’ to start an extortion racket from money lenders (these days called corruption). A bureaucrat from colonial Punjab, Malcolm Darling (1925) shedding crocodile tears stated “the Indian peasant is born in debt, lives in debt and dies in debt” became a by line for tarring the money lender – while the cause was extractive, colonial revenue practices.
Options Foreclosed
These restrictions on money lending foreclosed the liquidity option for the Indian peasant, which would have averted the gold outflow from India and the impoverishment of the Indian peasant. With this legalized persecution, money lenders’ activities were curtailed all over India. RBI joined in this hounding of the money lenders – which continues to this day. The Bengal Burma link of the ages was broken. Chettiar money lenders were thrown out of Burma. From being a granary of Asia, Burma started declining – and there was no rice for exports. Result – The Bengal Famine of 1943. Tally – 40-50 lakh deaths. Similarly, the role of Chettiars in Singapore was wiped clean.
After the fall of Singapore, and the rapid Japanese advance, with Subhash Chandra Bose in the vicinity, a revolt by Bengal would have had catastrophic effect on the colonial administration. Howard Fast, in his novel ‘The Pledge’ believes that the Bengal Famine was deliberate creation– possibly to weaken the local population.
Subhash Chandra Bose occupied a large mindshare within and outside India. (Image source and courtesy - editstreet.com). Click for a larger image.
The RBI, a colonial era body, continues with these colonial anti-Indian policies. They keep ever-greening and recycle colonial policies. Old laws with new labels and different wordings are made – with the same intent. Kill the money lender. In all this, it is Indian agriculture and the peasant who suffers.
Even the rare modern supporter of the money lender does not see the colonial baggage that India and Indians governance carries, sees only half the picture – and little opportunity.
The Pre-WW2 Currency Crisis
After (colonial) India’s accession to the world gold standard in 1898, India rapidly built up a export surplus – and British reserves of gold started drying up – in spite of gold export restrictions to India by the USA, Britain and much of the Western world. There was hysteria in popular press and politicians on the subject of India and its appetite for gold. To overcome this payment crisis, it was decided to pay India in silver released by the Pittman Act. Subsequently, even payments in silver became difficult. India then started getting paid by Bank Of England credit notes.
By WW1 end, it was evident that sooner rather than later, India would obtain independence. Between 1920-40, in a series of measures, it was decided to reverse this policy. Central bankers from the USA, Britain, France and Germany had many meetings to “coordinate monetary policy.” The agenda – gold flow management between themselves and an obvious understanding – don’t let the browns get the gold. They (Hjalmar Schacht, Governor, Reichsbank, Charles Rist, Deputy Governor, Banque de France, Benjamin Strong, USA Federal Reserve, Montagu Norman, Bank Of England) agreed that Indian demand for gold had a “deflationary effect on global liquidity,” therefore “Indian demand for gold had to be regulated.” So, while the West consumed Indian production and goods, they regulated Indian demand for gold!! The result – Bengal Famine of 1943 which killed 40-50 lakh Indians. As Gideon Polya has pointed out, Australian sheep have lower mortality rates.
Like much of Western history, the British (Lord Willingdon, Neville Chamberlain, Montagu Norman, Winston Churchill – as the Chancellor of the Exchequer) executed a scorched earth policy in India. (After all what is brown life worth?) They implemented a series of economic and administrative measures that killed millions in the Bengal Famine would impoverish India – and sustain the empire.
Montagu Norman, Winston Churchill (then the Chancellor of the Exchequer) returned to the gold standard – with the famous prediction by Keynes that this action would result in a world wide recession – of which much came to pass. Churchill confessed “I’m lost and reduced to groping,” but went along with Montagu Norman, united by their racism.
On October 27th, 1931, the Ramsey Macdonald led “National” Government (Conservatives and Liberals coalition, fearful of the rising Labour Party) in Britain won a huge majority of 554 MPs of 615. The economic crisis of September (misnamed as the Indian Currency Crisis), ensuing Depression era problems in the US, the Weimar Republic problems – and other issues pushed this ‘National’ government to ram through a series of measures (page 130-131) that depressed silver prices, inflated gold prices and raised interest rates in India.
Done over the protests by Gandhiji, trade bodies and merchants and threats of resignation by the Viceroy and his Executive Council , the resulting ‘money famine’ (page 155) had the Lord Willingdon ecstatically say ‘… Indians are disgorging gold … (page 156). Indians have a different reason to revile Neville Chamberlain who with great satisfaction said “…The astonishing gold mine that we have discovered in India’s hordes has put us in clover …”after impoverishment of the Indian serf.
What Can be Done
The largest rural credit agency system, which knows Indian agriculture like the back of its hand, is available to the Indian economy. Trash the colonial propaganda – and use these money lenders.
Step 1 – Stop calling them money lenders. This term was used and has acquired pejorative connotations.
Step 2 – Bring them under SEBI – an effective organization, not reputed for corruption.
Step 3 – Increase credit supply – and interest rates will automatically fall. Allow re-finance to these ‘banias’ – based on their loan books.
Step 4 – Create credit enhancement tools – by use of traditional adhatiyas, other money lenders, property collateral of the end user, etc.
Step 5 – Induce competition by simplifying registration and inducing initial success for existing and new comers.
These credit experts can become low cost credit delivery mechanisms – which will revolutionize Indian agriculture. Will Indian planners grow out of their colonial moulds? Will Indian legislation go native? Sooner the better.
What Can The Money Lenders Do?
Under generations of persecution, extortion and discrimination has blunted the organizational capability of the ‘native money lender.’ He needs to look at himself afresh – and exploit business opportunities and use his knowledge of the Indian financial ‘consumer.’
A simple outline of an action plan for the money lenders to reclaim their position can be as follows: –
1. Incorporate a holding company.
2. Contribute one lakh rupees capital per member – with 34,000 members.
3. Create a paid up promoter capital of Rs.340 crores – and an IPO for 660 crores.
4. Obtain RBI licence for a rural bank with this paid up capital of 1000 crores.
5. Enrol all money lender members as DSAs.
6. Refinance money lender portfolio – and create further liquidity.
7. Use the money lender network to raise deposits, sell insurance, obtain refinance mortgage for housing, etc.
Even a conservative estimate of Rs.1.00 crore lending, guaranteed by these money lenders can inject Rs.34,000 crores of investment in the agricultural economy in India. SEBI can be co-opted to create appropriate supervisory and oversight measures.
Post Script – The source of Krittivas’s article
It is 6 months and Krittivas has not seen it fit to give sources or details of his dubious charges. So, let me give the details. This entire story of prostitution of wives to money lenders was a colonial idea that the British plagiarised from a very successful French Emile Zola novel, Germinal (1885).
Of course, most of Zola’s work was propaganda for the Socialist causes that were dear to him. The Vatican banned Germinal – and proscribed its reading by Catholics. India’s vernacular press fighting for survival had no sources to overcome this propaganda. Indian English press was, of course, under colonial domination. When Emile Zola died in 1902, he was given a State funeral and the crowd chanted ‘Germinal, Germinal’.
Does this give you some idea, Bro.Krittivas, on how much propaganda we are targetted with, before you start hitting the keyboard.
Related articles
- Desi Nostalgia For British Raj (quicktake.wordpress.com)
- Flag error leaves Jeremy Paxman University Challenged (telegraph.co.uk)
- Explaining the Methods of Hard-Money Lenders (blogs.wsj.com)
- How British Raj Ended Thugee in India (2ndlook.wordpress.com)
3 That Changed The World – Boghazkoi Clay Tablets
Egyptian temple complex of Abu Simbel, Southern Egypt. (Photograph by David S. Boyer, Courtesy - National Geographic). Click for larger photograph.
Ramesses-II goes to war
1301 BC. An Egyptian land army, numbering more than 20,000, (divided in 4 divisions), set out on a campaign, lead by Pharoah Ramesses-II of the XIX Dynasty.
Ramesses-II, lived for more than 90 years, was probably the Pharaoh at the time of Exodus of Hebrews under Moses.
Ramesses-II is known in history for the construction during his reign. Most notably, the Temple Of Abu Simbel, Temple Of Nefertari. How would Abu Simbel read in Sanskrit – ‘abu’ is elephant, ‘simba’ is sinh i.e. lion and ‘bal’ is strength.
Cause of War Of Kadesh
Of the two warring sides, one was the Egyptian Pharoah RamessesII (1279-1212 BCE). With a land army of 20,000, and a naval Egyptian force set sail, in ships, to reach Byblos and squeeze the Hittites in the world’s first pincer movement. Ramesses-II set out to punish a small kingdom. Of Hittites, for trying to lure the Amurrus, Egyptian vassals, to the Hittite side.
Bedouin Slaves Being Beaten - Battle Of Kadesh
A lesser known (to modern history) element, were the Hittites led by Muwutalli-II, who had cobbled an alliance of small kingdoms.
Both these kingdoms were interested in the Syria and Palestine areas through which trade was carried out with India. Syriac and Palestinian lands were controlled by the Amurru – who were Egyptian vassals. The Hittites were a liberalising element in the Middle East /West Asia and possibly the Amurrus had defected to protect their political identity.
The campaign
During the march, leading to the Kadesh battle, the Egyptian army captured two Bedouin “spies”. These “spies”, after being sufficiently beaten, “revealed” to the Pharoah important information – giving confidence to the Pharoah that the Hittites feared the approaching Egyptian army. The truth was the opposite.
Battle Of Kadesh
The Greatest Chariot Battle In History
What followed was a historic chariot battle.
The awaiting Hittites ambushed the Egyptian army. These spies, in fact, were Hittites – sent to misinform the Egyptians!! An estimated 2500 Hittite (Ramesses’ estimate) chariots saw action. For two days the battle of Kadesh raged. Fought on the banks of the Orontes River in Syria.
The Egyptian king was saved at the last minute by the appearance of his reserve troops.
The Historic Treaty
After this battle, the Egyptians and the Hittites sat down and wrote their versions of this battle – which makes it rather unique. One of the few times in ancient history, where we get both versions of the battle. Two copies of the treaty were made. One, in Egyptian hieroglyphics and the other, in Hittite-Akaddian, and both survived. Only one difference in both the copies – the Egyptian version (recorded on a silver plaque) states that the Hittite king who wanted peace. In the Hittite copy, it was Ramesses-II who sent emissaries.
Queen Nefertari (Photograph by Kenneth Garrett 1997, NGM, From Treasures of Egypt, 2003.).
The two queens – critical factor
Peace broke when the queens of Hatti and Egypt, Puduhepa and Nefertari, sent one another congratulatory gifts and letters. Over the next 15 years, they arrived at modus vivendi and drafted a peace treaty. Puduhepa continued to be an active diplomat, co-signatory to the treaty of Ulmi-Teshub treaty.
This peace treaty is the first in recorded history. A replica of this peace pact, in cuneiform tablet, found at Hattusas, Boghazkoi, hangs above the Security Council Chamber, United Nations, in New York, – a demonstration to modern nations the power of peace through international treaties. At Boghazkoi other Hiitite treaties have been found.
Another Treaty
The second discovery in the West Asian history, is the Treaty between the Mitannis and Hittites. In 1450 BC, Suppiluliuma I of the Hittites entered into a treaty with the Mitannis. The Mittanis of the Amarna Tablets fame were linked to the significant power in the region – Egypt. As already outlined, the Mittanis were the closely associated with the Egyptian Pharaohs by marriage. And the Mittanis were also Indo-Aryans.
What Is Special About This Treaty
In this treaty, Vedic Gods like Indra, Varuna, The Ashwini twins were invoked to bless and witness the treaty. The Hittites who had become past masters at treaties did not invoke these Gods with any other kingdom – except the Mitannis. Hittites and Mitannis were Indo- Aryan kingdoms – in full presence, with their Vedic Gods and culture.
The Zannanzas Puzzle
The 3rd interesting link between the Mitannis and the Hittites was the Zannanzas affair. After the death of Tutankhamen, (The Boy King) the XVIIIth Dynasty of Egypt was without a ruler. Tutankhamen’s queen, Ankhesenamun, a princess of Mitanni descent, needed a husband to continue the dynasty and protect the throne. She sent some urgent missives to the Hittite King, Suppiluliuma – asking him to send his son, to her as a husband, and become the King Of Egypt. The suspicious Hittite king ignored the missive. A second missive followed – and then a young prince was sent to Thebes (the capital was moved from Amarna back to Thebes).
The young prince never reached Egypt. He was possibly killed en route. And Tutankhamen’s Queen? Never been heard of since then.
How Do We Know All This
In 1906-07, an Turkish archeologist , Theodore Makridi-Bey, started excavations at Boghazkoi, (now identified as the ancient city of Hattusas) in Cappadocia, 150-200 kms from Ankara, Turkey. The name of the Hittite city, Hattusas, is possibly derived from the Sanskrit word, hutashan, हुताशन meaning ‘”sacred sacrificial fire.”
He was joined by Hugo Winckler, a German archaeologist, specialising in Assyria. They unearthed more than 10,000 clay tablets which proved to be of tremendous interest. A Czech cryptographer, born in Poland, working in Germany, Friedrich (or Bedrich) Hrozny, working in Germany cracked this code over the next 15 years – and that set off a furore amongst archaeologists.
What do the Boghaz koi tablets show
Deciphered cuneiform tablets show Hittite worship of Varuna, Mitra and Indra – Gods worshipped by Indo-Aryans. Rulers and Kings had names likes Shutruk (Shatrughna), Tushrutta meaning “of splendid chariots” (similar to Dashratha; Master of Ten Chariots) Rama-Sin (Assyrian Moon Good was Sin; in Hindi Ramachandra), Warad (Bharat). One of the Hittite allies against Ramesses II was Rimisharrinaa, रामशरण the King of Aleppo. (One of my grand uncles is also named as रामशरण – a common Indian name 4000 years later, 4000 kilometers apart).
These Hittites ruled immediately before and after Hammurabi – the much proclaimed western world’s first law giver. Hammurabi’s legal concepts of vengeful laws and retributive justice are the basis of laws in the 3 ‘desert religions.’
The Elam culture had a language which is similar to Dravidian languages. The Mitannite, Kikkuli, wrote on how to manage chariot horses. Egyptian king, Amenhotep I, married a Mittanite princesses. Elamites were founders of the first kingdom in the Iranian geography.
Some archaeologists await the discovery of tombs to establish the identity of kings. They may never find them. In Vedic cultures, there are no tombs – like the Pyramids, or the Catacombs, or Mausoluems. Vedic Indo Aryans cremate their dead. They do not build memorials or mausoluems.
Religious freedom
The Hittite kingdom came to be known as the “kingdom of thousands of gods.” Like the Mittani, the Hittites too, added the gods of the conquered people to their own list of gods – instead of imposing the Hittite religion on the conquered peoples.
Why does this sound familiar?
This is significant as the Western concept of slavery was to deprive the captured of their religions (for instance, The Wends and their religion). This is another display of slave reform by Indics 3000 years ago.
Valued 3000 years later
These inscriptions were held sacred by the locals, 3000 years later and William Wright, an European investigator, had difficulty in noting these inscriptions. In 1870 The Hittites were named, by William Wright and Oxford University linguist A. H. Saycebased on Biblical short references, as one of the tribes of Palestine in the first millennium BC. It was a “son of Heth—a Hittite—who sold the Prophet Abraham the land to bury his much-loved wife, Sarah”. Modern view is Hattusas-Hittites (Yazilikaya/Boghazkoi/Carchemish) have nothing to do with the Biblical Hittites.
The Boghazkoi tablets changed modern history. From a completely Greco-Roman (read Euro-centric) history, the pendulum had swung to the other end. Boghazkoi showed Indian presence in the thick of West Asia in the year 2000BC with their culture and technology. This has pushed Indian history back by at least by 2000 years – to 4000 BC.
The Amarna letters and the Boghazkoi tablets have given archaeological proof of the Indo Aryan spread. Earlier, theories were retro-fitted, based on Biblical dates (Max Mueller’s, (specialist in “Compartive Theology”); main aim – “save” Indian pagans; make them see “the light” of Christian belief), colonial propaganda (Max Mueller, though a German, was a British employee) and racism. Hazy systems like philology, linguistics, comparative linguistics were used to define history. Now hard archaeological proof shows something else. Written texts, deciphered and decrpyted give us a new theory.
These discoveries and their implications have been buried under a mound of silence. Although well known in academic circles, these discoveries have not been used to update popular history. In the next (and last instalment of this series) I will trace how DNA testing is the third major tool used to reveal history!
PS – One of the big hits in Japan is the manga comic series “Red River” by Chie Shinohara. The entire series is based on this interaction between the Hittites and The Egyptians. The Red River is a work of fiction – so it cannot be taken as history – but the intrigue, silence, drama obviously inspired the author.
2ndlook 
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