Notes on Hindu capitalism

Notes on Hindu capitalism – continued: #4

On August 18, 2012, in Economics, India, by Sanjeev Sabhlok

I'm continuing my compilation on Hindu capitalism – a topic that seems to have been seriously under-researched.

Why is this issue important? Am I trying to revive Hindutva theories? Or aligning myself with the BJP types? Not at all!

If I can demonstrate that Indian history and economy was primarily a PRIVATE ENTERPRISE capitalist economy, not socialist, then I can debunk ridiculous claims of "Vedic socialism" and "Integral Humanism" which arise primarily from poor scholarship and the strong influence of Nehru's Fabian socialist ideas.

If we can prove that Hinduism is innately CAPITALIST, then we've won half the battle against Indain Marxians, Keynesians and other socialists.Then we can hope that LIBERTY will once again occupy the heart and minds of Indians.

This is a very important project. I'd encourage all FTI members (and others!) to get involved. Let's try to understand how ancient India worked, and if we determine it was capitalist, then we can sell freedom to India more easily.

The following is a brief extract from my copy of A Concise History of the Indian Economy 1750-1950, by Dhires Bhattacharyya, Prentice Hall of India, 1979.I've checked Wikipedia (Indian banking) but it seems to start from when the British came, and doesn't cover pre-British capitalism in India. I'll keep researching as time permits. Please assist.

There's a book cited below (The rise, progress, and present condition of banking in India, Charles Northcote Cooke, P.M. Cranenburgh, Bengal Print. Co., 1863) that I've downloaded and will review.

BANKING DEVELOPMENT IN INDIA

"IT is not improbable," remarked Cooke in his book on Banking in India, "that long before England had ranked in the scale, of nations, India had adopted a system of banking which may have originated that now in use with the shroffs or native bankers." The antiquity of Indian banking can be established by references to bankers and bank documents in the Arthashastra of Kautilya and laws of Manu.

During the period of Mughal rule bankers and financiers were held in high esteem; the financial stability of the Royal Court appeared to rest on the principal bankers of the country. (At the court of the Nawab of Bengal in the eighteenth century the Royal bankers (Jagat Seths as they were called) exercised tremendous influence and discharged useful banking functions. One of their functions was to stand as surety, for a consideration, on behalf of zamindars who were unable to pay the instalments of land revenue in time.) Banking activities were usually the monopoly of a few castes who were known by different names in different parts of the country.

The European trading companies in India at one time made frequent use of the services of India's indigenous bankers. The bullion which was imported by the companies was usually sold (at a discount) to the Royal bankers who often enjoyed a monopsony in respect of bullion purchases. For their purchases in India the companies had sometimes to resort to borrowing from the native bankers at rates usually varying between 9 and 12 per cent per annum. The banking houses were found useful by the East India Company for remitting its revenues from one part of the country to another and getting different types of currencies then circulating in the country exchanged for one another.

By the second half of the eighteenth century European Agency Houses began to come into existence. Usually founded with the accumulated capital of retired English traders and officials, these houses rendered a number of financial services for which the help of native bankers had to be sought in an earlier period. The rise of these European houses hastened the process of disintegration of native banking establishments which were already suffering from the disappearance of the royal patronage and the new system of revenue administration introduced by the Britishers in this country.