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The ‘Great Firm’ Theory of the Decline of the Mughal Empire

  • Karen Leonard (a1)

Most historians of the Mughal empire currently emphasize economic factors in their attempts to locate and measure the causes of imperial decline in seventeenth- and eighteenth-century India. Recent articles reiterate a standard set of tensions: those between monarch, military and service nobles (mansabdars), landholders (zamindars), and peasants. Existing theories attribute the Mughal decline to the nature of the monarchy, the breakdown of the mansabdari administrative system, and the challenges from newly established regional rulers. One influential analysis points to the increasing burden of taxation and consequent zamindar-peasant rebellions throughout the empire as the fundamental cause of decline. The nobility and the mansabdari system have received most attention, however. Historians have emphasized the strains caused by numerical expansion, inflation of noble ranks, and the ‘aristocratization’ of the mansabdars through conspicuous consumption and hereditary control of positions.

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A preliminary version of this article was presented at the Seminar on ‘Decline of the Mughals’ at the University of Pennsylvania, May 1974; criticism from the other participants, but even more from Dr. John G. Leonard, has helped improve that version.

1 Peter Hardy has referred to this standard ‘diagram of tensions’ in his commentary upon two of the most recent articles: Hardy, P., ‘Commentary and Critique,’ Journal of Asian Studies, XXXV: 2 (02 1976), 257. The articles upon which he is commenting are Pearson, M. N., ‘Shivaji and the Decline of the Mughal empire,’ 221–35, and Richards, J. F., ‘The Imperial Crisis in the Deccan,’ 237–56, both in the same issue.

2 Habib, Irfan, The Agrarian System of Mughal India (Bombay, 1963), argues for oppression and revolt. Two often-cited views focusing upon factions among the nobility are Chandra, Satish, Parties and Politics at the Mughal Court, 1707–1740 (Aligarh, 1959), and Ali, M. Athar, The Mughal Nobility Under Aurangzeb (Aligarh, 1966). Two regional perspectives are given by Calkins, Philip, ‘The Formation of a Regionally Oriented Ruling Group in Bengal, 170O-1740,’ Journal of Asian Studies. XXIX: 4 (08 1970), and Leonard, Karen, ‘The Hyderabad Political System and Its Participants,’ Journal of Asian Studies, XX: 3 (05, 1971), 569–82.

3 See the two articles cited in footnote 1; Pearson argues that military efforts in the south and the defeats inflicted by Shivaji decisively affected the loyalty of the nobles, and Richards argues that policy miscalculations led to artificial jagir shortages and inattention to newly incorporated warrior elites in the south.

4 Useful discussions are by Eisenstadt, S. N., The Political Systems of Empires (New York, 1963), and The Decline of Empires (New Jersey, 1967).

5 The generalization has interesting implications for scholars of cultural and intellectual movements in medieval and early modern India, such as the bhakti movements, the development of vernacular poetry, the shifts of artistic patronage to regional courts, and those political movements led by Shivaji or the Sikh gurus.

6 The analysis draws upon Eisenstadt, , Political Systems, particularly ch. 12.

7 Ibid., and his Decline of Empires, pp. 35; and Udovitch, A. L., ‘Credit as a Means of Investment in Medieval Islamic Trade,’ in Journal of the American Oriental Society, 87:3 (0709, 1967), 6064.

8 Eisenstadt, S. N., Essays on Comparative Institutions (New York, 1965), 203, suggests this line of reasoning, which is clearly relevant to the Mughal empire.

9 For an introductory discussion of ‘Elites,’ see Keller's, Suzanne article in the International Encyclopedia of the Social Sciences, Vol. 5 (New York, 1968), p. 28.

10 This is Michael Pearson's view, particularly in his unpublished dissertation, ‘Commerce and Compulsion: Gujarati Merchants and the Portuguese System in Western India, 1500–1600,’ University of Michigan, 1971. He has modified his view of their role in politics to some extent in his article, Political Participation in Mughal India,’ Indian Economic and Social History Review IX:2 (0406 1972), 113–31.

11 See Habib's, Irfan three articles: ‘Banking in Mughal India,’ Contributions to Indian Economic History, 1 (Calcutta, 1960), 120;Potentialities of Capitalistic Development in the Economy of Mughal India,’ Journal of Economic History, XXIX (03 1969), 3278; and Usury in Medieval India,’ Comparative Studies in Society and History, VI: 4 (07 1964), 393423. Also, Smith, W. C., ‘The Mughal Empire and the Middle Class-A Hypothesis,’ Islamic Culture, XVIII: 4 (10 1944), 349–63.

12 For examples of such treatments, see Pearson, , ‘Political Participation,’ op. cit., p. 119–23;Gadgil, D. R.Origins of the Modern Indian Business Class (New York, 1959), especially pp. 2328, and the same author's tentative conclusion that ‘mahajans’ in Poona were socio-religious organizations for immigrants, Immigrant Traders in Poona in the 18th Century,’ Artha Vijnana I (03 1959), 16; and Gillion, K. L., Ahmedabad (Berkeley, 1968), pp. 1624.

13 Timberg, T. A., ‘A Study of a “Great” Marwari Firm: 1860–1914,’ Indian Economic and Social History Review VIII: 3 (0709 1971), 267–68.Gadgil, , in Origins, speaks of firms based on kinship units: p. 34. Neither defines the unit further.

14 Jain, L. C., Indigenous Banking in India (London, 1929), makes this distinction on p. 3. He also gives the best explanation of the hundi system which was extremely complex.

15 Krishnan, V., Indigenous Banking in South India (Bombay, 1959), p. 9. In a twentieth-century survey, he found that 80 percent of moneylenders dealt with agriculturalists, while only 3 percent of the bankers did so.

16 Habib, , ‘Banking,’ pp. 38.

17 Gadgil, , Origins, pp. 3234.Naqvi, Hameeda Khatoon, Urban Centres and Industries in Upper India, 1556–1603 (New York, 1968), gives specific instances: pp. 6263, 127–28, 286.

18 Little, J. H., ‘The House of Jagatseth,’ in Bengal Past & Present XX (0106, 1920), 111200, and XXII (Jan-June, 1921), 1–119, is a fascinating history of this firm. The material used here comes from XX, 112–32.Gupta, Brijen K., Sirajuddatlah and the East India Company, 1756–1757 (Leiden, 1962), also documents this firm's closeness to the Mughals, especially pp. 3031 and 9697.

19 Krishnan, , Indigenous Banking, p. 3.

20 Timberg, , ‘A “Great” Marwari Firm,’ in the footnotes, pp. 272–74.

21 For the Nawab of Arcot, Bavany Doss Nanasa Soucar and Dave Boocunji Cashee Dass Soukar were the largest creditors in 1805: Jain, , Indigenous Banking, p. 21. For Hyderabad, there were the ‘Panch Bhai’ bankers, which in the early nineteenth century certainly included Seth Kishen Das (now a famous jewelry firm), Makhdum Seth, Mahanand Ram Puran Mai, probably Surat Ram Govind Ram, and perhaps Palmer and Company.

22 Writers on later systems of finance and banking often referred to this prior function of indigenous banking firms, for example, Datta, P., ‘Rise of the Calcutta Money Market in Relation to Public Borrowing and Public Credit (1772–1833),’ Calcutta Review 46 (02 1933). 171203, and Das, N., ‘The Old Agency Houses of Calcutta,’ Calcutta Review 46 (03, 1933), 317–26. But these and other authors completely fail to deal with the historical transition which the indigenous bankers have undergone, even at a descriptive level.

23 Habib, , ‘Usury,’ pp. 408–09.

24 Habib, , ‘Banking,’ p. 6, and ‘Usury,’ p. 409.

25 Habib, , ‘Usury,’ pp. 414–15.

26 Habib, , ‘Banking,’ pp. 1011.

27 Gadgil, , Origins, p. 34.

28 Habib falls into this category most of the time. See his article ‘Potentialities of Capitalistic Development,’ p. 69, where he sees the karkhanahs as engaged in the ‘production of luxury articles. … This naturally set limits to their economic significance,’ and similar remarks on pp. 5760.

29 Significantly, Gadgil remarks that by 1750 such karkhanas had diminished in importance: Origins, pp. 3435.

30 Gadgil, , Origins, pp. 35.

31 Ibid, 35; Habib, , ‘Banking,’ p. 4.

32 In Hyderabad, a leading early banking firm is now noted as the leading jewelry firm, a business in which it had always engaged as well: Kishen Das, now Vithal Das. See also Ahmad, Qeyamuddin, ‘An Historial Account of the Banaras Mint in the Later Mughal Period, 1732–1776,’ in Numismatic Society of India, 23 (1961), 198215, where ‘precious stones’ pass through the mint: pp. 209.

33 Habib, , ‘Usury,’ p. 398.

34 Little, , ‘House of Jagatseth,’ XX, 133, citing Hunter's, Statistical Account, IX, 256.

35 Jain, , Indigenous Banking, pp. 1819, citing Bengal District Records of the eighteenth century.

36 Shah, A. M., ‘Political Systems in 18th Century Gujarat,’ Enquiry, 1:1 (Spring, 1964), 8395, 92.

37 See specific instances in the following articles by Cohn, Bernard S.: ‘The Initial British Impact on India, A Case Study of the Benares Region,’ Journal of Asian Studies, XIX: 4 (08, 1960), 422–23; ‘Recruitment of Elites in British India,’ in Plotnicov, L. and Tuden, A., eds., Essays in Comparative Social Stratification (Pittsburgh, 1970), 128–29:‘Structural Change in Indian Rural Society, 1596–1885,’ in Frykenberg, R., ed., Land Control & Social Structure in Indian History (Wisconsin, 1969), 8081; and Political Systems in Eighteenth Century India: The Banares Region,’ Journal of the American Oriental Society, 82:3 (0709 1962), 319.

38 See Sundaram, L., ‘Revenue Administration of the Northern Circars,’ Journal of the Andhra Historical Research Society, XIV (1943-1944), 2258, and XV (1944–45), 1118, for details. The reference to Hyderabad firms: XV, 12.

39 Krishnan, , Indigenous Banking, pp. 1920, notes that this was still done in the twentieth century; despite the failure to date its origin, it indicates the complex possibilities the revenue system offered for intermediary profits.

40 Even for this commission method, an initial large nazr or payment seems to have been necessary.

41 Pearson argues that the impact upon the nobility was crucial: ‘Shivaji and the Decline,’ op. cit.

42 Pearson, , ‘Shivaji and the Decline,’ pp. 227–28, and his ‘Political Participation,’ op cit., 118–19.

43 Ibid., particularly the latter article, pp. 124, 129–30. See also Chandra, Satish, ‘Commercial Activities of the Mughal Emperors During the Seventeenth Century,’ in Bengal Past & Present, 78:146 (0712 1959), 9297, where he argues that the jagir crisis may have induced nobles to turn to commerce, and his Some Aspects of the Growth of A Money Economy in India during the Seventeenth Century,’ Indian Economic and Social History Review, 111:4(12, 1966), 321–36.

44 Pearson, , ‘Political Participation,’ op. cit., pp. 122–27;Gillion, , Ahmedabad, 1718, 21.

45 Pearson, , both articles cited above, and particularly ‘Political Participation,’ p. 128, for emigration.

46 Gadgil, , ‘Immigrant Traders in Poona,’ op. cit., p. 16.

47 Habib, , ‘Usury,’ pp. 408–09.

48 Chandra, Satish, ‘Early Relations of Farrukh Siyar and the Saiyid Brothers,’ Medieval India Quarterly 2:1 & 2 (1957) 142, for Husain Ali Khan's action (the governor of Bihar).

49 Satish Chandra, in his articles cited in footnote 43, suggests that Mughal commercial activities were increasing in the seventeenth century and persisted right through the eighteenth century; I suspect that their activities were characteristic earlier as well, and that his evidence supports the line of argument here for interdependence.

50 For example, Arasaratnam, S., ‘Aspects of the Role and Activities of South Indian Merchants c 1650–1750,’ in Proceedings of the First International Conference Seminar of Tamil Studies(University of Malaya,1968), vol. I, pp. 582–96. He prefaces his material on merchants dealing with Europeans after 1650 with these sentences (p. 582): ‘After the decline of the great medieval collective enterprises, the mercantile tradition seems to have lived on among certain families with commercial roots in the past. When the European traders … came to southern India they … soon established firm relations with them.’ See also, Chandhuri, Susil, Trade and Commercial Organization in Bengal, 1650–1720: With Special Reference to the English East India Company (Calcutta, 1975).

51 Gokhale, B. G. starts his ‘Ahmadabad in the XVIIth Century’ with the statement, ‘The history of India in the seventeenth century is characterized by the emergence of various regions as distinct economic units,’ Journal of Economic and Social History of the Orient, XII:2 (04, 1969), 187;see also Rau, B. Ramachandra, ‘Some Specific Services of the Indigenous Bankers of Bombay,’ in Indian Historical Records Commission, Vol. 12 (1929), 5459.

52 See footnote 46; also Gode, P. K., ‘Keshavbhat Karve, a Poona Banker of the Peshwa Period and His Relations with the Peshwa and Damaji Gaikwad,’ in Journal of the University of Bombay Vol. 6 (07, 1937), 8791.

53 Saletore, B. A., ‘A Forgotten Gujarati Brahman Banker,’ Indian Historical Records Commission XXX (1954), 155–60.

54 See Philip Calkin's article (cited in footnote 2) and his unpublished paper, ‘The Role of Murshidabad as a Regional and Sub-regional Center in Bengal,’ which suggests that the city's importance derived more from its commercial orientation towards European factories even in the seventeenth century than from its administrative orientation to the Mughals (8–14).

55 For the Hyderabad firms, Sundaram, , ‘Revenue Administration,’ p. 12; for the Marwari firm, Timberg, , ‘A “Great” Marwari Firm,’ 264–65, 283.

56 This has been stated by Jain, , Indigenous Bankers, p. 17, and Gadgil, , Origins, p. 32, where he notes that de Bussy in the Deccan and Karnatak obtained a loan from ‘a great banker.’ Instances of Kanara Saraswat merchants who allied themselves with the British are given in Kudra, V. N., History of the Dakshinatya Saraswats (Madras, 1972), 117–18.

57 Fischer, Karl, ‘The Beginning of Dutch Trade with Gujarat,’ unpublished paper, pp. 1618.

58 Saletore, , ‘A Forgotten Gujarati Brahman Banker,’ p. 155, citing early East India Company records which he lists in his footnote; see also Habib's charts in ‘Usury,’ pp. 402–03, and Naqvi, H. Q., Urban Centres and Industries, pp. 6364.

59 Pearson, , ‘Political Participation,’ pp. 125–27. This is also clear in Gupta, Ashin Das, ‘The Merchants of Surat, c. 1700–50,’ in Leach, Edmund and Mukherjee, S.N., eds., Elites in South Asia (Cambridge, 1970), pp. 201–22.

60 Saletore, , ‘A Forgotten Gujarati Brahman Banker,’ pp. 158–60.

61 Little, , ‘The House of Jagatseth,’ (Vol. XX), 115–16, for the 1652 loan, and 126–29, 136–45 for the Mitra Sen firm.

62 Gadgil, , Origins, p. 32, Little's article, continued in Vol. XXII, and Gupta, , Sirajuddallah and the East India Company, p. 132, both document the Hindu bankers’ new alliance with the East India Company in Bengal by 1760. Panikkar, M., in Asia and Western Dominance (New York, 1953), carelessly generalizes that the powerful Indian merchant class worked with European traders because of its ‘inherited hatred of Muslim rule’ (p. 99).

63 Little, , ‘The House of Jagatseth,’ Vol. XXII, 97103.

64 Jain, , Indigenous Banking, pp. 1920, citing the Governor General's letter to the Collector of Rangpur, in Vol. I. p. 33 of the Bengal District Records.

65 Sundaram, , ‘Revenue Administration,’ Vol. XV, 1014.

66 Ibid., p. 33, citing Macartney.

67 Ibid., pp. 34 and 15.

68 Ibid., pp. 77–78.

69 Jain, , Indigenous Banking, pp. 2022.

70 This was Charles Metcalfe, in a letter to the Governor General, September, 1821: Thompson, E. J., Life of Lord Metcalfe (London, 1937), pp. 210–11.

71 Jain, , Indigenous Banking, pp. 2325, makes this comparison. The best coverage of this transition period from the point of view of the Company is by Rau, B. Ramachandra, ‘Organized Banking in the Days of John Company,’ in Bengal Past and Present Vol. 37 (0106 1929), 145–57, and Vol. 38 (July-Dec. 1929), 6080.

72 Both Panikkar, (Asia and Western Dominance, p. 99) and Gupta, (Sirajuddallah and the East India Company, p. 32) compare the Indian mercantile class to ‘Shangahi compradors,’ but they do not investigate this comparison further. For China, see the following: Balazs, E., ‘The Birth of Capitalism in China,’ in Eisenstadt, , (ed.) Decline of Empires, p. 109;Yang, Lien-sheng, Money and Credit in China, A Short History (Cambridge, 1952);‘Economic Aspects of Public Works in Imperial China,’ in Excursions in Sinology (Cambridge, 1969); and Government Control of Urban Merchants in Traditional China,’ in the Tsing Hua Journal of Chinese Studies, new series (2nd) 8, 08 1970, 186206.See also Elvin, Mark, The Pattern of the Chinese Past (London, 1973), particularly pp. 155, 161–62, 215–25, and 285–97.

73 For example, Lehmann, F., ‘Shah Ayat Allah “Jauhri” and his Shahr Ashob,’ in Abdul Karim Sahitya-Visarad Commemoration Volume (Dacca, 1972), and other writing on the eighteenth-century cultural laments.

74 Timberg discusses the problem of sources in ‘A “Great” Marwari Firm.’ In an unpublished paper, ‘Speculative Gains and Primitive Accumulation’ which deals only with the nineteenth and twentieth centuries, Timberg's problem is the theoretical one of entrepreneurial values; he had no problems with sources. Morris D. Morris, in a recent unpublished paper, ‘South Asian Entrepreneurship and the Rashomon Effect,’ also deals with the nineteenth and twentieth centuries and emphasizes the significance of indigenous banking and entrepreneurial activities and how little we still know about them (paper presented at a Conference on Colonial Port Cities in Berkeley, June 1976).

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