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The Monsoon and the Market for Money in Late-colonial India

Published online by Cambridge University Press:  22 January 2016

TIRTHANKAR ROY
TIRTHANKAR ROY*
Affiliation:
Tirthankar Roy is Professor of Economic History, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, UK. E-mail: t.roy@lse.ac.uk
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Abstract

Banking experienced large growth in colonial India along with a process of commercialization of agriculture. Yet, the rate of aggregate saving or investment remained low. This article is an attempt to resolve this paradox. It suggests that traditional forms of banking were helped by the formalization of indigenous negotiable instruments, but that transactions between bankers, merchants, and peasants were characterized by a limited use of legal instruments. The limited circulation of bills in this sphere is attributed, among other factors, to high seasonality in the demand for money. Seasonality-induced distortions in the organization of the money market made indigenous banking an unsuitable agent to promote saving and finance industrialization.

Type
Articles
Information
Enterprise & Society , Volume 17 , Issue 2 , June 2016 , pp. 324 - 357
Copyright
Copyright © The Author 2016. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved. 

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References

Bibliography of Works Cited

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Acemoglu, Daron, and Robinson, James A.. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. London: Profile Books, 2013.Google Scholar
Bagchi, Amiya Kumar. The Evolution of the State Bank of India . Vol. 2, The Era of the Presidency Banks 1876–1920. New Delhi: State Bank of India and Sage Publications, 1997.Google Scholar
Bengal. Bengal Provincial Banking Enquiry Committee 1929–30, vols. 1–3, Calcutta: Government Press, 1930.Google Scholar
Bihar, The Bihar and Orissa Provincial Banking Enquiry Committee 1929–30, vols. 1–3. Patna: Government Press, 1930.Google Scholar
Bombay. Report of the Bombay Provincial Banking Enquiry Committee 1929–30, vols. 1–4. Bombay: Government Press, 1930.Google Scholar
Bose, Sugata. (ed.). Credit, Markets and the Agrarian Economy of Colonial India. New Delhi: Oxford University Press, 1994.Google Scholar
Central Provinces and Berar (CPB). Report of the Central Provinces Banking Enquiry Committee 1929–30, vols. 1–4. Nagpur: Government Press, 1930.Google Scholar
Chaudhuri, K. N. Trade and Civilization in the Indian Ocean. Cambridge: Cambridge University Press, 1979.Google Scholar
Cooke, C. N. The Rise, Progress, and Present Condition of Banking in India. Calcutta: Bengal Printing Company, 1864.Google Scholar
Goldsmith, Raymond W. Financial Development of India 1860–1977. New Haven, CT: Yale University Press, 1983.Google Scholar
India. Banking Enquiry Committee for the Centrally Administered Areas 1929–30, vols. 1–3. Calcutta: Government Press, 1930.Google Scholar
India. The Indian Central Banking Enquiry Committee. Vol. 1, part I, Majority Report. Calcutta: Government Press, 1931.Google Scholar
Jain, L. C. Indigenous Banking in India. London: Macmillan, 1929.Google Scholar
Kessler, Amalia D. A Revolution in Commerce: The Parisian Merchant Court and the Rise of Commercial Society in Eighteenth Century France. New Haven, CT: Yale University Press, 2007.Google Scholar
Madras. The Madras Provincial Banking Enquiry Committee, vols. 1–4. Madras: Government Press, 1930.Google Scholar
Morrison, Theodore. The Economic Organization of an Indian Province. London: John Murray, 1906.Google Scholar
Muranjan, S. K. Modern Banking in India. Bombay: New Book, 1940.Google Scholar
Punjab. The Punjab Provincial Banking Enquiry Committee 1929–30, vols. 1–2. Lahore: Government Press, 1930.Google Scholar
Rau, B. Ramachandra. Present-Day Banking in India. Calcutta: Calcutta University Press, 1929.Google Scholar
Reserve Bank of India. Banking and Monetary Statistics in India. Bombay: Reserve Bank of India, 1952.Google Scholar
Roy, Tirthankar. The Economic History of India 1858–1947. 3rd ed. New Delhi: Oxford University Press, 2012.Google Scholar
Sahn, David A. Seasonal Variability in Third World Agriculture. Baltimore: Johns Hopkins University Press, 1989.Google Scholar
Sivasubramonian, S. National Income of India in the Twentieth Century. New Delhi: Oxford University Press, 2000.Google Scholar
Timberg, Thomas. The Marwaris. Delhi: Vikas, 1973.Google Scholar
United Provinces (UP). Report of the United Provinces Provincial Banking Enquiry Committee, vols. 1–3. Allahabad: Government Press, 1930.Google Scholar
Bagchi, Amiya Kumar. “Introduction: Money, Banking and Finance in India.” In Money and Credit in Indian History, edited by Kumar Bagchi, Amiya, ix–xli. Delhi: Tulika Books, 2002.Google Scholar
Barth, James R., and Bennett, James T.. “Seasonal Variation in Interest Rates.” Review of Economics and Statistics 57 (1975): 80–83.Google Scholar
Freyer, Tony A. “Negotiable Instruments and the Federal Courts in Antebellum American Business.” Business History Review 50 (1976): 435–455.Google Scholar
Mahadevan, Raman. “Entrepreneurship and Business Communities in Colonial Madras, 1900–29.” In Business Communities of India, edited by Tripathi, Dwijendra. Delhi: Manohar, 1984.Google Scholar
Martin, Marina. “An Economic History of the Hundi 1858–1978.” Ph.D. dissertation, Department of Economic History, London School of Economics and Political Science, 2012.Google Scholar
Ray, Rajat Kanta. “Asian Capital in the Age of European Domination: The Rise of the Bazaar, 1800–1914.” Modern Asian Studies 29 (1995): 449–554.Google Scholar
Ray, Rajat Kanta. “Indigenous Banking and Commission Agency in India’s Colonial Economy.” In Money and Credit in Indian History, edited by Bagchi, A.K., 118–130. Delhi: Tulika Books, 2002.Google Scholar
Sokoloff, Kenneth L., and Dollar, David. “Agricultural Seasonality and the Organization of Manufacturing in Early Industrial Economies: The Contrast between England and the United States.” Journal of Economic History 57 (1997): 288–321.Google Scholar
Tvedt, Terje. “Why England and not China and India? Water Systems and the History of the Industrial Revolution.” Journal of Global History 5 (2010): 29–50.Google Scholar
Wolcott, Susan. “An Examination of the Supply of Financial Credit to Entrepreneurs in Colonial India.” In The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times, edited by Landes, D. S., Mokyr, J., and Baumol, W.J., 443–468. Princeton: Princeton University Press, 2010.Google Scholar
Kuznets, Simon. “Seasonal Variations in Industry and Trade: Appendices.” NBER Working Paper no. 2204, 1933. Available at www.nber.org/chapters/c2204.pdf (accessed April 14, 2015).Google Scholar
Miron, Jeffrey A. “The Economics of Seasonal Cycles.” NBER Working Paper no. 3522, 1990. Available at http://www.nber.org/papers/w3522 (accessed April 14, 2015).Google Scholar