Sagnik Bhattacharya1
University
of Groningen, the Netherlands
Abstract
Why
Europe grew rich and ‘Asia’ became poor is the substance for the fiercely
contested ‘Great Divergence’ debate where the prevailing Eurocentric view
posits that European exceptionalism was responsible for the former’s success.
The essence of the picture painted in the arguments against ‘oriental states’
is a despotic and extractive one that hinders commercial activities. This paper
tries to address this debate through looking at the nature and role of Mughal
the administrative machinery and challenge image of despotic hegemony. In order
to address the issue of commensurability of sources, the present author has
only used European accounts and correspondences produced by the English East
India Company and the Dutch VOC. The paper argues that the Eurocentric
perspective essentially paints an ahistorical picture of the Mughal state by
investigating European responses to the deaths of important Mughal emperors
(Jahangir, Shah Jahan and Aurangzeb) and the economic consequences following
it. Additionally, this paper also provides evidence of a strong role of bankers
in the internal commercial system further undermining the image of the
extractive state and supporting the ‘Great Firm theory’ of Karen Leonard. In
conclusion, it is argued that the European-exceptionalism theory is
fundamentally based on an orientalist imagination of South Asia and essentially
suffers from the pitfalls of the ‘historiography of decline’ that plague the
history of other ‘Asian’ empires such as the Qing and the Ottomans. Eighteenth
century South Asia shows considerable similarities with early modern Europe and
its commercial viability and agility does not appear to be dependent on the
central government or the abilities of the emperor.
Introduction—A
Raging Debate
Why
India became the posterchild of oriental poverty and Europe emerged as the
leading economic superpower in the nineteenth century is the substance matter
for the fiercely fought Great Divergence debate within the field of global
economic history. As Prasannan Parthasarathi elaborates, most arguments by
Eurocentric historians and scholars since the 19th century (e.g., Marx, Weber
etc.) that have tried to explain this phenomenon, have essentially claimed that
Europe was, in some ways exceptional, which set them on a path to economic
prosperity while ‘Asia,’ (more specifically, the Ottoman Empire, China and
India) were doomed to be a commercial failure due to their own
political-economic arrangements and institutions such as caste, despotic,
extractive states etc.2
One
very strong proponent of the idea of European exceptionalism is the British
Australian economist and historians Eric Jones, who in the very title of his
book published in 1981, The European Miracle: Environments, Economies and
Geopolitics in the History of Europe and Asia, makes his stance on the debate very
clear. That he views European ‘advancement’ as a “miracle,” and that he sees
the decline of Asian economies as an intrinsic phenomenon is made clear in the
course of his book. This essay, will essentially look at Jones’ work as
paradigmatic of a section of Eurocentric historiographic claims and try to re
examine the arguments in the light of archival material and also research from
later eras with regard to the nature of and interaction with the late Mughal
State and administrative apparatus in 18th century India.
‘The
Oriental Despot’
Jones’ picture pre-colonial ‘Mughal India’ is surprisingly aligned with the picture that Edward Said critiqued in his much acclaimed 1978 book.3 Jones’ India is a place where traditional societal organisation is infallible and is a hindrance to ‘modernisation.’ The Mughal state is despotic and lives through the economic exploitation of the overwhelmingly agrarian population. The condition of the commerce is not conducive to economic advancement as there is very little opportunity for the accumulation of capital and an omnipresent threat of property appropriation by the ruling class resulting in an extremely high liquidity preference. In brief, Jones’ India, is very similar to the picture painted by the author he quotes at the beginning of his chapter on that region—W. H. Moreland: “India of the seventeenth century must have been an inferno for the ordinary man.”4
Jones
takes this vision of India as his starting point and assumption and applies to
it arguments similar to Douglas North’s, that institutions—especially legal and
property rights are crucial for economic growth and concludes that the reason
for India’s stagnation and decline was the absence of these fundamental
components in their political economy.
Although
his conclusion is theoretically sound, a closer examination reveals a number of
problems with this assumption and sources. The reason why his image of India is
such a good candidate for criticism on grounds of orientalist thought is
because Jones uncritically uses sources such as travelogues and memoirs from
the sixteenth and seventeenth centuries for example those by Jean-Baptiste
Tavernier (1605 – 1689) and Francois Bernier (1620 – 1688). Sanjay Subrahmanyam
has worked extensively to demonstrate why these documents are not only unreliable but invalid sources
for historical research into Mughal Indian society due to problems of
incommensurability, cultural translation and (in the case of Sir Thomas Roe’s
accounts) political expedience5.
If
the Mughal State was that averse to commercial activities, then it does not
account for the mushrooming of European trading centres all across the Indian
coastline with imperial sanction (firman). Moreover, Jones gauges the liquidity
preference of rich Indians from Bernier’s statement that “owners of property
declined […] to repair their houses for fear of confiscation,”6 which clearly
appears to be a hyperbole.
The
Problem
Prasannan
Parthasarathi and Eric Jones paint very different pictures of India and the
Mughal Empire that appear to be at odds with each other. On the one hand, the
Mughal empire is said to be the harbinger of a Pax Mughalica which allowed safe
passage of goods and easy conduct of business at an unprecedented
subcontinental scale, and on the other hand, the Mughal empire is seen as a
large, despotic and extractive state7 that hindered a healthy inter-state
competition in mercantile activity which is seen as the key to Europe’s
industrial success.
Christopher
Bayly and Tirthankar Roy’s work however, suggests an amalgamated version of the
picture where they represent the Mughal administration as less than concrete
and more of a tactful suzerainty over existing regional power bases8. In that
case, it is logical to suggest that Mughal power not being uniform across the
empire, the state provided enough avenues for regional commercial competition
(as revenue collection was a regional matter) and also acted as a positive
political entity guaranteeing safety and security of transport, legal
protection, a reliable arbiter and a uniform commercial actor across Mughal
territory.
The
first part of this essay, in its quest to understand the nature of the Mughal
administrative system will examine the role of the centralised Mughal state to
function as an economically beneficial institution in the sense that Douglas
North discussed in his seminal 1991 publication.
Douglas
North’s work primarily outlined the necessity of institutions such as courts
protecting against appropriation, security of the highways, political stability,
secured means of transport etc. in order to lower what he called ‘transaction
costs’ and promote trade. In the absence of these crucial institutions, firms
and capital flows from regions of high transaction costs to regions of low
transaction costs thereby maximising profitability for the enterprise.9
The
method here, will be to look at the impact of the death of Emperor Aurangzeb
(1707) widely regarded as a watershed moment in Mughal history—the economic
impact of the decline of a strong central government and the ensuing war of
succession, on the two regions of Surat and Bengal. Then, we will look at the
main commercial institutions in Mughal India who were in regular contact with
the Europeans, namely the shroffs (money changers), indigenous merchants etc.
and the nature of their activities and their degree of independence. The aim
here, is to investigate the effective degree of control that the centralised
state (that Jones complains about) enjoyed and to answer the question: was the
Mughal empire indeed an extractive, disorganised state with insecure commercial
rights and disincentives to trading activities?
Sanjay
Subrahmanyam has demonstrated the problem of commensurability of sources and
the issues of cultural translation which make comparing the reactions and
accounts in Asian and European sources a very difficult.10 In response, this
paper only uses European sources from the records of the English East India
Company and the Dutch VOC to explore the nature of their interactions with the
State and consequently to infer the nature of the administrative machinery with
regard to commerce.
1.
‘The Emperor is Dead’
The
death of the Mughal emperors was, in several cases followed by a struggle for
the Peacock Throne among his living sons. Jones criticises the empire for a
lack of systematic hereditary transitions and forward’s Vincent Smith’s claim
that wars of succession were in fact the norm and created massive unrest all
across the country jeopardising the economy and the disrupting the Pax Mughalica11.
In order to examine the impact and importance of the centralised Mughal state
which heavily relied on the capabilities of the emperor12, we shall examine the
European accounts of the deaths of the two emperors Jahangir (1627) and
Aurangzeb (1707) in the records of the English and Dutch East India Company(s)
with particular focus on the disruption of trade and administration.
The
deaths of both Emperors Jahangir and Aurangzeb were followed by a brief war of
succession. In the case of Jahangir, the infamous ‘Nur Jahan junta’ was
defeated after a series of bloody conflicts resulting in the death of Shehzada
Shahryar, Nur Jahan’s (Jahangir’s second wife) house arrest and the
enthronement of Prince Khurram or Shah Jahan (regnal title) as the Mughal
emperor.13 In the case of Aurangzeb, his death was followed by a war of
succession among his sons Muhammad Kam Baksh, Muhammad Azam Shah and Muhammad
Mu’azzam who ascended the throne as Emperor Bahadur Shah but proved to be a
very weak ruler.
With
regard to the death of Jahangir in October 1627, the English East India Company
accounts are surprisingly silent and only mention his death in the passing in a
27 page long report to the Company from Surat dated January 4, 1628:
“a
suddaine rumour overspread the land with the King’s death, which filled all men
with feare and expectation, except only rebells and theeves that make itt their
harvest. The newes was first whispered here the 19th November, but within two
dayes after, publikly divulged: whose decease was the first of the sayd moneth
in his journey twixt Cashmere and Lahoare.”14
The
rest of the letter mentions that there is ample speculation as to who would be
succeeding the deceased Emperor but it also mentions that the Governor of Surat
and the “principalls of these inhabitants (being naturall Persians) directed
secretly their peticions unto Prince Charoom [Khurram].”15 Subsequent letters
and reports also do not mention any large scale disruption of trade or money
remittances to and from Surat. On February 17, 1628, the ‘President and Council
at Surat’ is informed by factors at Agra that:
“Shaw
Jehaun sate in his royall throne the 4th ditto and was saluted and proclaimed
King, with the cuttbah read according to the custome of his ancestours […]
cruellie murthered all other princes of the blood.”16
These
reports along with the absence of any extensive description of chaos are
sufficient to conclude that although there was turmoil and confusion as a
result of the Emperor’s death, the chaos does not seem to be extensive and more
importantly a hindrance to commercial activities as Jones suggested.
The
precise nature of the turmoil one might anticipate as a result of the collapse
or weakening of the administrative apparatus in the Mughal heartland is visible
following the death of Emperor Aurangzeb in March 1707. Ashin Das Gupta
discusses at length the coincidence of a marked increase in the number of
European letters and reports mentioning ‘banditry’17 and the death of the last
powerful emperor. In a letter from Surat to Amsterdam dated February 4, 1708
the Dutch Directeur at Surat writes:
“trade
that had been hampered at the death of Aurangzeb, was now [as the war of
succession developed] at a standstill throughout the country, because the
routes round about Agra were too unsafe in the lower lands.”18
In
another letter dated May 12, 1707 from Surat to Batavia, the Directeur reports
that the shroffs who were responsible for remitting money to Agra had suspended
business and the merchants trading in that part of the empire were in
trouble19.
There
is, in reality, three pieces of information that can be gathered from these two
letters, firstly, that there was turmoil at the death of Aurangzeb, which means
that long distance trade was in fact protected and secured during the reign of
the emperor, if one adds to this the information from a letter from Surat to
Amsterdam dated March 19, 1710 that talks about customs problems at Cambay20,
one can easily construe the image of a fair and strong control of the Mughal
Empire on the region of Surat before 1707 that not only guaranteed protection
from brigandage but also ensured maintenance of customs regulations that had
been agreed between the traders and the Court. Furthermore, the letter to
Batavia, concerns the services of the ‘shroffs’ or money-changers (bankers),
that seem to have been functional during the reign of the emperor and was
suspended at the death of the same.
Ashin
Das Gupta concluded from the evidence available from the sources quoted above
that “all available evidence indicates the fact that a serious breakdown
affected the heartland of the empire […] and security of transport disappeared.”21
This insecurity is noted in the travelogues of Simon Diodati—a Dutch factor who
left Agra on 26 December 1716 and reached Surat on 24 February 1717 having been
attacked multiple times by “armed peasants” (gewapande boeren) and being forced
to take a detour through trackless forests and going further south (where they
came to know of a Maratha advance).22
Bernard
Cohn also notes that the Mughals deployed market regulators who maintained
accuracy of weights and currency in the markets, and discovered that they seem
to have disappeared in Benaras around the 1710s. This is not only one example
of Mughal administrative machinery but also of the decline of the same after
1707.23
The
result of all this was that the import of commodities from the interior died
out and Surat gradually declined as a viable centre for trade. This decline in
trade is noticeable as early as 1708 when the import of Dariabadi chadar
(beadspreads from Lucknow) was stopped and in 1710 when the best quality of
indigo grown in the vicinity of Agra (the Biana indigo) was no longer
available24. The procurement that was still possible costed 50 percent more in
transport and additionally, records show a 10-15 percent loss on remittances
from Surat to Agra25 a classic case of increasing transaction costs.
Records
from the English East India Company’s factors in Bengal about the death of
Emperor Aurangzeb though apprehensive, show much more limited impact on that
region. On April 3rd, 1707 it is reported that “the whole town and factory are
thrown into confusion by the news that the Mogul is dead”26 and on April 7th, a
resolution is passed by the Council at Fort William, Calcutta that:
“Considering
the emperor’s death and the scarcity there may be of provisions, and the want
they may have at Madras, agree to order that 5,000 maunds of rice and 1,000
maunds of wheat be provided by Mr Arthur King […] and to supply Fort St. George
if they be in want of the same.”27
However,
subsequent letters and reports mention no major disruption of communication or
obstructions to trade of any kind and hence it may be suggested that Ashin Das
Gupta was right in his assumption that the impact of the decline of Mughal
administration after 1707 was most severely felt only in the Mughal heartland
around Delhi and Agra.
Interestingly
the problems of trade, mentioned by the Dutch factors, concur with the theory
of Douglas North which mentions the absence of security and assurance as major
factors that can potentially increase transaction costs and disincentivise
economic activities causing a decline in wealth.28 It would not entirely be
irrational to suggest that this destabilization of the Mughal heartland in
western and northern India was responsible for the eastward shift of the main
economic actors namely the European traders and the indigenous banking firms
and agencies.
2.
Bankers and Rulers
So
far, we have focussed on the higher layers of the Mughal administrative system
and seen that the existence, strength and competence of the person at the helm
was crucial for the sustenance of the Pax Mughalica for which there is good
evidence. However, historians such as Karen Leonard and P. J. Marshall have
argued that the Mughal body politic was composed of more than just the elite
actively engaged in administration such as the governors (subahdars) and
princes.
Leonard
argues that merchants and more importantly bankers were in fact not a
segmental, but strategic elites in the Mughal political system who enjoyed
consistent backing and supported the state during times of war and peace.
Leonard in fact goes to the extent of arguing, in the course of her ‘Great Firm
Theory of Mughal Decline,’ that the loss of support from these banking firms
like the Jagat Seth caused the capabilities of the centralised state to shrink
rapidly and contributed to the growing power of the regional elites;
paradigmatic of which for this essay, would be the increasingly independent
Subah (province) of Bengal.
Sudhindra
Nath Bhattacharya writes that Bengal was brought into the Mughal fold at the
time of Emperor Akbar but the real power of the Mughals was felt there only
after Jahangir’s ascension.29 By the time of Aurangzeb, Bengal accounted for
50% of the Gross Domestic Product of the empire translating into about 12% of
the world’s GDP. Bengal also sent the largest tribute and share of revenue to
the Mughal exchequer at the time of Aurangzeb making the province indispensable
for the empire’s economic welfare30.
Bankers
on the Move
Any
degree of understanding of subcontinental trade in the 18th century is
incomplete without the role of the banking and merchant firms that lubricated
and facilitated the trade network. From the Dutch records cited above, it is
clear that they were in fact crucial in the conduct of business as they (the ‘shroffs’)
carried out the function of remittance of cash from one part of the country to
another through the use of ‘hundi’(s) or payment orders that could be
transferred across the country. The ceasing of business activities by the
shroffs is cited as a reason for major disruption in trade in the 1708-10
letters.
Interestingly,
the main banking firms and families themselves appear to be on the move at this
crucial juncture and Kumkum Chatterjee has outlined how the movement of the
major banking firms shows a tendency to migrate towards the east into Bengal
(Dacca or Murshidabad) and Bihar (Patna). The major firms in Patna in the 18th
century include the houses of Gopaldas-Manohardas, Ramchand-Gopalchand Shahu,
Kishen Deo Tiwari, Premraj-Manikchand etc. but the most powerful and
influential of these was undoubtedly the house of Jagat Seth31.
The
firm was founded by Manek Chand who rendered critical financial assistance to
Aurangzeb and received the title ‘Jagat Seth’ along with several privileges
from the emperor.
This
firm not only had access to the Murshidabad mint, but also had a monopoly in
handling the government’s finances and was responsible for the remittance of
the province’s tribute to Delhi.32 He also had direct access to the Emperors
since Aurangzeb till the 1730s. The original base of operations of the firm was
in Agra but at the turn of the century and as the Mughal heartland became
increasingly unstable, their headquarters migrated eastward into Varanasi,
Patna, Dacca and finally settled in Murshidabad after the governor of Bengal
Murshid Quli Khan shifted the capital of the province there.33 Other firms such
as that of Amir Chand (or Omichand) demonstrate a similar pattern—suggesting
that this trend can be generalised to the majority of firms.
The
instability of the Mughal heartland, partly originating from the continual
raids of the Marathas and the failure of the government in protecting the
bankers and merchants also caused a number of Gujarati firms to migrate into
Maratha territory and become bankers to the Peshwa.34
This
movement of bankers is in line with the North’s assumptions regarding
transaction costs as they are seen moving from institutionally unstable regions
that would incur high transaction costs to regions of political stability. But
the crucial point here is that great banking firms existed and flourished in
the heyday of the Mughal empire in its political centre and were in fact
crucial for the survival of the regime. As Karen Leonard maintains, the central
function of the bankers with regard to the state was to provide cash for the
payment of regular salaries in a situation when land-revenues were only
available seasonally.35 In fact, Irfan Habib was surprised to discover that the
largest share of the gold and silver bullion imported into India was actually
bought by the shroffs and not by jewellers, as was expected.36 Leonard also
cites instances when the abilities of the state were limited by refusal of
assistance from the bankers. Irfan Habib discovered that an attempt by
Aurangzeb to secure 500,000 rupees in interest-free loans in 1702 for troop
payment during his Deccan campaign was turned down by the bankers37 which might
suggest sufficient power and autonomy rested in their hands and that their
rational self-interest was not overpowered by imperial decrees and demands as
Jones appears to suggest.
The
Local Courts and the Post-Mughal Order
In
addition to despotic government, Eurocentric historians in the debate including
Jones argue that the Mughal and even the post-Mughal political orders in India,
were not conducive for trading activities as they did not protect trading
rights and contracts which are, again factors that North claims hampers
economic growth. In this section, we shall briefly look into instances of clear
intervention on the part of the Indian administrations in the case of
commercial disputes.
The
English Factory Records contain a copy of an agreement between the “English and
the Surat Authorities” dating from September 1624 which states that:
“it
is agred that the English shall freely trade at their pleasure in the ports of
Surat, Cambaya, Baroch, Goga, Bengala, Scyndam and in other the cities of the
Kings dominions”38
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