'Fortune Seekers': How the Nattukottai Chettiars affected global finance

Copyright © HT Digital Streams Limit all rights reserved. Lounge ‘of Chettiars to Financiers’ (2002) by Chern Lian Shan, Asian Civilizations Museum, Singapore. Consenting of Wikimedia -Summary Raman Mahadevan’s ‘Fortune Seekers’ captures the history of Mercantile Nattukottai Chettiars of Tamil Nadu. In this excerpt, he explains how Ceylon became their first stop while sought business opportunities, Ceylon, possibly because of the geographical proximity of their homeland, was one of the first overseas regions where the chettiars were looking for profitable business opportunities. Their association with Ceylon returned when it was under Dutch rule, between 1656 and 1796. But because of their restrictive trading policy, characterized by monopolies, the scope for investment was limited and the Chettiars’ activities were at a low key. It was only after the establishment of the British rule by the English East India Company, followed by the lifting of restrictions on internal and external trade, that there was a noticeable stream of Chettiar Capital in Ceylon. The Ceylon Chettiar Chamber of Commerce, while recalling the history of the community, claims that the first chettiar firm was founded on the island in 1820. It was the first phase of the organized stream of Chettiar Capital. One of the noticeable features of the Chettiars’ investment portfolio was their external and internal trade in a number of commodities. They erected a fixed grip on the import trade in rice and obtained it through their agency firms from Bengal and Thanjavur. It was their control that even the resident European traders had to pay large amounts of money to the chettiars to obtain the necessary supplies. They also controlled much of the coastal trade in Arrack and other coconut products between Ceylon and Madras. The profitable raw cotton trade was another line of their business, which they later lost when it moved to Tuticorin and the cash advance system was abolished. Also read: Donald Trump stops rates, but Swiss watchmakers are still facing a ticking crisis until the European exchange benches erected a shop on the island in the latter half of the nineteenth century. The chettiars were considered the most important bankers, and at least they exerted a significant influence on the island economy. Their role as financiers accepted particularly important on the basis of the peculiar exchange problem Ceylon faced during this period. It stems from the island that had to meet the trade deficit with India in rupees from the reception of excess sterling earned from Ceylon’s exports to England and to Europe. Sterling therefore had to be turned into rupees. This important function was performed by the chettiars. Using their mortgages in South India, the Chettiar firms were able to arrange for overpayments to and from India. Since they had virtually a monopoly in this business, it is said that almost all European traders deal with them. There is also evidence that Chettiar Finance was used in the transport of the small indigenous coffee produced from Binneland to the large trading center. Take a look at the full image ‘Fortune Seekers: A Business History of the Nattukottai Chettiars’ by Raman Mahadevan, Penguin Random House, 256 pages, £ 599 from the middle of the nineteenth century, and the island economy entered a new phase, characterized by the growth of an export-oriented plantation sector. It was initially coffee, but after the serious rust that affected the coffee plantations in the 1880s, it made way for tea and later rubber. In addition, there was also a steady growth in the area under coconut. As in other regions, the opening of the Suez channel encouraged a greater flow of foreign capital. The large plantations of coffee, tea and rubber were mainly developed with British capital. Bank development on the island reflects the changes that the island’s economy is. No coincidence, the European Exchange Banks also made their entry to this time to raise the benefits from the export trade. The foreign banks that made their appearance during this period were in fact branches of established British banks whose operations ended many colonial areas. The Bank of Ceylon, promoted in 1841 by William Thompson, a London dealer with business in Ceylon, was the first modern bank to appear on the island. The bank collapsed shortly to the coffee crisis in 1847–48. It was taken over in 1851 by the Oriental Banking Corporation. The Chartered Mercantile Bank and the Bank of Madras opened a branch in Ceylon respectively. With the arrival of the Exchange Banks, the Chettiars forfeited their earlier leading position in the sphere of currency exchange, and the business to discount sterling accounts from their hands. Their role as most important credit providers to the European traders has been significantly eradicated. Despite this setback, in the short term, they have drawn up more than in the short term by channeling their investments in new emerging areas. In addition to the large British possession and managed coffee plantations, there were also a number of small coffee possession owned by the Ceylonese. Similarly, in the latter half of the nineteenth century, the innocent coconut gradually became important as a commercially viable and feasible commodity. The area under coconut went up threefold, from 2 lakh hectares in 1860 to 6 lakh by 1900. Coconut, unlike coffee and tea, was grown by local Sinhala farmers in a relatively small possession. The production and marketing of coffee and coconut, except other commodities, has caused an enormous demand for credit. However, for the vast majority of these Ceylonese producers and traders, the European banks were inaccessible because of the tight standards of creditworthiness they set. This was exacerbated by the lending policy of the banks, which was largely aimed at financing export trade and the expatriates involved in this business. Under these circumstances, the growing demand for credit of the non-European segment of small and medium estate owners and traders was a segment that could benefit the chettiars. Using their large pool of capital and the well -organized network of firms across the island, the chettiars moved in to meet the demand for credit in the urban and rural sectors. The capital requirement for the initial investment in the Ceylonese Coffee Estates and Coconut Holdings came to a large extent from the chettiars. Excerpt with permission from Fortune Seeker, by Raman Mahadevan, published by Penguin Random House India. The book is for sale in the last week of April. Also read: ‘Deviants’ Book Review: How generations of men who were a queer in India catch all the business news, market news, news events and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Features #Books Mint Specials