Anti-industrialism

‘Dhandha? Yaneke kaam, na?’ (Raj, speaking to the beggar-entrepreneur, Shri 420, 1955)

By the time of WW1, an influential space had opened up within India’s economy. I have suggested the following: first, that a formerly agrarian economy, through its transactions with a usurious system of indigenous credit, was increasingly turning towards primitive commodification and capital accumulation. Second: that the cinema remains, along with various other low-level investor-friendly trading structures (including gold bullion, real estate, and, in Bharat Shah’s historical instance, diamonds), a prime example of primitive commodification as well as a prime representation of it. Third: that this economy was large enough, and influential enough, to incorporate most colonial trade arrangements pre-WW1, and was post-WW1 the conduit facilitating the induction of India’s rural economy into global trade, and that much of the imperial economy, both pre- and post-1857, primarily constituted British effort to insert itself into this financial sector. In the sections to follow, we shall propose two further conclusions: that the industrial economy was at best a marginal presence to this arrangement, and finally - coming to the cinema - that sustained British efforts to insert their own cinema into this system, mainly through Empire Marketing ideology, provided a critical backdrop to British efforts at cinematic textual reform in the colonies as a whole.

As we turn to a moment of industrial interruption - a ‘moment’, no more, within our colonial longue durée - to the generally smooth transition of our Lahore financial model into Bombay, we shall also turn to the brief period that separates out Bombay and Ahmedabad from the rest of Western India, conventionally described as the heyday of industrial capitalism and coinciding with the career of the textile industry in these cities: usually dated from the first Indian cotton mill in Bombay in 1854 but dated for our purposes between 1914 (the onset of WW1) and 1933-34 (when the Global Depression hit India, and the textile strike of ‘34). Despite the similarities in the agrarian origins of capital investment in early 20th C. Bombay with those in Lahore, and notwithstanding the consequences of the 1879 Deccan Act, which were similar to those of the later 1900 Punjab Act, there is also - for an all-too-brief period - a significant difference between the two cities. Right through the late 19th C. and even in this so-called heyday, industrial capital in Bombay had to wage a foundational war of attrition with what was, we have seen, by the interwar period the far more globalized indigenous capital associated with ‘new’ industry^[27] : a war that was to be increasingly centered around the city’s film industry, and which in the 1990s would spill out into the city’s streets. The pitched battle took place on many fronts, most visibly perhaps in the war between the city’s elite Millowners’ Association and its brokers, its jethawalas, mucadams and shroffs (Gordon, 1978 85-87) - that lasted over thirty years. In many ways, in Bombay city this war was the Second World War.

It is this abortive industrial phase of Bombay’s economy that reveals the scale of colonial compromise with indigenous capital, and also reveals the interwar colonial administration’s ambiguity to industrialization, both in India and in Britain. The ‘moment of industry’, if we can call it that, was really a series of late 19th C. spurts, before and after the American Civil War, and then sandwiched between the two World Wars. Sandwiched thus, it was also sandwiched between the late 18th-early 19th C. financial arrangements (when the East India Company first utilized hundi structures for credit, followed by the Company’s rise to financial prominence directed towards facilitating repatriation of capital from India to Britain) and the interwar years that saw the return to prominence of the famous ‘invisibles’ economy. Rothermund, describing the earlier period, shows the effort that went into controlling and appropriating the indigenous credit system: of the pre-1850 period he writes, ‘After 1833 the East India Company… emerged as a major source of credit for the export trade. As it could not conduct trade on its own account, but had to remit money to London, it was willing to finance even the export of products that did not fetch a good price in London, as long as this facilitated remittance transactions’. He also shows the direct relationship between credit systems facilitated by indigenous capital and India’s rural indebtedness, as the remittance process was linked to increased revenue demands upon the Indian peasantry (Rothermund, 1988 24-25).

By 1914, as this system settled in, there was growing British opposition to the very desirability of industrialization in India given the overdetermined presence of an economy of agrarian trade (and the primacy of rural credit to the pre-War Empire economy). As Clive Dewey (1979 227) says, speaking of the Curzon period known for inaugurating state intervention into industrial production, ‘Men doubted not only whether industrialization would do India much good, but whether industrialization was an option open at all’^[28] .

Hardly any of this enormous trade and credit capital found itself qualified to enter organized industry. ‘Given the dislocation of the internal banking structure, the non-monetization of large sectors of the rural economy and the absence of even a rudimentary stock exchange before 1914′, Tomlinson writes, it is ‘hardly surprising therefore that before 1914 industrial entrepreneurs often found difficulty in raising adequate amounts of capital’, since ‘purchase and mortgage of property were the preferred type of long-term investment’ (Tomlinson, 1979 10-11). By the early 20th C., in its effort to redefine its colonial arrangements, England’s own commitment to the industrial revolution was a thing of the past, even as its relationship with Indian trade became the core of a new effort to restructure the terms of preferential Empire trade agreements. In the years just before WW1, at the pinnacle of a global financial structure, Britain’s invisibles economy - crucially including ‘overseas investment’ - made London the world’s banker, central to a new international financial system with Indian capital increasingly central to that system^[29] .

Meanwhile, industrial decline in Britain itself, conventionally dated from 1870, was so severe that there have been growing suggestions that Britain may never have had an industrial revolution at all: Australian historian W.D. Rubenstein (1993 24) follows on a long tradition of such critique^[30] to contend that ‘Britain was never fundamentally an industrial and manufacturing economy; rather it was always, even at the height of the industrial revolution, essentially a commercial, financial and service-based economy whose comparative advantage always lay with commerce and finance’ (emphases in original). Both WW1 and the Great Depression had led to Britain only increasing its dependence on this financial arrangement even as she is forced, says Chatterji (1992 38), to turn to her empire to bail her out of difficulties in her struggle to minimize the traumas of slow structural adaptation. And so it was that the restructuring of the older colonial economy into a post-autarchy conception of imperial ‘Trade Preference’ arrangements was dominated by financial links with the Dominions:

In the changed context, the relationship that had existed between the British, Indian and the world economies came to be reformulated within which British financial and commercial interests were sought to be reconciled. For the former, India now needed to run a trade surplus with Britain, and for the latter, for the first time a conscious attempt was made to restructure Indo-British trade on the basis of new complementarities under a system of mutual preferences. This strategy, worked out at Ottawa (the Imperial Economic Conference, 1932), was (also) linked to the need to contain agrarian discontent by providing some support for Indian exports and with the plans for constitutional reform in order to diffuse the anti-imperial energies of Indian politics (Chatterji, 1992 97).

Elsewhere, we will explore the foundational role played by Ottawa 1932, the ideology of Imperial Preference, and the Tariff Wall that Britain was proposing be put around the Empire, within the British policy of what I will call cinematic governance^[31] : and the further impact of that concept, along with its imperial economy, upon Bombay. At this point, I want to revert the argument back to its original narrow locale, the specifics of Bombay’s economy, and to the global nature of the war being fought out in that city.

In the crucial interwar period, Tomlinson says, if indigenous industry was to ever access local capital here, two things had to necessarily happen. First, the supply of manufactures from overseas had to be so completely disrupted as to generate so much demand that the often speculative, under-capitalized Indian factories could survive and develop. Even this alone wouldn’t be enough. Second, the established institutional pattern for the allocation of savings had to break down, as though through direct state intervention. ‘Protective tariffs for infant industries, the great cry of economic nationalism in this and later periods, would only supply one half of the less important of these two alternative scenarios. Only when the external network for the supply of goods and the internal network for the supply of credit were both disrupted… was it likely that Indian industrial production would increase significantly’ (1979 13 emphases mine).

Such disruptions would take place, to varying degrees, on three occasions of major economic change in Bombay in the time of our investigation (all three, we have seen, referenced at some time in our film-text palimpsest Shri 420). The first around battles to reorganize the city’s textile industry, including its trade union activity; the second, the Global Depression, and the third, and perhaps most definitive, the Second World War. As chronicled by A.D.D. Gordon in the most detailed available account of the battle (‘The Assault of Modern Capitalism on the Traditional Markets, 1914-30′, 1978), the textile industry’s conflicts over market reform between ‘mill owners, exporters, importers, commission agents and merchants, jethawalas, muccadams and brokers’. In this industry’s effort towards initiating what Gordon calls a ‘historical process of synchronization of the traditional market structure with the modern methods of trade and industry which had been grafted onto India’^[32] , also lies, it appears, the more basic question, asked again and again through the entire history of industrial decline in the city culminating in the legendary 1982 strike, of whether Bombay’s textile industry was an industry at all^[33] . The second, and still more definitive moment in the interruption was the worldwide Depression, and the ensuing credit squeeze^[34] . This was the first time that India’s indigenous credit system was directly hit by a global economic crisis from which it had been, until now, effectively insulated. Tomlinson (1979 36-37) writes that these gold exports ‘have often been regarded as enforced disinvestment by the agrarian population, straightforward proof of the fact that the Depression was forcing the rural economy to draw on all its accumulated resources to make ends meet… A part at least of the gold exports… were the result of distress sales’.

The move forces the indigeous bankers, who had until then stayed with agriculture, rural trade and rural industry, to go legitimate, including both the Marwari and the Chettiar communities - the two communities that would enter film financing in the largest way. Tomlinson (1979 41) says that it is likely that ‘the new commercial bankers of the 1930s were the indigenous bankers of the 1920s who had adapted to new circumstances’; so in 1928, in the early days of the Depression, the Chettiar community ‘converted part of their indigenous banking, trading, and moneylending business into the Bank of Chettinad Ltd, a joint-stock bank with a paid-up capital of a couple of crores’.

Rajnarayan Chandavarkar (1998 56-57) says ‘while it was certainly not the case that the dominant Hindu vania merchants and great Jain bankers abjured the opportunities created by the expansion of the Company’s trade’, one is nevertheless forced to conclude that ‘they were too firmly established within the Gujarati economy to seek dependence upon or patronage from the European companies or to abandon the centre of their highly successful operations’ even after they moved their activities to Bombay. As early as in the early 19th C, these operations had included the theatre, as investment into the entertainment economy came, like Lahore, via exhibition. Dharamsey and Gangar (1984) track the Parsee and Bhatia sponsors originating from the city’s ‘playhouses’, and the building of the Bombay theatre by Balkrishna Shankarshett in 1822. Key landmarks thereafter include Dadabhai Thunthi’s founding of the Victoria Theatre, the later Gaiety theatre (1879) owned by K.N. Kabraji, the Novelty owned by Khurshetji Baliwala, the Deshi Natakashala funded by Dahyabhai Dhosalji (later the famous Princess Theatre of Bhangwadi funded after 1905 by Tribhovandas Mangaldas Nathubhai), the Baliwala Theatre Company’s Empire Theatre (1890), etc. In a second phase, some of that investment moves further into vertically-integrative production investment, the best example being the well known Madan Theatres, India’s first major exhibition chain^[35] , but perhaps the most significant being Ardeshir Irani, director of India’s first sound film, Alam Ara (1931). Irani started his film career partnering Abdulally Esoofally in exhibition interests launched with the acquisition of the Alexandra and Majestic theatres in 1914, and entered film production - with Star Film (1920) in partnership with Bhogilal K.M. Dave, releasing their first film, Manilal Joshi’s Veer Abhimanyu in 1922, followed by interests in Majestic Film (1923) and Royal Art Studio (1925) - primarily to keep his distribution outlets supplied, only entering production proper with the Imperial Film Company in 1926.

The onset of the Second World War saw a major industrial boom but it was one rigidly controlled by the restrictions and demands of the War economy. Rothermund’s account of ‘India’s War Profit’ speaks of a time that also defined the preconditions of economic planning in India. While the war did lead to a major increase in demand for industrial goods - including textiles and, even more crucially, steel - such a demand had strange consequences, effectively sowing the seeds of deindustrialization in the city ^[36] . For Rothermund, the crisis defines the wartime origins of economic planning in India, as a ‘formidable interventionist machinery’ was assembled in India, for the first time ever, ‘geared to solving immediate problems rather than designed in the interest of long-term planning’, as India’s economic planners were ‘now interfering with the market in a big way, but they still could not think of countervailing measures such as controls of the distributive system’ (1988 122). Instead, the terms of economic planning were effectively determined by the state’s mopping up of all credit to finance the war effort, the drying up of investment in industrial capital, the enormously high levels of war profiteering, the hoarding of essential commodities, and the establishment of a taxation policy that typically hit the rural poor.

While post-War deindustrialization in Bombay, and the parallel return to dominance of speculative investment in land, and, of course, the new entertainment industry of celluloid film, has still to be fully understood^[37] , Chandavarkar (‘From Neighbourhood to Nation: The Rise and Fall of Life in Bombay’s Girangaon in the Twentieth Century’, 2004) dates the effective onset of deindustrialization from as early as the late 1940s. He sees it as coinciding with the decline of support to the city’s Communist textile trade unions, although he acknowledges that the culmination of the process should be more conclusively dated to a far more recent event: the 1982 textile strike which ‘hastened the flight of capital as the millowners sought to diversify their investment, outsource production to powerlooms and garment factories and realize the value of their vastly inflated real estate’.

The film industry before and after the War

‘Black money’ originated during the scarcities of the wartime years, when the spoils of large-scale profiteering stayed outside the banks; it has remained there ever since. An industry which costs more in services than in goods offered an excellent area for this unaccounted and untaxed wealth to hide and multiply. The moneybags offered fantastic sums to the stars to wean them away from the studios, which were soon forced to close down. Since then, Indian production has been completely ‘independent’ everywhere except the South. ‘Independents’ dependent on stars are hardly likely to hold their own against them. Now the inevitable has happened… [T]he mass film in India has landed itself in a star system without studio control, formula film-making without Hollywood’s variety of formulas, an annual investment of some 85 million dollars without Hollywood’s audience research or other organisational safeguards (Chidananda Das Gupta, 1969 30)

By the late 1920s and through the 30s, coinciding again with our brief second boom in industrial capital, the city’s film industry too had made its efforts at vertical integration. Paralleling the post-Depression integration of a new generation of financial institutions with an outlook ‘very similar in structure to the expatriate enterprises they were rivalling and supplanting’ (Tomlinson, 1979) - an outlook demonstrated through direct control of financial companies including ownership of ‘banks and insurance and investment companies to help finance trade and industrial activities’, several 1930s studios in Bombay too set themselves up with a more integrated business structure. The most visible of these in Bombay, the Kohinoor Film Company, originated in typical manner with financier capital derived from Ahmedabad exhibitor Maneklal Patel in 1919. However, by the mid-1920s, Kohinoor had apparently done significant work in setting up a professional exhibition apparatus through a wholly-owned rights-disbursing agency, Bachubhai Bhagubhai, enabling a monthly booking revenue exceeding Rs 50,000. It had also, parallelly, produced the closest Indian cinema would ever see of the Hollywood-style film factory with several simultaneous productions, story sessions and the planned building of star careers.

Perhaps the most significant move in the direction of establishing compatibility with industrial capital was that of the Bombay Talkies studio. Interestingly, while BT founder Himansu Rai had begun his career with financier support sourced from Lahore, from financier Prem Sagar and his brother, the retired Lahore High Court Judge Moti Sagar, to make Light of Asia (Franz Osten, 1925), by 1934 BT’s ambitions as defined by chief backer Richard Temple were foundationally different. It was set up with a corporate Board consisting of people like F.E. Dinshaw, Sir Chimanlal Setalvad, Sir Chunilal Mehta, Sir Pheroze Sethna and Sir Cowasji Jehangir (many of them, as A.R. Desai (1948 114) later wrote, part of the ‘dozen individuals who, by their control over banks, insurance companies and investment trusts, occupy commanding positions in the industrial life of Bombay’ facilitating the ‘control of Indian industry by finance capital’). The studio, thus backed by major financial institutions, paid a regular dividend to all stockholders from its third year onwards. The Bombay Talkies model of ownership may well have been the first significant departure from the commoner joint-stock system that dominated studio ownership (as for example in the Prabhat Film Company), replacing it with a more sophisticated Managing Agency structure, common to the new corporate financiers in the time that saw the ‘vesting of the management of a joint stock company in the hands of a firm of professional managers… responsible for the initial promotion, financing, underwriting, and organisation of the… company’ (Kling, 1992). A small number of other producers in Bombay too sought similar institutionalization.

The effective destruction, in cinema exhibition and production, of the entire pre-War studio infrastructure within a few years of the end of the War, coincides with a number of economic phenomena. ‘The War ended’, writes the S.K. Patil Film Inquiry Committee Report of 1951, ‘at a time when the industry was enjoying a boom. Cinemas, old and new, were earning large revenues, and since the annual production of films had been curtailed, from about 170 at the beginning of the War to about 100 when it ended, the distributors and producers also secured good returns on every film’. The situation was rapidly to change: ‘When controls were lifted by 1946 there was a sudden spurt of activity both in production and exhibition’, says the Report. ‘Theatre equipment was imported in the two years 1946-47 and 1947-48 amounted in value to a crore of rupees. Studio equipment costing another crore of rupees was also imported and installed in the same period. Within three months of decontrol, over 100 new producers entered the field, attracted by the prospects held out by the industry, and new films released numbered over 200 in 1946 and 283 in 1947′ (Patil, 1951 13). Under the onslaught of new capital entering the industry, within the decade virtually all the major studios in Western India close down, and with them their effort at industrial reorganization. Prabhat closed in 1953, New Theatres in 1955, and while Bombay Talkies and Ranjit studios did continue, through the 1960s they became - as did V. Shantaram’s Rajkamal Kalamandir and even Raj Kapoor’s and Mehboob Khan’s respective studios - primarily real estate for rent making occasional productions rather than as production houses.

The boom and shift coincides with several related economic phenomena in the city. It coincides, we have seen, with the onset of deindustrialization. It also coincides with the rise of a ‘black market’ in housing following the 1947 Bombay Rent Control Act, and a new ‘builder’ economy of Punjabi and Sindhi migrants undertaking speculative construction of real estate in numerous new city suburbs, in Khar, Santa Cruz and Juhu, and in the massive Nariman Point and Cuffe Parade reclamations in South Bombay. We have, with Raj Kapoor, arrived in Bombay city’s historical present.

 

References:

1 Towards the beginning of the film, having pawned his ‘honesty’ medal, Raj says to the old Khoja pawnbroker (Rashid Khan): Just see how I buy all of Bombay city with this forty rupees. Later, after he has been bought over by Sonachand Dharmanand, Raj says, responding to Vidya’s father’s comment that he seems to have found the keys to some treasure, that he has indeed found the keys to treasure, and to watch, for soon all of Bombay city would belong to him.

There is also an important dialogue with Vidya where Raj says: ‘Lekin is waqt meri madat mujhe khud karne dijiye. Is shaher mein mujhe kuch karna hai - kuch banna hai’ (But right now I have only to help myself: in this city I have to do something, become someone’).

Vidya: ‘Kuch banna hai? Kya? Aur Kaise?” (‘Become someone? Who? And how?’)

Raj: ‘Jaise bhi ho, jis dhang aur jis raste se bhi ho, lekin thode dinon mein aap dekhiye meri jeb mein paise honge meri badan pe ek badhiya suit hoga, is shaher mein mera naam hoga, izzat hogi, log mujhe dhikkarenge nahin, mera jaijaikar hoga’ (‘However it is, in a few days from now you will see money in my pockets, a suit on my body, I will be famous and respected in this city, and people will not shun me but will praise me’).

2 Ashish Rajadhyaksha, Cinema in the Time of Celluloid: Indian Evidence 2005-1925, New Delhi, (forthcoming 2007).

3 ‘Bombay-Mumbai 1992-2001′ was part of ‘Century City: Art and Culture in the Modern Metropolis’ curated by Geeta Kapur and myself, at the Tate Gallery 2001. See Kapur and Rajadhyaksha, 2001, for more on the presence of Shri 420 as a part of this pictorial tradition.

4 Ashis Nandy writes, ‘Today the right metaphor for Indian popular cinema, alias conventional, commercial or Bombay cinema, has become the urban slum… both cinema and the slum in India show the same impassioned negotiation with everyday survival, the same mix of the comic and the tragic, spiced with elements borrowed indiscriminately from the classical and the folk, and the East and the West’ (Nandy, 1995).

5 Raj (to Vidya): ‘Yahi meri badkismati hai ki main anpadh nahin - agar aisa hota to mai kamsekam tokri utha sakta, station par hamali kar sakta, magar kya karoon, graduate hoon, BA. Pass’ (‘It is my misfortune that I am not illiterate: were I one, I could at least be a porter, but what to so, I am a graduate, a B.A. pass’).

6 The pavement dweller: in a mimicking voice: ‘He wears a Russian hat and does not understand what is pagdi. It is a gift: it is money, I have got this by paying three rupees: you can have half’. A reasonably accurate description of pagdi is provided by a World Bank investigation report on the Mumbai Urban Transport Project (MUTP), with reference to the project’s Resettlement and Rehabilitation policy. The term, it says, refers to the ‘system of land control and rights underlying many important economic activities in Mumbai’. The term signifies ‘the turban’, the sign of ‘rule or control, passing from one head to another’. With the payment of pagdi, the turban and control of the land is transferred with little if any documentation. Despite this, even without documents, ‘the control or ‘title’ to occupancy of space for income-earning can be very stable. Tens of thousands of people in Mumbai’s informal economic sector earn their living in premises governed by the rules of the informal land sector. In the formal residential sector, moreover, formal recorded title and pagdi (translated here as “key-money”) often work in parallel’. See http://siteresources.worldbank.org/EXTINSPECTIONPANEL/Resources/IPNMUTPFINAL.pdf.

7 Dharmanand has this conversation with Kilachand: ‘Kaun, Kilachand? Ek hazaar ton chawal ka order nahin supply kar sakte ho, sirf aathso ton milta hai? Isme ghabrane ki kya baat hai? Agar chawal nahin milta to do sau ton kankad patthar to mil sakta hai? Idiot.’ (‘Who, Kilachand? You say you cannot supply a thousand tons of grain but only 800? What is the reason for worry? Can you not add to it 200 tons of stones and pebbles? Idiot’). Wartime food hoarding peaked in 1943 and contributed to the nationwide famine that year.

8 Raj: ‘What have you not done to acquire these useless pieces of paper? You run bogus companies, you deal in the black market, and you receive insurance monies by setting fire to your companies’.

9 Elsewhere, Dalal (2006) writes that ‘the Mumbai police have submitted a list of 12 mafia-linked entities to the Securities and Exchange Board of India (SEBI). These entities were apparently active in ramping up B-group scrips in the secondary market and are allegedly linked to ‘underworld dons’… Market sources… say that once the mafia identifies the stock market as a good investment avenue it is unlikely to restrict its activities to penny stocks or B-groups scrips’.

10 An official definition of hawala trade shows the extent of structural compatibility with the exhibition trade: hawala is

‘an alternative or parallel remittance system. It exists and operates outside of, or parallel to ‘traditional’ banking or financial channels. It was developed in India, before the introduction of western banking practices, and is currently a major remittance system used around the world. It is but one of several such systems; another well known example is the ‘chop’, ‘chit’ or ‘flying money’ system indigenous to China, and also used around the world. These systems are often referred to as ‘underground banking’; this term is not always correct as they often operate in the open with complete legitimacy, and these services are often heavily and effectively advertised’ (‘The hawala alternative remittance system and its role in money laundering’ (http://www.interpol.int/Public/FinancialCrime/MoneyLaundering/hawala/default.asp).

11 One explanation given for hawala-type exhibition trade in film is that it puts the trade beyond the tax curtain. Whatever the reason, the link between film exhibition and the hawala trade has been a longstanding one. As explained by a recent television channel’s news item following the 2006 Finance Budget: ‘It all begins with small-time producers who make C-grade films like Sexy Girl, Naughty Boy and Young Love. The overseas rights for these films are then sold at astronomical sums to fictitious companies abroad and since the money is not taxable there is no accountability for the money. The producer of the film receives his share, shuts shop and disappears. The erring producers also escape the prying eyes of the Income Tax Department as there is no track of where the money comes from how it gets utilized. The racket works both ways. Whereas the producer needs to sell the copyright of the C-grade film to receive money, he just needs to purchase the copyrights of foreign films to transfer money out of the country’. Kanhaiya Singh, ‘A-Grade Tax Escape Route for C-Grade Filmmakers’, March 11, 2006, CNN-IBN webcast (http://www.ibnlive.com/article.php?id=6619&section_id=7). Apparently the total amount of money transferred in this way could exceed Rs 10,000 crore. A second issue has been that of box office versus television rights: confusion around the two; cf. Malchand Bagri et al: the toss being fixed. Television et al being guaranteed tertiary rights.

12 The question arose primarily in the country’s apex stock exchange regulatory body, the Securities and Exchange Board of India. After the Shah scandal the SEBI sought more effective implementation of the recommendations of the 2001 Y.H. Malegam Committee Report on Disclosure Requirements, addressing ownership disclosure procedures of companies intending to list their stocks. It had been appointed in 1995 by the SEBI to ‘review the extant disclosure requirements in Offer Documents for public/rights issues’. For the full text of the draft report, see http://www.sebi.gov.in/commreport/melagamreport.pdf.

13 A relatively recent addition being the international live concerts economy catering to non-resident Indians.

14 While Shah’s own money came from Gujarat’s diamond trade and not from real estate, the recent history of a ‘mafia’-dominated exhibitor-financier economy that he was by all accounts to aggressively enter through the 1990s shows little variation to this norm.

15 This was a key reason for the conflict, in several film industries, of the Minimum Guarantee/Overflow system versus the slab system, with several state governments preferring the latter option.

16 The entry of video was perhaps the first significant move away from the box office: since then television, followed by the explosion in the music rights sector, and most recently the satellite and digital sectors, and star branding have further enhanced the devaluation of ticketed sales.

17 The best known instance is that of producer G.P. Sippy. While Sippy has in a colourful career ‘run a restaurant, constructed buildings, produced films, directed films and even dabbled in acting’, his contribution to the cooperative housing society movement is well known. He apparently arriving in Mumbai in 1947 with only the proverbial shirt on his back, but among his earlier financial ventures, ‘originated the idea of building a cooperative society where flats could be sold individually to owners. Until then, apartments were only rented out. Mohini Mansion, Churchgate Mansion, Anand Niwas and Gopal Mansion are only a few of the Mumbai buildings that stand testimony to his unbeatable chutzpah’ (Chopra, 2000 20-21).

18 And also in film exhibition. The best known is that of the company owned by Shyam Shroff, the man who gave Ganti her map. Shringar Films (founded 1975) originated in the early 1950s as a partnership firm financing Hindi films named Issardas Naoomal, owned jointly by Gobindram Naoomal Shroff and Vasudev Naoomal Shroff. Among the famous Hindi films they financed include Kafila (Aravind Sen, 1952), Chalti Ka Naam Gaadi (Satyen Bose, 1958), Jhumroo (Shankar Myukherjee, 1951), Guide (Vijay Anand, 1965), An Evening in Paris (Shakti Samanta, 1967) and Aradhana (Shakti Samanta, 1969), etc. By the mid-60s, they spun off a distribution outfit called Maya & Co. which started acquiring distribution rights for films they would put out through the Chhabra Film Exchange. For an extraordinary career timeline of this organization, see http://www.shringar.co.in/IIC/ShringarGroup.htm.

19 The connection was first made around 1760 when the Bombay government found itself with insufficient financial resources to support its growing civil and military establishment, and began approaching Bania bankers in Surat for short-term loans, as well as to transfer funds from Bengal acquired from the Diwani in 1765 to Bombay using their hundi network that stretched across the subcontinent connecting Surat with Murshidabad. The ‘Bania-British’ partnership went on for five decades and over two phases: the first limited to the Company’s commercial interest, but deepening into a second after the Anglo-Maratha war (1775-1882) when ‘Bania cooperation reached its high point and when their hundis became the principal instruments of supplies to the British armies in the distant theatres of war’ (Subramanian, 1987)

20 See especially Balachandran’s John Bullion’s Empire: Britain’s Gold Problem and India between the Wars (Balachandran, 1996) for a detailed account.

21 In Martin J. Wiener’s (1981) phrase. Also see Cain and Hopkins, 1992.

22 Ravinder Kumar writes, ‘All that the Land Alienation Act accomplished… was to relocate the surplus capital of the cities from the rural to the urban sector. This new trend was vividly reflected in the dramatic growth of joint-stock companies from 50 in 1901 to 155 in 1913′. He also speaks of the astonishing ‘physical growth of Lahore… reflecting a fundamental middle class transformation in the Punjab’, of which the principal beneficiaries were the new urban communities such as the ‘Khatris, Aroras and Banias’: more or less the same communities who were to enter independent film financing. See Kumar’s extraordinary essay ‘The Two ‘Revolutions’ in the Punjab’ (1983 109-111). Also see ‘The Punjab Land Alienation Act and the Professional Moneylenders’ (Islam, 1995).

23 Dietmar Rothermund says that the ‘scarcity of industrial capital in India was… not only due to the lack of an adequate financial infrastructure; it was related to an even more fundamental problem: the enormous appreciation of the value of land’. He writes, ‘Between 1860 and 1913, the price of land rose by about 4 per cent per year, while other prices increased only at a rate of about 1.5 per cent. This unjustified appreciation of the value of land led to the strange situation that this value, which made up a quarter of the national wealth in 1860, amounted to one-half of it in 1913. This pernicious type of appreciation, which was in contrast to the experience of all industrialised countries, was a much more serious obstacle for the accumulation of industrial capital than the hoarding of precious metals, which is usually mentioned by those who try to explain India’s retarded industrialisation. While this appreciation prevailed, it was impossible to channel rural capital into industrial investment. The appreciation itself indicated that there was plenty of money in the countryside, but it was chasing around for land and could not be siphoned off’ (Rothermund 1988 62)

24 According to Mushtaq Gazdar, it was earlier named the Northern Film Corporation. Effectively, however, it takes over Shorey’s Kamala Movietone.

25 Mushtaq Gazdar mentions two films, Abla and Falcon, directed by Ramgopal Kirpalani. Virchand Dharamsey’s definitive filmography of the silent cinema (Dharamsey, 1994) mentions this as the Punjab Film Co. and the films as Abala (Jaigopal Pillai, 1931) and Madhu Bose’s Khyber Falcon (1932), both silent.

26 Just one typical example being Lahore migrant Gulshan Rai, founder of Trimurti Films and financier of Yash Chopra’s legendary 70s productions .

27 The ‘new’ industries were, among others, ‘electrical engineering, motor vehicles, rayon and silk manufacture, as against ‘old’ industries associated with cotton. As Chatterji (1992 111) says, given the ‘almost interrupted decline’ of cotton textiles since 1914, it should be remembered that ‘it was the housing boom, with its associated backward and forward linkages, which sparked off the ‘recovery’ of the early 1930s and while this encouraged the growth of new consumer industries and the tertiary sector, its employment generation rate (the highest in the interwar period) and its geographical concentration arguably contributed to retardation in labour transfer to the high productivity sectors and adversely affected the subsequent growth and structure of the economy’.

28 Dewey writes that the advocates of state intervention in the Curzon regime were ‘inhibited… by genuine uncertainty over the correct development strategy for India. It was far from universally acknowledged that industrialization was the only means of permanently improving living standards. Contemporary commentators differed over the relative importance of the economic benefits brought by factory industry, and the social costs that followed in its train…’. Dewey also draws his evidence about British anti-industrialism, interestingly, from the romantic rediscovery of Indian art, and in the art-historical ideologies of Sir George Birdwood and E.B. Havell (Dewey, 1979 227-229)

29 As Basudev Chatterji suggests, India’s finance economy may well have been involved in a considerably larger global operation of helping ‘maintain stability in Britain’s balance of payments position by virtue of the fact that she enjoyed the largest surpluses precisely with those countries with whom Britain had her largest deficits’, thus suggesting that Indian capital repatriation, often drawn from rural sources through the intermediary structures of indigenous credit, were then used by Britain to pay its debts, often to countries in West Europe and the USA with whom India had trade surpluses. This also enabled the globalization of an otherwise largely local transfer of capital within India. India’s special significance for the British economy, and the complex routing of this capital, was a reflection of a serious malady that beset Britain, viz. slow industrial growth coupled with the major success of finance capital, often capital provided by ‘personal fortunes, retained earnings and country banks’. The inversion of the industrial economy, enabling Britain to cover the discrepancy between the manufacturing sector and the export economy primarily through her overseas investment and heavy reliance on ‘invisible earnings’, forms the heyday of late colonial finance capitalism (Chatterji, 1992 40-41).

30 Rubenstein locates his argument within a tradition of anti-Marxist critique of British industry starting from Arthur Koestler’s famous Suicide of a Nation? An Inquiry into the State of Britain Today (1963), to Corelli Barnett’s The Collapse of British Power (1972) and The Audit of War (1987), and Martin J. Wiener’s English Culture and the Decline of the Industrial Spirit 1850-1980 (1981).

31 Chatterji writes of Ottawa that, by the time the negotiations were concluded, they made sense to British industrialists and financiers as related to economic nationalism, a ‘comprehensive struggle for control of international finance and services as well as of commodity trade’, which would be achieved through ‘new techniques of radio communication, film propaganda and air transport‘. (Chatterji, 1992 59).

32 Chandavarkar’s definitive work on Bombay (1994 52-55), also addressing this transition, shows how the British administration’s effort to restrain Marwari moneylending leads to merchant moneylenders pulling out of the agrarian economy, and ‘using their trading and kinship connections to diversify their operations away from usury’ while ensuring control over agrarian produce rather than over land including, as we have seen, a former landed elite attempting to ‘diversify their activities to long-distance export trades and industry’, and thus a brief era where mercantile capital seeks, within ‘the commercial and industrial growth of Bombay’, a ‘subordination of indigenous capital’.

33 The problem of qualifying for access to financier investment, which first surfaced in the context of the American Civil War when cotton trade received a major boost, had forced capitalist spinning mills to take on a pre-capitalist weaving function as well, unique to the Indian textile industry. It was further exacerbated as the traditional relationship between industrialists and their market agents - the ‘mass of shroffs, brokers, sub-brokers, adatyas and dalals who constituted the market chain from the ryots to the godowns and docks’ (Gordon, 1978 85) - started breaking down with the increasing entry of speculative investment into speculative forward markets. In this time, the industrialists had no alternative but to themselves descend into the credit business, through creating new forms of credit, through cooperative credit societies, postal cash certificates, post-office savings banks and so forth, to finance the mofussil trade. Gordon says that although the ‘extent to which modern capitalism did encroach upon the domain of the shroffs during the 1914-33 period’ still needs to be analysed, it is likely that this was for a while an all-India movement, that ‘both shroffs and merchants felt themselves to be under a severe economic attack’.

34 Maharashtra historian N.S. Phadke (2000) shows, the Depression was the first modern instance of extreme rural as well as urban indebtedness in the Bombay Presidency, and also connects the condition of the rural peasantry, faced with falling prices for all primary goods, and rising land revenue taxes (the context of Gandhi’s salt satyagraha), with that of the textile industries, as evidenced in the gradual closure of mills (from 78 in 1926 to 55 in 1932), the wage cuts and ensuing textile strikes in Solapur and Bombay.

35 With Madan, several famous ‘Parsee Theatre’ repertories made forays into film production. See ‘Parsee Theatre’ in Rajadhyaksha and Willemen, 1999 171.

36 The ‘British government bought goods produced in India on credit and subjected India to a regime of forced saving’, writes Rothermund (1988 118-120). ‘This amounted to a kind of compulsory investment in government bonds, but it was not necessary to issue such bonds as the government could freely print money. As more and more money was printed, the sterling currency reserves of the Reserve bank of India deposited with the Bank of England in London increased to the same extent. But the reserves could not be touched by India during the War’. Rothermund identifies the condition of stagflation (increase in wages and prices, the reduction of profit and reduction of the propensity to invest into industrial production) as a direct cause for the foodgrain crisis that was to lead to the disastrous famines of 1942-43, again making a direct link with the agrarian economy and thereby to the links established by indigenous creditor capital.

37 As some of the language of the Bombay Moneylenders Act of 1947 indicates, the social presence of a certain kind of cultural activity associated with moneylending had come to receive legal visibility. The Act, which now seeks to license all moneylenders, regulate their activities in ways that would e.g. require them to lend with defined rates of interest, and determine legal ways of debt recovery, also for example states that (Section 33-1) ‘whoever molests, or abets in the molestation, of a debtor for the recovery of a debt due by him to a creditor shall… be punishable…’, and such molestation included anyone who ‘obstructs or uses violence or intimidates’, ‘persistently follows such other person from place to place or interferes with any property owned or used by him’, ‘loiters near a house or other place where such other person resides, or does any act calculated to annoy such person…’. (Bombay Act No XXXI of 1947: the Bombay Moneylenders Act, 1946, Government of Bombay).

 

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