Remaking the Bengal market in the 1830s - Mercantile Responses to Financial Crisis
Michael Aldous

On the rescinding of the East India Company’s (EIC) monopoly on trade in India in 1813, private mercantile firms rapidly took its place, organising trade and production of export commodities such as indigo, and coordinating international trade routes. Known as Agency houses, these firms evolved to provide a wide range of mercantile and commercial services, as well as becoming key suppliers of credit and capital within their local economies. In the early 1830’s, when confronted by rapidly falling commodity prices and a contraction in liquidity within local credit markets, the largest agency houses collapsed into bankruptcy. A financial crisis ensued in Bengal. This paper examines how merchants responded to this significant disruption. Analysis of new mercantile ventures reveals how they adapted both organizational and market structures to overcome the significant challenges of financing and coordinating the production and trade of export commodities. The paper finds that a variety of innovative approaches were used, ranging from vertical integration, specialist intermediation, and utilisation of hybrid organizational forms. This deepens our understanding of how merchants have responded to highly disruptive events, and the innovative role they have played in restructuring global markets and supply chains.