Partners, Servants or Entrepreneurs? Banians in the 19th century Bengal Economy

Michael Aldous

The difficulties of long-distance trade in the 18th and 19th centuries often saw merchants use intermediaries with expertise of the local markets and languages to carry out various trade functions. In Asia this was described as the ‘comprador’ system, whilst in the Anglo-Indian trade individuals carrying out the same functions were known as ‘banians’. The banians built relationships with individual East India Company managers, overseeing and managing investments, providing capital to them, and becoming wealthy and highly important individuals in their own right.

There is disagreement about how the function of the banians changed over the 19th century, the importance of their role in the trade, and the impact they had on the local economy. The literature suggests that they declined in importance as European business enterprises no longer required their services (Marshall, 1979), and successful banians moved away from commerce to became rentier landlords. A related argument proposes that as the British came to dominate business and politics, Indian commercial interests were subordinated with the banians marginalised (Misra,1999). Yet, British firms continued to employ them until late in the 19th century, and Indian intermediaries remained important in credit and labour markets. There are also indications that Indian business interests evolved in the second half of the 19th century, with successful banians using their experience and contacts to independently enter new industries and establish competitive international operations (Mukherjee, 1967).

This paper explores these debates by examining how the role of the banians, and their interactions with European merchants evolved across the 19th century. It uses new data from Calcutta commercial registers to quantify the number and type of banians operating in Bengal, and other Indian owned businesses. It also uses a range of new qualitative sources including legal contracts with banians to analyze changes in their role and the structure of their relationship with European business interests.

An improved understanding of how and why these roles and relationships changed, offers insight into a number of debates.  First, it enables a reassessment of how the Europeans established themselves in the Indian economy in the 19th century. The evolution of the organisation and function of the European trading firms has been widely examined, but less attention has been paid to the role of Indian intermediaries in enabling the expansion of the Anglo-Indian trade, and the integration of the trading firms into other areas of the Bengali economy. Analysis of the function of intermediation provides an interesting lens through which to assess the changing structure and operations of the trading firms, identifying which activities could be outsourced or integrated, to reveal changes in their capabilities and focus of activity.

Second, the banians were conduits between cultures, bellwethers of the relationship between the European and Indian communities, transferring knowledge in both directions. Examination of these relationships allows analysis of how long-run collaborations between different cultural groups shape the transference of knowledge and development of commercial systems.  That the Europeans benefited from the banians knowledge of local markets is clear, what is less understood is the role they played in shaping Indian owned business. In particular, the marginalisation of Indian business interests is proscribed as a cause of entrepreneurial and economic stagnation in the 20th century, yet the evidence for this is conflicting. There is an interesting opportunity to examine how the organisation and ownership of Indian business evolved in the 19th century, and consider how this affected the long-run development of Indian business organisation.