Friday, 20 December 2013

OCCUPATIONS - Commodities Trading & Speculation - Cotton

Commodities Trading & Speculation - Cotton

In 1788, the Governor General (at Calcutta) was requested by London to encourage
growth and improvement of Indian cottons to meet the requirement of the Lancashire
textile industry.

By 1793, the Court of Directors of East India Company in London revised their policy to

a. Increase import of raw materials
b. Increase the export of British manufactured goods.

By 1850, India accounted for almost one-sixth of the total textile exports from England and also became the largest consumer of British textiles. India was thus reduced from the position of a supplier of manufactured cotton goods to that of a supplier or raw cotton, for the British textile mills.

In 1820's the ryotwari system of land revenue was introduced in Madras Presidency. In the later years it was extended to Bombay Presidency. In the ryotwari system every registered holder of land was considered a Propritor and paid directly to the government.

It was introduced as an alternative to the zamindari system of land revenue which was practiced in Bengal Presidency which had generated a class of pest like blood sucking landlords which did not contribute significantly to the overall revenues.

The ryotwari allowed the landowner to gift, sale and mortgage his property. This allowed the land owner for the 1st time in history to obtain a cash loan against land.

As land now became a collateral Marwari money lenders who made inroads into cotton growing region for financing cotton cultivation.

When American Civil war broke out in 1861 there was a widespread belief in Britain that the supply of cotton from subsidiary sources especially India would keep the mills running. However in reality the total quantity of raw cotton imported into Britain from India was merely 20%.

The reason for this was the short-staple cotton grown in India was unsuitable for British Mills which were equipped for use of American long-staple variety.

The government stepped up measures to cultivate cotton in India. Under an executive order wasteland owned by the government could be acquired and held in fee simple by their owners and their heirs in perpetuity. This enabled Marwaris to amass huge land holdings which stayed with them until the Land ceiling act was imposed in 1976

By 1860 railroads from Bombay had extended until Nagpur trespassing Vidharbha region. This region having deep black soil and scanty rainfall coupled with railroad access to Bombay Port proved ideal for cultivation of cotton.

Moneylending for cultivation of cotton enabled the Marwaris to obtain tighter controls over the cultivators produced which led to natural extension into its trading and ginning. The prices of cotton increased manifolds which made farmers cultivate cotton instead of food grains and at times they even plowed down food crops to sow Cotton

The news of American Civil ware coming to and end reached India on 1st May 1865 and Britain again turned to American for raw cotton ending the short-lived glory of the Indian saple. Some business families laid the foundation of a stable and prosperous business on the basis of the profits earned in speculation during the Civil War years.

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