Tuesday, 24 December 2013

OCCUPATIONS - Commodities Trading & Speculation - Jute

OCCUPATIONS - Commodities Trading & Speculation - Jute

Jute has been grown in East Bengal for ages. Since 18th century it has been exported to Dundee in Great Britain from Calcutta where it was woven into hessians (woven-cloth) or sand bags and used by the Army in trenches during War.

Jute was either sold to mills in Calcutta or shipped abroad. With a few exceptions the mills bought through European agents, and Indians could only under broker them. European brokers received 1.25% commission on purchase of raw material out of which 0.25% was passed on to Marwaris who acted as under-brokers or guaranteed broker.

The Jute Balers Association of Calcutta had both European and Indian members, but was entirely dominated by the Europeans among them. By 1900 there were 74 balers on its rolls, of whom 49 were Marwaris. The Marwari balers and brokers found it difficult to be admitted to the Royal Exchange where Jute transactions were made. By 1909 an effort lead by Sir Badridas Goenka and other leading Marwari merchants resulted in the formation of the Baled Jute Association, which provided facilities for Marwari trading in Jute.

By 1895 Scottish Jute Mill owners operating mills in Dundee established mills in Bengal. In the immediate pre-World War 1 period and during the way itself, Marwaris also entered hessians trade, formerly a European preserve.

In 1917, the Birla Brothers established the first Indian office for the export of Jute in London and rapidly became 1 of the 3 leading Jute exporters. The office had to fight hard to get into the market and was not admitted to the "official"? Baltic Exchange for several years.

Speculative gains recieved by various Marwari businessmen enabled some of them to start industries right after the World War 1. GD Birla and Sarupchand Hukumchand of Indore started Jute mills in 1918-19. These were the 1st large Indian Controlled Jute Mills.


  1. many times it is mentioned that profits from speculative trading helped marwaris start industry.
    My question is ...speculative trading is risky business.....how can one make profit in it? how could marwari make profit in it?...is it because of availability of capital? is it because of their network that helped them get extra information from each other quickly?....is it patra system? which helps to keep daily watch on profits? what was the reason behind the success in satta market or commodity speculative trading market?......it is almost like being succesful in non linear complex volatility...

  2. The network was certainly I big factor which led success of Marwaris in speculative trade. As the network involved its kinsmen at different levels right from financing drop production to trading it gave them not only market information but also the ability to manipulate the supply situation.

    Lot of Marwaris did loose their fortune in speculative business. Smarter ones make after raising their seed capital through speculation moved on to manufacturing. Gains made through speculation was frowned upon as marwari businessmen brought their families to cities permanently.