OCCUPATIONS - Commodities Trading & Speculation - Opium

Commodities Trading & Speculation - Opium

—English East India company increased purchases of Chinese Tea following Pitt’s commutation Act of 1784 which lowered the duty on tea. —Export of raw cotton from India to China which until then was used to finance purchase of Chinese tea was unable to keep pace with its increasing imports in Britain. —The solution was eventually provided by opium.
—Malwa was well known for its opium since the 16th Century. —The massive expansion of opium expansion of opium exports from Bengal to china in the closing decades of the 19th Century drew Indo-Portuguese and Indian traders to this alternative source of supply. — —Peasants in Malwa received prices 3 times as high as in Bengal where opium trade was a state monopoly.

—Between 1805 and 1821, Daman was the main outlet for Malwa opium however the big opium dealers conducted the trade from Bombay. —The British government made strenuous efforts to limit the Malwa trade which it could not monopolize like that in Bengal, but was un-successful.
—From 1830, the government stopped its restrictive efforts and turned instead to encouraging Bengal’s production and imposed a high duty on Malwa’s production. —Rapidly Malwa opium became the major exported, and Bengal moved to the second place.

—The expansion of poppy cultivation and opium trade brought into being other powerful groups of vested interests having an enormous stake in this given economic system. —Of these the most important were the class of money lenders cum small traders (sahookars), the native agents connected with the native firms and the wholesale merchants. —These were classes heavily composed of immigrant merchants from Rajasthan and Gujarat. 

— —In early 19th Century several tens and thousands of Marwari merchants settled in the Opium tracts of Malwa. —It contained a fair proportion of Shekhavati Aggarwals connected to prominent merchants in Calcutta. —Opium soon became a major commodity for the local Marwari firms. —The books of “Sevaram Ramrikhdas”, a Marwari firm based our of Mirzapur in 1830’s show Opium to have been their major commodity. —Another prominent Marwari firm “Tarachand Ghanshyamdas” had branches all through the opium tracts of Malwa.

—The rapid oscillation in opium prices, compounded by the unstable conditions of exchange between India and China, where the opium was sold, rendered the opium market particularly unstable. —The fact that their fellow Marwari’s were already doing considerable business in Opium in the Malwa area, made the futures operations a natural extension for Marwari’s. —Regular opium futures trading by Marwari’s in Bombay and Calcutta seems to have started in the 1830’s. It was in opium futures trade that several of the first Marwari fortunes were made

—By 1872 telegraph services reached Jaipur. —Calcutta Marwari merchants wired the current rates for opium to Jaipur.  Agents in Jaipur used a system of mirrors to flash the rates from hilltop to hilltop.
—From the final hill outside of Jhunjhunu a runner would come to the city and inform the merchants of the rates. —At night, If the information needed to be supplied, gunpowder explosions were deployed along the same route. —By 1896 telegraph had come to Churu and Sikar. The trans-regional speculation networks worked very well and profitably for several decades. —

—Opium sales were Legalized in Hong Kong in 1845 after the British defeated China in the 1st Opium War. —Having gone through a period of lull during the years of the Opium War the opium trade was in full blast after the 2nd Opium War from 1860 onwards. —Calcutta became an important market for opium speculation after its auctions in Bombay were discontinued in 1830.

—Shivnarain Birla, grandfather of Ghanshyamdas Birla began his career was an independent opium speculator and for 10 years perfected the art of opium speculation in which he made large gains. —In 1896 four marwari firms, “Devibaksh Jivanram’, ‘Ramnarain Bhojraj’, ‘Daulatram Lakshminarain’ and ‘Shivnarain Baldeodas’ came together in a room at Kaligodam Number 18, Mullick Street in Bara Bazaar to form ‘Bare Chaurastiya’ (the Gang of Four) who speculates in Opium. —Afeem Chaurasta Ki Panchayat enjoyed complete Juristicion over the Marwaris engaged in the Opium trade.

—This later took form of a Cartel led by Sarupchand Hukumchand and Harduttrai Chamaria which enjoyed complete monopoly on Opium trade. —So fervent was bidding that at one such sale in Calcutta in 1845 two speculators took the price to a phenomenol Rs.1,30,995 per chest compared to the average price which ranged between Rs.400 to Rs.450 per chest. —Swarupchand Hukumchand conducted Rs.50 lakhs business on the day he opeaned his calcutta office in 1915 and by the end of the year he was worth Rs.1 Crore.

—Widespread Marwari speculation on the exchanges helped raise the price of opium to levels that were highly profitable to the colonial state. —By 1925, the export of Opium had greatly diminished, and the speculative market in Opium figures had come to a hald because there was no longer enough fluctuation in the price for bookmakers to profit from taking bets on the daily market price.
—As a substitute for Opium, the bookmakers took bets on the average of several prices of cotton in the American market.