What role did the Indian capitalists play in the national movement against British rule? What were their relations with Congress and the British government? Did the Indian Capitalists support the freedom struggle or did they oppose it?
The capitalist class in any nation consists of the business and merchant class who dominate trade and industries.
They are an important class for the financial and industrial progress of the nation. It is, however, another thing whether or not they actually play that role.
Read this to learn more about the Indian capitalists and their role in the national movement for freedom from British rule.
Introduction
The words ‘capitalism’ and ‘capitalist class’ are of the western construct. They connote a system where means of production, trade, and large industries are owned by a few private individuals. These private individuals form the capitalist class.
In India, this capitalist class largely came from only a few communities of upper-caste Hindu Baniyas, Jains, and Parsis.
They had become quite powerful in the Mughal rule itself. For instance, in 1707, Jagat Seth Manikchand helped Prince Farrukhsiyar financially in becoming the Mughal Emperor.
Kings and Nawabs of India often resorted to big merchant bankers to finance their state expenditures.
Indian Capitalists and Battle of Plassey
The ultra-rich Hindu and Jain merchant bankers like Omichand, Krishna Chand, Mehtab Chand, and Jagat Seth dominated the financial landscape of Bengal.
Jagat Seth or the banker of the world was a title conferred by the Nawabs of Bengal on a prominent Jain Merchant family.
However, these big merchants betrayed the Nawab and financed the traitors and British.
They played a major role in the British victory in the Battle of Plassey in 1757 which marked the start of British rule in India.
Some of them paid a heavy price for their treachery later. In 1764, shortly before the battle of Buxar, Nawab Mir Qasim ordered the arrest and execution of Jagat Seth and Swaroop Chand.
They both were subsequently arrested and shot dead for their treachery against the sovereign of Bengal.
Indian Capitalists and Company Rule
According to Rajiv Ahir, Indian trading castes, moneylenders, and bankers had amassed wealth as junior partners of English merchant capitalists in India. Their role fitted in the British scheme of colonial exploitation.
Peasants were doubly exploited. First, the government levied heavy land revenue. And then the moneylenders made full use of farmers’ difficulties by extracting high rates of interest on the money lent.
They exploited small and marginal farmers and landless laborers by lending to them on high-interest rates and by manipulating the accounts to keep them in a debt trap.
This vicious debt cycle would often result in moneylenders seizing the mortgaged belongings and reducing the actual cultivators to the status of tenants-at-will, sharecroppers, and landless laborers.
Farmers, while selling their produce to traders also suffered from faulty weighing and manipulation of accounts.
In the Deccan region of western India, farmers suffered heavy taxation under the Ryotwari system. They found themselves trapped in a vicious network with the moneylender as the exploiter and the main beneficiary.
According to Rajiv Ahir, these moneylenders were mostly outsiders – Marwaris or Gujaratis Baniyas.
However, when the oppression became too unbearable, the peasants rebelled against both moneylenders and the government.
In 1874, Deccan peasants called for a social boycott movement against the “outsider” moneylenders. Under this, they refused to buy from their shops and cultivate their fields. In solidarity with farmers, even the barbers, washermen, shoemakers refused to serve moneylenders.
However, soon this social boycott was transformed into an agrarian rebellion with systematic attacks on the moneylenders’ houses and shops. The debt bonds and deeds were seized and publicly burnt- writes Rajiv Ahir.
Indian Capitalists and Revolt of 1857
During the 1857 revolt, many rich merchants and traders sided with the British.
According to Bipin Chandra, “The merchants, intelligentsia, and Indian rulers not only kept aloof but actively supported the British. Meetings were organized in Calcutta and Bombay by them to pray for the success of the British”.
The rebels, disposed rulers, and zamindars viewed some rich merchants and British Indian officials as the suspect.
They resented the rise of capitalists and the Indian official class and considered them the collaborators of “Firangis“. And this was also one of the reasons they burst out in an open revolt against the nascent British system.
“The proud zamindars and poligars resented this loss, even more, when they were displaced by rank outsiders – government officials and the new men of money – merchants and moneylenders,” writes Bipin Chandra in India’s Struggle for Independence.
Several big merchants and capitalists of British India not only did not support the reduction of salt levies on common people but also demanded its enhancement.
Additionally, they demanded a reduction of some license taxes on traders involved in the salt trade.
According to Bipin Chandra, “in 1882, Jotendra Mohan Tagore and Durga Charan Laha, the representative of Calcutta’s big merchants, opposed the reduction of the salt tax and recommended the reduction of the license tax on merchants and professionals instead”.
Similarly, “in 1888, Peary Mohan Mukherjea and Dinshaw Petit, representatives of the big zamindars and big merchants respectively, supported the enhancement of the salt tax along with the non-official British members representing British business in India” adds Chandra.
Leading Capitalists in British India
Some prominent capitalists, merchants, or industrialists in 20th century British India were Jamnalal Bajaj, Vadilal Lallubhai Mehta, Samuel Aaron, Lala Shankar Lal Banker, G.D. Birla, Ambalal Sarabhai, Waichand Hirachand, and Purshottamdas Thakurdas, etc.
Some of them like Jamnalal Bajaj, Shankar Lal Banker, and Ghanshyam Das Birla were close friends and associates of Mahatma Gandhi. So much so that Gandhi choose to stay at GD Birla’s home in New Delhi during the last four months of his life.
Most importantly, these capitalists generously helped the Indian National Congress by both financial and non-financial means even though the latter claimed independent decision-making.
For instance, in 1916, Jamnadas Dwarkadas, Shankerlal Banker, and Indulal Yagnik set up a newspaper Young India from Bombay to give voice to Congress politics.
Later, they also launched an All India Propaganda Fund to publish the nationalist pamphlets of Congress in regional languages besides English.
Congress wholeheartedly acknowledged their assistance as invaluable and treated their opinions on economic issues with respect.
Capitalists in British India
The Indian capitalist class saw tremendous growth in the early 20th century.
In the period 1914-1947, the capitalists grew so rapidly that close to independence, they had already cornered more than 70% of the domestic market and over 80% of the deposits in the organized banking sector.
They were rich enough to undertake the construction of grandiloquent palace hotels that rivaled the best of buildings in Europe.
For instance, Jamsetji Tata commissioned the magnificent Taj Mahal Hotel in Mumbai and it opened its doors to guests on 16 December 1903.
According to Bipin Chandra, they could achieve this tremendous growth and accumulate great wealth “primarily through import substitution, by edging out or encroaching upon areas of European domination, and by establishing almost exclusive control over new areas thus accounting for the bulk of the new investments made since the 1920s”.
Thus, they had become a powerful force that even the British government could not ignore. For instance, in 1927, when leading Indian capitalists formed the Federation of Indian Chambers of Commerce and Industry (FICCI), the British government quickly recognized it as a body representing the Indian capitalist class.
Congress and Capitalists
Capitalists were closely associated with Congress since its formation. As mentioned earlier, some leading capitalists and some leading Congressmen were close friends.
Moreover, the capitalists benefited immensely from some of the movements launched by Congress.
Whether, it was the Swadeshi and Boycott Movement of 1905, the non-cooperation movement of the 1920s, or the civil-disobedience movement of the 1930s, they all helped the indigenous industries when they advocated boycott of foreign goods.
They had another reason to support and finance the mainstream Congress which was largely centrist in its ideology.
In absence of Congress, they feared the national movement going into the hands of radicals and revolutionaries who they believed would unleash far more socio-political upheavals and economic disruptions in India.
Most importantly, the main leaders of the Congress were of the same caste and class to which the capitalists belonged to.
Thus, their mutual class interests were aligned to an extent even though the Indian capitalists never publicly claimed Congress to be their class party.
Capitalists and National Movement
Initially, the Indian capitalists played safe and did not support Congress openly. At most, they financed it from behind and took the role of mediators between Congress and the Government.
Depending on their capitalist class interest, they often switched sides between Congress and the Government. At times, they even criticized Congress after witnessing growing socialist and leftist tendencies in some of the leading Congressmen like Nehru.
However, one must take the leftist tendencies of Nehru with a pinch of salt for he had a habit of speaking lies. For instance, he openly supported the British government in the first World War but later pointed out in his autobiography that “there was little sympathy with the British in spite of loud professions of loyalty”.
Leading Capitalists of India displayed explicit disapproval of the non-cooperation movement launched by Congress.
We are told that Purushottamdas Thakurdas, Jamnadas Dwarkadas, Cowasji Jehangir, Phroze Sethna, and Setalvad, all of whom belonged to the industrialist section, even launched an anti-non-Cooperation Association in 1920.
In the 19030s and 1940s when a dominant section of clever and shrewd capitalists realized that the days of British rule in India were numbered, they began openly supporting the Congress even to the extent of ignoring top British authorities.
They also began openly endorsing the movements launched by Congress. For instance, during the civil disobedience movement of the 1930s, industrialists such as G.D. Birla, Jamnalal Bajaj, Homi Modi, Walchand Hirachand, Lalji Naranji, Purushottamdas Thakurdas, Lala Sri Ram, etc., gave explicit support to the movement in its first phase.
G.D. Birla even donated up to five lakh rupees to Congress. Further, Jamnalal Bajaj served as the AICC treasurer for several years and represented Gandhian leadership in Bombay.
Homi Modi, in his presidential speech to Bombay Mill-owners’ Association in March 1931 said that though the Swadeshi Movement had helped the Indian industry, frequent strikes had dislocated trade and industry.
Naranji and Thakurdas, who had remained indifferent to the nationalist struggle in the 1920s, demanded Indian control over finance, currency, fiscal policy, and railways.
However, from September 1930, there was a sharp decline in support from the industrialists and traders with the prominent businessmen having differences of opinion with the Congress, writes Rajiv Ahir.
Bombay Plan of Indian Capitalists
After realizing that a socialism-inspired Congress would sooner or later form the national government, the capitalists came up with their own socio-economic plan in 1943.
The plan is known as the Bombay Plan and it was drafted by a Post War Economic Development Committee set up by the capitalists in 1942.
Its rationality can be best summed up in the words of GL Mehta, the president of FICCI, who in 1943 argued that a consistent program of socio-economic reforms was the most effective remedy against large-scale social and political upheavals in post-independent India.
The object of the Bombay Plan was to incorporate “whatever was sound and feasible in the socialist movement and see how far socialist demands could be accommodated without capitalism surrendering any of its essential features”, writes Bipin Chandra in his book India’s Struggle for Independence.
The Bombay Plan, therefore, was an attempt of Indian capitalists to deliberate on the questions of economic growth and equitable redistribution of its benefits in post-Independent India.
Interestingly, the Bombay Plan even argued for the necessity of partial nationalization of some important sectors of the economy, land reforms, and labor rights.
One may add, that through the Bombay Plan, the Indian capitalists hoped to influence the socio-economic policies of Independent India.
So, this was a brief overview of the relationship between Congress, Indian capitalists, and the national movement for freedom.
