होम Modern Asian Studies Banking Firms in Nineteenth-Century Hyderabad Politics

Banking Firms in Nineteenth-Century Hyderabad Politics

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Banking Firms in Nineteenth-Century
Hyderabad Politics
Karen Leonard
Modern Asian Studies / Volume 15 / Issue 02 / April 1981, pp 177 - 201
DOI: 10.1017/S0026749X00007046, Published online: 28 November 2008

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How to cite this article:
Karen Leonard (1981). Banking Firms in Nineteenth-Century Hyderabad
Politics. Modern Asian Studies, 15, pp 177-201 doi:10.1017/
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Modern Asian Studies, 15, 2 (1981), pp. 177-201. Printed in Great Britain.

Banking Firms in Nineteenth-Century
Hyderabad Politics
KAREN LEONARD
University of California, Irving

T H E relationship between business and politics in preindustrial societies
has seldom been clear from historical records. I have argued elsewhere
that the major banking firms of Mughal India were central to the
imperial system. These 'great firms' were not parasites, passively supportive of the state because it preserved the law and order necessary for
trade; they were not self-contained caste communities interacting with
the government through the leaders of panchayats or guilds. Their
functions were as important to the government as those of its official
treasurers, and their desertion of the Mughal Empire in the eighteenth
century helped bring about its collapse.1
The case study presented here of banking firms in nineteenth-century
Hyderabad establishes the forms as crucial participants in the state's
political system, like their earlier counterparts in the Mughal Empire.
Hyderabad, a Mughal province which became autonomous in the
eighteenth century, was the largest princely state in the Indian subcontinent. The Hyderabad bankers were importa; nt political figures,
involved with other political figures in a complex of relationships which
went far beyond trade and moneylending. Investigation of these
relationships not only illuminates Hyderabadi history; I would maintain that it allows inferences about the Mughlai political systems more
generally. Finally, this investigation gives us a closer view of Indian
family firms and helps formulate better questions about their internal
workings and their relationships with each other.

I. The Political System
The first half of the nineteenth century was a time of deepening financial
and political crisis for Hyderabad. Founded in the eighteenth century as
1
See my article, 'The "Great Firm" Theory of Mughal Decline,' Comparative Studies in
Society and History, i\, no. 2 (1979), 151-67.

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© 1981 Cambridge University Press

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KAREN LEONARD

a military aristocracy, Hyderabad's ruling class was dominated by
northerners who had come to the Deccan in Mughal service with the
first Nizam (Mughal governor of the Deccan province from 1723). By
the early nineteenth century, the state had become a Mughlai civil
bureaucracy. Allied with the British East India Company (by initial
treaties of 1798 and 1800), the Hyderabad officials were working out
relationships with the British Resident newly-established in the city.
From 1812, an important factor in this was the Hyderabad Contingent,
a body of British-officered troops paid by the Nizam but controlled by
the Resident. Chandu Lai, defacto Diwan (Prime Minister) from 1808 to
1843,2 had come to power as the result of a bureaucratic-mercantile
alliance and stayed in power because of his ability to command credit.3
The political intrigues which followed his resignation produced a
fiscal crisis in 1853 and forced the state's cession of Berar to the British
East India Company. The bankers were heavily involved in these
intrigues.
The state's sources of income and cash disbursements show how the
bankers and other groups participated in the Mughlai political system.4
Although the rural areas provided the bulk of the state's income through
land revenue, the government exercised direct control only in urban
areas. The land revenue from the state or khalsa lands was collected by
talukdars, or revenue farmers. These men contracted with the state
recordkeepers, the two hereditary daftardars, to collect the land revenue
from specified districts; they turned over to the government the amount
set in their contracts. Other lands were alienated to nobles asjagirs, or
land grants, for their personal income; sometimesjagirs were granted for
the maintenance of troops in the Nizam's army. Some income came
from tributary zamindars, large land-holders whose territories were
exempted from direct state supervision. Some income came from taxes
levied on commercial activities and urban services: a market tax, customs, or the contracting of major consumer industries.
Cash disbursements by the government consisted almost entirely of
salaries and allowances to its employees and dependents. High-ranking
nobles received cash allowances and subsidies to maintain troops, or the
2

The nominal Diwan from 1808 to 1832 was a high-ranking Muslim noble, Munirul-Mulk, but by agreement of the Nizam and the Resident, the deputy Diwan or
Peshkar, Raja Chandu Lai. officiated. After Munir-ul-Mulk's death in 1832, Chandu
Lai was officially named Diwan and resigned in 1843.
3
Dr Brijen Gupta pointed this out to me long ago in a personal communication; I am
indebted to him for first directing my attention towards the bankers.
4
The following discussion draws on that of Manik Rao Vithal Rao, Bustan-i-Asafiyah
(Hyderabad, 7 vols, 1909-32), I, 149-50.

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BANKING FIRMS IN HYDERABAD POLITICS

I 79

land to provide revenue equivalents for those purposes. Lower-ranking
employees who performed clerical and managerial services for various
government units received monthly cash stipends, usually hereditary
ones. These might be disbursed through the Diwan or through the two
state recordkeepers who often assumed responsibility for cash disbursements. Many other officials were responsible for further salary disbursements, to the military men led by their jamadars or commanders, the
palace guards and attendants, units of musicians and dancers, and the
Begums and other relatives living in the Nizam's palaces. A major
expense by the 1830s was the Hyderabad Contingent, Europeanofficered and under the authority of the British Resident but paid by the
Nizam.
Because the land revenue provided only seasonal income, the government depended on members of the financial community resident in the
city for its ongoing expenses. Sahukars or bankers provided the resources
to pay government employees and dependents. The major bankers, by
granting or withholding loans, could have a powerful effect on the
political standing of an individual or on the viability of a particular
Diwan's administration. Bankers also controlled the minting and
exchange of currency, through their own mints or those they contracted
to administer for the state. A Persian history written in 1842 stressed the
residential, financial, military, and political connections of the financial
communities with other key groups in the city:
Side by side in Begum Bazar are the houses of the Marwaris, Gosains,
Komatis, Afghans, and other financiers and traders . . . and in Karwan Sahu,
the Gujeratis reside. . . . The bankers are millionaires, lending millions of
rupees to the state and financing the land revenue contractors . . . [one of them,
a Gosain] associates with the Afghan military leaders and is fond of fighting . . . The bankers also loan to the nobles and to the Nizam himself; they have
access to the Court.5

II. Bankers in Politics
Maharajah Chandu Lai was successful in obtaining funds from Hyderabad's bankers in the first decades of the nineteenth century. He dealt
with an informal coalition of'State Treasurers' during his long tenure as
Diwan. Called the Panch Bhai, or Five Brothers, these local bankers
5
Ghulam Husain Khan, Tarikh-i-Gulzar-i-Asqftjiah (Hyderabad, 1890-91), 622-5.
The manuscript was written in 1258 Hijri (1842-43).

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l8o

KAREN LEONARD

financed the government activities and personnel.6 The members undoubtedly changed, but two banking firms can be definitely identified as
members of the Panch Bhai. Makhdum Seth, A Muslim of Begum
Bazar, headed one firm;7 the Gujerati firm of Seth Kishen Das of
Karwan Sahu was another. 8 The Marwari firm of Mahanand Ram
Puran Mai was almost certainly one of the Panch Bhai—Puran Mai had
access to the Nizam's Court and was granted ajagir for Sitaram Bagh
temple by Chandu Lai. 9 Palmer and Company, the much-investigated
Eurasian firm, was the major creditor of Chandu Lai's government in
the 1820s and may well have been a Panch Bhai firm.10 Other obvious
candidates for the Panch Bhai at various times during Chandu Lai's
tenure would be the Maheshwari Marwari firm of Surat Ram Govind
Ram, various Gosain bankers of Begum Bazar, and the Oswal Jain
Marwari firm of Umarsi Sajan Mai. All of these were associated closely
with Chandu Lai and known to have made extensive loans to the
state. 11 Repayment proved more and more difficult—many firms which
dealt with Chandu Lai were still calculating the interest due them at the
end of the century. 12
These firms were nearly all Hindu and non-indigenous, from western
and northern India. Family firms in almost all cases, they can be traced
from generation to generation. For example, in the case of Mahanand
Ram Puran Mai, Puran Mai was the current head of the firm, son and
6
K. Krishnaswamy Mudiraj, Pictorial Hyderabad (Hyderabad, 2 vols, 1929 and 1934),
II, 497, and a newspaper article just after Chandu Lai's period also mentioned the
concept of five state treasurers: 'The Englishman,' March 24, 1847, in Mahdi Syed Ali
(ed.), Hyderabad Affairs (Bombay, 10 vols, 1883-89), IV, 18. The latter source will
hereafter be abbreviated HA, and the page numbers are those stamped in the volumes
owned by the University of California, San Diego.
7
Khan, Gulzar-i-Asafiyah, 628-9.
8
Ibid., 630. This firm moved from Karwan to Gulzar Hauz (in the old city) about

1900.
9

He, as well as three Gujerati bankers (Kishen Das, Lachmi Das, and Jaganath Das),
sent ceremonial clothes for the 1839 wedding of one of the Nizam's daughters: Government of Hyderabad, Chronology of Modern Hyderabad (Hyderabad, 1954), 217. Puran
Mai's father, Mahanand Ram, is also mentioned in this translated Persian Court diary
as giving out alms to stop a beggars' riot in 1811: 146. For the jagir, 'The Evening Mail,'
April 17, 1894, in the Clippings Collection, Andhra Pradesh State Archives; also,
Mudiraj, Pictorial Hyderabad, II, 507-8.
10
A good summary of the Palmer affair is given in Henry G. Briggs. The Nizam
(London, 2 vols, 1861), II; and see the manuscripts in the India Office Library by
Edward Palmer, c. 1934 (Eur. D. 443).
1
' Mudiraj, Pictorial Hyderabad, II, 478-9, 480-1, and Khan, Gulzar-i-Asafiyah, 625-6.
12
Interest comprised 82 to 99% of the debt in 8 of the 9 cases filed against the
Hyderabad government in 1890: India Office Library (hereafter IOL), Crown Representative Records, R/1/1/20, Document no. 9.

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BANKING FIRMS IN HYDERABAD POLITICS

18 I

successor of Mahanand Ram. Double names, then, indicated succession
and/or partnership. The second name was usually a son, sometimes a
brother, grandson or adopted successor—always the latter, in the case of
the Gosains, a 'sanyasi' merchant order. 13
Table i traces the major nineteenth-century Hyderabad banking
firms over time. Branches of a parent firm have been treated as one firm.
For example, the two firms Shivdut Ram Jaisee Ram and Shivdut Ram
Lachmi Ram may have conducted transactions independently, but
Jaisee Ram and Lachmi Ram were brothers (sons of Shivdut Ram) and
the pattern of their business affairs was very similar. 14
These 'great firms' of nineteenth-century Hyderabad belonged to
three major communities: Gujerati, Gosain and Marwari. Gujerati
merchants and bankers had settled in Karwan Sahu by the seventeenth
century, under the Qutb Shahi dynasty. 15 Most Gosains came from
Central India and the Hyderabad districts after the first Nizam became
provincial governor for the Mughal Empire (the early eighteenth century); they resided in Begum Bazar. Of the Marwaris, the Oswals and
the Maheshwaris came before the Agarwals: the firms of Umarsi Sajan
Mai and Surat Ram Govind Ram preceded those of Puran Mai and
Shivdut Ram Lachmi Ram. 16 These Marwaris settled in Begum Bazar;
others established themselves in the Residency Bazars or in the Secunderabad Cantonment, under British jurisdiction. Especially in Begum
Bazar, there is no evidence for self-contained caste or community localities; the residences of bankers and merchants and military men intermingled throughout that suburb. 17
Europeans, Eurasians and Parsis were also involved in banking in
Hyderabad. The firm of Palmer and Company had close connections
with the Gujerati bankers. 18 Henry Dighton, a clerk of the Palmers who
13

Bernard S. Cohn, 'The Role of the Gosains in the Economy of Eighteenth and
Nineteenth Century Upper India,' The Indian Economic and Social History Review, I, no. 4
(1964), 175-82, is still the best coverage of the Gosains or Goswamis.
14
Mudiraj, Pictorial Hyderabad, II, 465A-B; and see table 5 below.
15
Karwan Sahu means Karwan of the bankers; sahu or sahukar in Sanskrit.
16
See biographies in Khan, Culzar-i-Asqfiyah, 625-31, and Mudiraj, Pictorial Hyderabad, II. T. Timberg, The Marwaris (Bombay, 1978), 120, relates Oswal and Maheshwari
migration to the rise of Maratha rulers at the end of the eighteenth century.
17
Christopher Bayly has found similarly fluid residential patterns in nineteenthcentury Benares: 'Indian Merchants in a "Traditional" Setting', in Clive Dewey and
A. G. Hopkins, The Imperial Impact: Studies in the Economic History of Africa and India

(London, 1978), 188-92.
18
Khan, Gulzar-i-Asafiyah, 629. Bankati Das helped Palmer become a banker and was
a partner in the firm begun in 1814: C. Collin Davies (ed.), 'Correspondence of William
Palmer with Sir Henry Russell, Formerly Resident at Hyderabad, 1836-1847,' Indian
Archives, Vol. 13 (1959-60), 58 and 60. In 1849, Palmer served as vakil to Puran Mai's

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Seth Ram Lai

Lakshmi Nivas Ganeriwal

Raja Dhanrajgirji

Seth Panna Lai Pittie

Seth Chand Mai Dadda

Seth Mukund Das

?

Girdhar Das Kishen Dasj

o
z

pi

Z
r

PI

10

co

R e c o r d s , in t h e I n d i a Office L i b r a r y , R / 1 / 1 / 2 0 ( c o n c e r n i n g t h e D e b t C o m m i s s i o n , 1890- 1898); M a h d i Syed AH, ed., Hyderabad Affairs, Vols I I , I I I , I V , V , V I
(1883-89).
* Father/son.
t Brothers.
X Grandfather/grandson.

Sources: Ghulam Husain Khan, Tarikh-i-Gulzar-i-Asafiyah (1890-91), 622-632; Samsam Shirazi, Mushir-i-Alam] Directory (1940), 1175-76, 1181-84; K.
Krishnaswamy Mudiraj, Pictorial Hyderabad, Vol. II (1934); Rai Lulta Purshad, Report of the Administration of the Salar Jung Estate, i8g6-i8gy, 44-46; Government of
Hyderabad, annual Reports of the Proceedings of the Debt Commission of His Highness the Nizam's Government for 191 o-1913; Government of India, Crown Representative

Puran Mai;
Prem Sukh Das

Kishen Das Hari Dasf

Marwari—
Agarwal

(1801)

Gujerati

Mahanand Ram Puran Mai*
(1801-2)

c. 1890-1910

Hari Das Bhagwan Das*
Bhagwan Das Balkishen Dast
Chaturbhuj Das, Purshottam
Lachmi Das Lachman Das'f
Gujerati
Lachman Das Purshottam Das* Das; and Benkati Das
Marwari— Surat Ram Govind Ram*
Ghansham Dasjaigopal
Maheshwari
Marwari— Umarsi Sajan Mai
Magan Mai Umarsi Sajan Mai
Oswal Jain
Marwari— Shivdut Ram Jaisee Ram*
Shiv Lai Moti Lai*
Agarwal
Shivdut Ram Lachmi Ram*
Gosain
Umraogir
Gyangir Narsinghgir*

c. 1840-60

Later Names of the Firm

Hari Das Kishen Das*
O729)
Lachmi Das Lachman Dasf
(?)
Moti Ram Surat Ram*
(•750)
Umarsi Sajan MalJ
(1762-1803)
Shivdut Ram
(1762-1803)
Umraogir

Early Nineteenth Century Name
(with date of arrival)
Community

Major Hyderabad Banking Firms over Time

TABLE I

BANKING FIRMS IN HYDERABAD POLITICS

183

was a British subject, later functioned as a leading banker and revenue
contractor in Hyderabad. 19 Kishen Das, the Gujerati banker, and
Dighton were partners at one time, but they split; in 1841 Kishen Das's
districts were reclaimed and turned over to Dighton, causing a bitter
dispute. 20 The Pestonji Viccajee firm, headed by Parsi brothers from
Bombay who were British subjects, was a major creditor of Hyderabad
for a decade following Pestonji Mirji's introduction to Chandu Lai in
1835. The Palmers and Dighton lived near the Residency, and Pestonji
first took over the kothi (office) of the Muslim firm of Makhdum Seth and
then built his own new and impressive kothi in the Residency area. 21
The bankers were closely and constantly involved with high-ranking
officials, revenue-farming talukdars and the leaders of military troops.
Evidence for the crucial role of the banking firms in Hyderabadi politics
during the nineteenth century comes not only from contemporary
newspaper accounts and assertions about 'tradition,' 22 but from the
Debt Commission proceedings at the end of the century. Many claims
and counterclaims were recorded and investigated by the Commission. 23 These records, combined with British records of the cession of
Berar, give concrete details of the financial and political relationships in
which bankers engaged.
In the first half of the nineteenth century, government officials and
son, Prem Sukh Das, in a dispute with Ramaswamy; the latter had started banking in
the Cantonment with a French partner. 'The Englishman,' November 17, 1849, in HA,
IV, 290-1.
19
For Dighton's beginning as a clerk of the Palmers, see Patrick Cadell (ed.), The
Letters of Philip Meadows Taylor to Henry Reeve (London, 1947), 19.
20
'The Englishman,'January 28, 1841, and'Bombay Times', April 17, 1841, in HA,
IV, 3-7 and 279-83. Here we also learn that Dighton's agent, Azim Ali, was once Kishen
Das's munshi (clerk).
21
Pestonji took on the responsibility of farming the Berar revenues and paying the
Hyderabad Contingent from 1836—1841 (after Puran Mai, who took it sometime after
the Palmers). For Pestonji, see IOL, Parliamentary Papers, Vol. LXIX, 1852-53, no.
996: 'Copies of all papers relating to the Case of Viccajee Merjee and Pestonjee Merjee,
British subjects and Parsee Inhabitants of Bombay and Hyderabad . . .'. Pestonji paid
Makhdum Seth's son Syed Ahmed 100 rupees a month rent. Khan, Gulzar-i-Asafiyah,
625-6.
"Most 'tradition' appears to be accurate: the descendants of Shivdut Ram Jaisee
Ram asserted in the 1930s that their firm had been state Treasurer under Siraj-ul-Mulk
(Mudiraj, Pictorial Hyderabad, II, 465), and as tables 3 and 5 show, their firm was his
major creditor.
23
Reports of the Hyderabad Debt Commission, 1890-1912, can be found in the
Andhra Pradesh State Archives, Documentation Room, and in the IOL: Crown
Representative Records, R/1/1/20 for documents relating to 1890-98, and Crown
Representative Records, Secret Internal, September and November 1898, R/i/1/228,
R/1 /1 /212, and R/1 /1 /215 for the cases of Shivdut Ram Jaisee Ram, Surat Ram Govind
Ram and Umarsi Sajan Mai respectively.

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KAREN LEONARD

banking firms did not keep separate, independent records of the firms'
loans to the government; the banking firms kept these records, which
might be copied or summarized by government clerks. 24 A government
official signed the banking firm's records and these were used by the
government when necessary. (The records of Berar turned over to the
British in 1853 were those kept by Pestonji.25)
The banking firms furnished hundis, credit instruments or bills of
exchange, payable elsewhere on sight or after a certain date. 26 Most of
these were destined for the British East India Company in the Presidency towns to pay Hyderabad's mounting debt for the Contingent
salaries. The firms furnished cash for disbursements made locally, such
as the expenses of the Nizam's household or the salaries of military
troops in the city. They made personal loans to high-ranking officials,
some of which were guaranteed by the government. Many loans were
made to talukdars, who used the cash for an offering {nazrana) to secure a
contract for revenue collection. The nazrana was given to the state
record-keepers; it was they who awarded such contracts at this time. In
return, the bankers received official signatures on their records, bonds or
guarantees of repayment, diamonds, jewels, or gold mohurs (coins) given
in mortgage, and, increasingly, land from which they could themselves
collect the revenues to secure repayment of their loans. To collect the
revenue, and then to prevent the government from reclaiming the land
assignments, the bankers employed military men, predominantly Arab
and Pathan mercenaries, who acted as their agents. These military men
acted as personal bodyguards for bankers too; almost all men of any
standing in the city employed Arab troops to protect their interests.27
The military men also received land assignments of their own from the
24

R e p o r t of the Hyderabad Debt Commission, 1301 F. (1890-91), 12.
I n d i a Papers, ' N a z a m ' s Territory, Copy of all Papers relative to Territory ceded by
His Highness t h e Nizam, in Liquidation of Debts alleged to have been Due by His
Highness to the British Government (1854),' 13.
26
See K a m a l a Prasad Mishra, Banaras in Transition (New Delhi, 1975), Chapter 6, for
a good discussion of the hundi system. When transmitting money, for example, a drawer
would give iooo rupees cash to a banker, who would give him a hundi for iooo rupees
payable after 1 to 2 months in Madras. T h e bankers would take some 1 to 3 2 % for this
service. T h e hundi could be used by the drawer almost anywhere to obtain cash—he
could turn it over to a banker or moneylender at a discount for 800 rupees, because of a
sudden need for cash. Here the banker's profit lies in the discount. As for its use as
short-term credit, it functioned like a loan. I n the case of the H y d e r a b a d government,
when sahukars gave the DiwanAam/t'j made out to the East India C o m p a n y and d r a w n on
M a d r a s , C a l c u t t a , o r Bombay, we know that the H y d e r a b a d government did not give
the sahukars cash; this was a loan transaction, and interest was added to the debt.
27
See the frequent references in the newspaper clippings published in HA, I I I and
I V , for the 1840s.
25

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BANKING FIRMS IN HYDERABAD POLITICS

185

administration when it became unable to pay their salaries in the 1840s.
The complexity of the resulting relationships is shown in Table 2, where
the functions ot talukdars, bankers and military men are indicated.
Major overlapping functions were performed by the talukdars and the
military men. Since both groups collected land revenue, often in excess
of what their contract specified or their own salaries required, they
became moneylenders, major creditors of the state. The military men
and talukdars did not deal in long-distance hundis; only the bankers were
able to engage in this form of moneylending to Hyderabad. The bankers
TABLE 2

Functions Performed by Key Groups in Hyderabad, 1840s

Bankers
Made Loans to State:
cash
hundis

Held Land Assignments:
as revenue contractors
for repayment ofloans
in lieu of salary payments
as agent for another
Provided military protection
of persons and land
Engaged in entrepreneurial
activities

X

Military
Talukdars Leaders

X

X

X

X

X

X
X

X

X
X

X

X

X

X

had been revenue collectors when land assignments were made openly
to them in return for loans under Chandu Lai, but the objection of the
British Resident in the 1840s forced bankers to work their (concealed)
land assignments through others, both talukdars and military commanders. 28 'Entrepreneurial activities' in Table 2 includes investment
in cotton and other new export crops, both through the financing of
producers and the development of new transportation linkages, primar28
In 1847, bankers were still being given land revenue assignments, although policy
had turned against it. 'The Spectator,' March 30, 1947; 'The Englishman,' March 24,
1947, in HA, IV, 18. By December of 1847, the bankers were arranging to receive
assignments on the revenues of particular talukdars: 'The Englishman,' December 30,
1847, HA, IV, 26-7.

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l86

KAREN LEONARD
29

ily road and river. Here, bankers and talukdars, not the military men,
were involved.
While not enough is known about these multiple activities of the
Hyderabad banking firms, it seems clear that in the 1840s the entrepreneurial activities took second place to the increasingly desperate
effort to supply funds to the state. Constant and growing pressure came
from the British East India Company and the military commanders.
Newspaper accounts of the day frequently mentioned the kidnapping of
paymasters or the besieging of one or another recordkeeper by military
men; these physical threats sometimes forced officials to pay the troops.
Bankers were also involved in incidents of violence. In 1846, the banker
Gomani Ram went with fourteen Pathans to coerce payment from a
Muslim creditor, but he and six of his mercenaries (as well as the
creditor) were killed in the ensuing fight.30 In 1847, a group of bankers
invaded the chief state recordkeeper's palace and thereby forced state
repayment of 215,000 rupees. 31 Begum Bazar, where many bankers and
jamadars resided, was often the scene of sword and gun fights (as Table 4
shows). 32
The British Resident made threats of another kind. Hyderabad had
fallen behind in payment of the salaries of the Contingent, and the
Resident had begun paying them from his Company treasury in about
1848. Thus the East India Company became a creditor of the state. The
debt mounted, and the Resident began to discuss Governor General
Dalhousie's demand: that territory with revenue sufficient to pay the
salaries of the Hyderabad Contingent be ceded to the East India
Company. 33
Successive Diwans and state officials called on the bankers again and
again for loans, but these were seldom repaid. When the state was
29
T h e Palmers developed timber contracting (shipping timber on the Godavari to
M a s u l i p a t n a m ) and the Berar to Bombay cotton trade; Pestonji Viccajee did the latter,
as well as farming (contracting for) the land a n d sea customs and undertaking road work
in the Bombay K o n k a n ; Hari D a s Kishen Das did timber contracting in the Central
Provinces and had shipping companies at Masulipatnam and Bombay; Surat R a m
Govind R a m had ships plying from M a d r a s to London and M a d r a s to Rangoon.
30
' S p e c t a t o r , ' J u l y 6, 1846, in HA, I V , 13.
3
' This was actually a debt owed them by Ismael K h a n , N a w a b of Ellichpur, b u t the
recordkeeper, Lala Bahadur, h a d signed a guarantee [jokum chitty). Siraj-ul-Mulk,
Diwan in 1847, paid the bankers, postponing a payment to the Resident to do so. ' T h e
Englishman,' December 27, 1847, in HA, I V , 26.
32
These jamadars and bankers were close neighbors in Begum Bazar, according to
names on the detailed municipal maps done in 1913. Leonard M u n n , Hyderabad
Municipal Survey, old city maps nos 1-21. '
33
T h e best account here is t h a t of the Resident, in the book compiled by his son,

Hastings Fraser, Memoir and Correspondence of General James Stuart Fraser (London, 1885).

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BANKING FIRMS IN HYDERABAD POLITICS

187

unable to give the bankers land assignments directly, many other
strategies induced them to continue lending. A coalition of bankers was
given an order on a talukdar for quarterly repayments of their loan. To
serve as intermediary, a treasurer was appointed from an old Agarwal
military family. From a financial caste but not involved in a banking
firm, this man was to channel funds from talukdars to the Diwan to the
bankers, but he soon resigned the position.34 Another strategy was to
solicit loans advanced 'by discount': the entire interest for the fixed
period of the loan was deducted at the time of lending, but if repayment
was not received on time, the state had to pay interest again. 35 Then
there were 'jokum chittees,' guarantees of payment by a powerful official
on behalf of the government given to a banker, commonly used when the
third party creditor was not strong enough to force payment from the
government on his own. The official signing such guarantees was not
necessarily the Diwan; it could be any official in whom the bankers had
confidence. For some time, this was Lala Bahadur, the Malwala Daftardar (revenue record-keeper for half the state). On at least one occasion,
the bankers tried to get the British Resident's signature as guarantee. 36
By 1850, rumor had it that three-fourths of the country was held in
one way or another by Arabs and Pathans. A published list of districts
and their revenue incomes was replete with the phrases 'held in the
name of and 'protected by' various of these military men. 37 The
contemporary press referred to 'the opulent soldier clans' and the
'capitalists of the powerful clans.' The bankers were said to have 'retired
from all dealings,' 38 and most had good reason to do so.
The largest banking firms of the 1840s had reached their limits.
Pestonji Viccajee's land assignments were reclaimed, although Pestonji
levied Rohilla troops and fought the state troops. He then requested the
34

'The Englishman,' November 25, 1847, in HA, IV, 25, for this particular coalition
(headed by Umarsi Sajan M a i ) . T h e Agarwal, Raja Shambu Pershad, seems to have
succeeded Dighton's agent, Azim Ali K h a n , in this position, which involved assignment
to him of Medak district. ' T h e Englishman,' February 29, 1848, in HA, IV, 29; N a w a b
Framurz J u n g , The Medak District (Secunderabad, 1909), 72. S h a m b h u Pershad later
converted to Islam, just before his death in 1857. See Rao, Bustan-i-Asafiyah, I I , 787;
M a k h a n Lai, Tarikh-i-Yadgar-i-Makhan Lai (Hyderabad, n.d. [1820]), 69; S. R. Bhandari, Agarwal Jali Ka Itihas (Bhanpura, Indore, N.D. [1938]), I I , 8 6 - 8 .
35
'The Englishman,' November 9, 1848, in HA, IV, 41. T h e rate of discount was 2 %
per month, the same as the rate of interest customary then ( 2 4 % annually).
36
'The Madras Spectator,' November 28, 1853, HA, I I , 38, for 'jokum chitties' a n d
Lala Bahadur; ' T h e S p e c t a t o r , ' J u l y 12, 1847, in HA, I V C , 21, for the a t t e m p t to secure
the Resident's signature.
37
'The Englishman,' November 2 1 , 1850, in HA, I I , 31-32.
38
'The Englishman,' October 22, 1849, m HA, IV, 56, and ' T h e M a d r a s Spectator,'
May 3, 1850, in HA, IV, 59.

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KAREN LEONARD

British East India Company's help in securing repayment; it declined,
and the firm went bankrupt in 1848.39 Puran Mai, 'the Rothschild of
the Deccan,' whose loans had been many times those of the other
bankers combined, went temporarily bankrupt in 1851, as did Shivdut
Ram Jaisee Ram two months later. 40 A coalition of local bankers, under
the leadership of Mr Dighton, twice tried to establish a state bank (in
1847 and 1852) to formalize and safeguard their position and prevent
cession of territory to the British. But the effort was blocked by the
Resident. 41 The bankers, like many creditors, were now at a disadvantage with respect to the commanders of Arab and Pathan units: the
military creditors always got paid before others. Table 3 below gives an
TABLE 3
Debts Due to Hyderabad Bankers by 1847

Unrepaid Rupee Loans to Successive
Administrations

Chandu Lai
Banking Firms
Umarsi Sajan Mai
Moti Ram Surat Ram
Hari Das Lachmi Das
Lachman Gir
Ramaswamy
Shiv Lai Moti Lai
Kangir Umraogir
Kripa Ram
Ramdhun
Girdhari Lai Fateh Chand
Puran Mai
Totals

1806-1843

Ram Baksh
1843-1846

600,000
350,000
150,000
800,000

30,000
30,000
400,000
300,000
300,000
500,000
300,000
300,000

Totals

150,000

630,000
480,000
625,000
1 ,100,000
400,000
1 ,075,000
450,000

95,000

395> 0 0 0

50,000
100,000

100,000

75,000
100,000

575>ooo

n.a.

n.a.

50,000
100,000
2 ,300,000

2,160,000*

1,200,000*

7 ,605,000

n.a.
1,900,000*

Sirajul Mulk
1846-1847

Source: 'The Englishman,'June 29, 1847, in Seyed Mahdi Ali, Hyderabad Affairs, IV, 20 (Bombay
>883).
* Plus debt to Puran Mai (n.a.)
39
'The Englishman,' March 10, 1848, in HA, IV, 285; Rao, Bustan-i-Asafiyah, II,
733-4. The date of the firm's failure is given as 1851 in Amalendu Guha, 'Parsi Seths as
Entrepreneurs, 1750-1850,' Economic and Political Weekly, Vol. 5 (1970), M-i 13.
40
For Puran Mai, see 'Nizam's Territory' (see note 25), 82, 88; and 'The Englishman,' December 3, 1851, in HA, IV, 76, and Rao, Bustan-i-Asa/iyah, II, 734; for Shivdut
Ram, 'The Englishman,'January 8, 1852, HA, IV, 80.
41
Objection was to the fact that Mr Dighton was a British subject, legally barred from
lending money to native princes. For the bank efforts, see Fraser, Memoir, 389-91, and
newspaper accounts in HA, IV, 22-6.

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BANKING FIRMS IN HYDERABAD POLITICS

189

idea of the losses sustained by some of the banking firms under successive
Diwans by 1847.
In these troubled decades, it is important to note that the bankers in
Hyderabad, despite some efforts such as the proposed bank, seldom
acted jointly as an interest group. There were coalitions formed on
occasion to put together large loans, and two bankers sometimes became
'partners' for a specific transaction. 42 But they were in competition with
each other, and disputes were frequent. Cases were filed in the Nizam's
courts and in the British Residency courts: Ramaswamy vs. Puran Mai,
Kishen Das vs. Dighton, Mahadev Gir vs. Sita Ram. And problems
between the government and bankers also reached the courts and the
point of open altercations: Pestonji, Kishen Das, Dighton, Janaki Das,
Ramaswamy, and Umraogir all sent troops against the government
and/or had troops sent against them at one time or another. 43
Resort to physical force became more frequent, and the bankers often
were pawns for more powerful groups in the political system. Table 4
below presents the violent incidents involving leading bankers from
1846 to 1857, conveying a graphic sense of their importance and vulnerability in that decade.
By 1851, the Resident was scrutinizing financial records of the
Nizam's government, and discussing possible cession of territory. The
Diwan, Siraj-ul-Mulk, responded by undertaking to repay the debt to
the East India Company (now some 7,000,000 rupees) between July
and December of 1851. He succeeded in raising loans from bankers in
July, and he sent hundis for 4,000,000 rupees, payable in four to six
months, to the Resident by mid-August. Thereafter, he found it impossible to secure a like amount by October, although more hundis were
sent. 44 This series of hundis delivered to the Resident by the Diwan from
July to November, 1851, provides the data below on the banking firms'
transactions with the Hyderabad government.
I have grouped the firms by caste or community designation. First,
note that a Hyderabad firm dealt elsewhere primarily with its own
branches or with other firms from its own community. Bayly, working
with bankers' books from Benares, found that hundi remittance was
carried on 'largely outside the boundaries of kin and caste,' but in
42

Report of the Hyderabad Debt Commission, 1301 F., 4, 12.
See HA, tables of content, vols III, IV, and V for references. These conflicts were
bitter and long-lasting. A dispute of the 1800s between Puran Mai and Umarsi Sajan
Mai was still being pressed by the latter in 1928: IOL, Crown Representative Records,
Foreign and Political Department, R/1/29/503, file no. 473-P or 1929.
44
Contemporary newspaper accounts are in HA, IV, 65-79, a n d s e e s o u r c e of table 5.
43

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Hari Das

Govind Ram
Surat Ram

Baldevgir &
Bijigir, Gosains

Syed Ahmed,
s/o Makhdum Seth
Shivdut Ram
Jaisee Ram
Puran Mai

Banker/Firm

Jan., 1849

June, 1850

May, 1853

Oct. 1849June, 1850

Jan., 1847

Oct., 1846

Oct., 1846

Date

TABLE 4

Imprisoned young heirs of: 4 Marwaris, the 2 Daftardars, the Peshkar, the
Paigah's manager, in his Begum Bazar house to force payment of debts
Jaisee Ram's grandson Moti Lai imprisoned by Syed Ahmed; government
troops secured release
Rohilla troops waylaid him at Diwan's residence; escaped with help of 200
men, including Arabs, of Gosains
Battle over disputed inheritance; Bijigir employed Rohillas to attack Baldevgir
but lost; unpaid Rohillas kidnapped disciple of Baldevgir and held him and
their employer for ransom; government troops finally fought Rohillas in
Begum Bazar
Bijigir attacked Baldevgir's house again with 100 Sikhs; 300 Arabs defended it;
Bijigir was wounded, captured
Govind Ram's son, Jai Gopal, kidnapped by Rohillas to force government to
pay them for employment by Bijigir (above); plan worked, all hostages
released
Hired Arabs to fight for jagir mortgaged to him by Lachman Gir, Gosain

Incident

Incidents of Violence Involving Leading Hyderabad Bankers, 1846—185J

V, 643

V, 664

V, 746

V, 646-47
V, 649;
V, 664-67

V, 603

V, 602

V, 602

Reference*

r
m
o
z

M
Z

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1857
Oct., 1852

March, 1853
Feb., 1855
Feb.Aug. 1855

Sept., 1852

Jan., 1849
May, 1851
March, 1853
Jan., 1850

Hired Arabs and Rathores to fight for jagir mortgaged to him by Azam Jung
Attacked in his house by Arabs; his guards were killed, he escaped
Two of his sons-in-law were kidnapped by Arabs
Kidnapped by Rohillas to force repayment of debts to Haji Sahib; body of
bankers 'sat in' at Diwan's until government paid for release
Employed 500—700 Arabs, led by Bafana; used them to coerce money from
talukdars who fronted for him, farming district revenues
Seized and imprisoned by former ally, the Arab Bafana
Arabs broke into his house claiming debt but he escaped
Imprisoned by Diwan Salar Jung, charged with conspiracy; his Arab allies
besieged Diwan's residence; Diwan put him in fetters; his Arab allies occupied
his Begum Bazar house as additional outpost vs. government; a settlement was
negotiated
Murdered in Salar Jung's house; other bankers to blame?
Brothers kidnapped by Sikhs, demanding payment of their salaries; ransomed
after 30 days by government with money borrowed from bankers.
V, 729-37

+
+

V,727;
IV, 90
V,743
V,767
V, 768-9,
733; 775t

V,643
V,697
V, 742
V, 656

a

z
U
<

po
2

z
0

w

r

O

•0

* All save two references are from the volumes of collected newspaper clippings edited by Mahdi Syed Ali: Hyderabad Affairs.
2
>
f Colin MacKenzie, Storms and Sunshine of a Soldier's Life (Edinburgh: 2 vols, 1884), II, 112-113, noted his imprisonment and Arab besiegers while attending a
wedding party at Salar Jung's. He has dated it in 1854—either he is a year off or Umraogir was imprisoned then as well.
*
I K. K. Mudiraj, Pictorial Hyderabad, II, gives this story; there are few 1857 references in the Hyderabad Affairs volumes.
Q

Lachman Das,
Lachmi Das

Umraogir

Fateh Chand

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Jaisee Ram Shiv Lai
Shiv Lai Kishen Ram
Sadul Singh Bijnath
Bag Mai Jit Mai
Kesri Chand Pul Chand

Calcutta

Bansi Lai Abir Chand

Madras

89,143 Brij Lai Dalab Das
34,483 Jawahar Chand Atma
Ram
26,893 Narotam Das Haribai
•9>579
260,000
10,000 Northwest Bank

7
2

g
3

5
1

Lachmi Das Lachman Das
Kishen Das Purshottam Das

Jamna Das Balkishen Das
Narayan Das Tirmuk Das
EUROPEANS
a) Dighton
b) MacPherson

* East India Company rupees, rounded off.
t also transactions with Girdhar Das Manikji Govardhan Das in Masulipatnam.
J also transactions with Mahanand Ram Puran Mai in Masulipatnam and Govind Das Radha Kishen in Mirzapur.

Source: Papers Relative to Territory Ceded by the Nizam in Liquidation of Debts, 6 6 - 9 , 8 7 - 8 .

97,000 Sri Govardhan Maharaj

Binny & Co.

Lachman Das Narayan
Das
Girdhar Das Balab Das

Bansi Lai Abir Chand
Pural Mai Hardat Rae Puran Mai Srikishen Das
Govind Ram Jaigopal
Jaigopal Das Purshotam Surat Ram Raebhan
Das
Manik Chand Kesri Chand
3,000
Tajsi Nyansi
83,000 Ram Lai
14,000 Bansi Lai Abir Chand

647,778
1,010,693
226,683
•7.909
36,721
60,000
89,107
1,369,519
185,715

Bombay

Firms on which hundis were drawn (including own branches):

7

2

2

1

7

28

5

2

3

I

9

22

•9

Number of
Hundis
Rupee
Amount*
Drawn

e) Gomani Ram Ram Lai
0 Anand Ram Sadasukh
GUJERATIS
Lachman Das Purshottam Das

d) Padamsi Nyansi

a) MARWARIS
Shivdut Ram Lachmi Ram
Shivdut Ramjaisee Ram
Nathmal Govardhan Dasf
Sultan Chand Bahadur Chand
Girdhari Lai Fateh Chand
Hanumant Ram Sri Ram
Moti Ram Ramdhun
b) Mahanand Ram Puran MalJ
Surat Ram Govind Ram

Hyderabad Firms

TABLE 5

Networks of Banking Firms and Hundi Transactions,

W

z
r
w
o
a
>
71
a

BANKING FIRMS IN HYDERABAD POLITICS

193

Hyderabad in 1851, that was apparently not so. 45 Even the Europeans
dealt with European companies or banks in Calcutta or Madras. With
respect to geographic networks, Marwari firms tended to deal with all
three Presidency capitals: Bombay, Calcutta, and Madras. The Gujerati firms in Hyderabad dealt with Madras but apparently not Calcutta
in the mid-nineteenth century. 46
In earlier times, Gujerati and Gosain bankers had been more closely
linked to the government; in 1851, the major suppliers of funds to the
Hyderabad government were Marwaris. 47 Only the two largest creditors (Puran Mai and Shivdut Ram) loaned to the government throughout the year, and even they decreased their support very sharply in
November; both firms were said to be temporarily bankrupt as the year
ended and 1852 began. The most serious consequence of the 1851 crisis
was that:
The foreign correspondents of the Hyderabad houses decline giving them
credit—that is, have stopped dealings with them—I believe, with all, without
an exception . . . to protect themselves from the pressures of their creditors the
tottering houses have procured and posted Arab guards at their gates.48
The Diwan, Siraj-uI-Mulk, now found it nearly impossible to secure
loans; 1852 was the bankers' second attempt to form a bank, and again
they failed.
The Diwan, with the advice of the British Resident, sought to reform
the Mughlai administration to avert financial disaster, but the reforms
proposed all reduced the power and income of the Mughlai officials. At
this juncture, Lala Bahadur, the major recordkeeper, led the Mughlai
officials in opposition to the Diwan's cooperation with the Resident. The
talukdars did not want their customary share (f) of the revenue collection
reduced. The paymasters of household and military units opposed
reduction of their share (TV t o i ) of the salaries they distributed, and they
opposed cuts in the numbers of their employees. The military commanders resisted similar proposals of salary and manpower cuts. Those
45

Bayly, 'Indian Merchants,' in Dewey a n d Hopkins, The Imperial Impact, 179.
Gujerati bankers were in Madras by 1800: Parliamentary Papers, Vol. 6 (1812),
242-3, lists settlements of the N a w a b of Arcot's debts, with the names of Gujerati
bankers. T h e Marwaris arrived there later: Timberg, The Marwaris, 225. Although
Gosains were not lenders in these records of the 1851 crisis, we have a reference to
Umraogir's providing hundis drawn on Calcutta in J u n e and J u l y 1851: Report of the
H y d e r a b a d Debt Commission, 1301 F. 1-3.
47
T h e Gujerati bankers and Palmer seem to have distrusted Siraj-ul-Mulk p r o foundly: Palmer to Russell, 1843, m Davies, 'Correspondence' (see note 18), 34.
48
'The E n g l i s h m a n , ' J a n u a r y 8, 1852, in HA, IV, 80.
46

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KAREN LEONARD

who held land, and they were many, resisted the Diwan's attempts to
regain it for the state.
The Nizam, suspicious of the East India Company, sided with the
Mughlai officials led by Lala Bahadur. 49 Given the political situation,
few bankers loaned and only then on the guarantee of Lala Bahadur, not
that of the Diwan. Fiscal reforms were resisted, and the financial situation worsened. Governor-General Dalhousie lost patience and sent an
ultimatum: Hyderabad was forced to cede Berar, rich in cotton and land
revenue, to the British in payment of its debt and to provide regular
salaries for the Contingent. The cession occurred on May 21, 1853, and
the humiliated Diwan, Siraj-ul-Mulk, died a few days later. 50
Siraj-ul-Mulk's twenty-four-year-old nephew, Salar Jung, was
chosen to succeed him. Not considered the strongest candidate for
Diwan, Salar Jung was selected precisely because it was thought he
would make an ideal puppet, easily manipulated by his backers, principally Lala Bahadur. 51 But Salar Jung declined the role of puppet.
Appointed Diwan in June, 1853, within two weeks he had refused to sign
papers presented by Lala Bahadur, saying that 'he could not sign papers
till he had satisfied himself by a knowledge of their contents of the
propriety of doing so.' 52 By early August the relations between the two
showed serious strain, and they challenged one another directly at the
end of August.
The crucial turning point in Salar Jung's contest for power with Lala
Bahadur involved securing advances from bankers. The 1851 arrangements to secure hundis from bankers had involved consideration of past
debts and future revenues, but the Hyderabad government had proved
no more able to repay the bankers than the East India Company.
Further loans could not be obtained. Lala Bahadur presented Salar
Jung with a financial statement of the state's predicament and
'requested his direction as to the way and means for the supply of
money.' Salar Jung responded by submitting a petition for specific
administrative reforms to the Nizam and threatening to resign if it was
not endorsed. 53 The Nizam endorsed the petition, awarding victory to
the Diwan, who then proceeded to eliminate the daftardars as inter49
'The Englishman,' May 18, 1853, in HA, V, 189; Shiv Narayan Saksenah, Kayasth
Sajjan Carilra (Jaipur, 3 vols, 1912-13) II, 8-9.
50
The text of the treaty is in Briggs, The Nizam, I, 312-16.
51
'The Englishman' and 'The Madras Spectator,'June 8, 1853, 'United Service
Gazette,'June 10, 1853, and'Madras Spectator,'June 8, 1853, in HA, III, 2-4.
52
'The Englishman,'June 20, 1853, in HA, III, 7.
53
'The Englishman,' August 29, 1853, in HA, III, 7-8.

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BANKING FIRMS IN HYDERABAD POLITICS

195

mediaries between himself and the moneylenders and revenue contractors.Salar Jung wrote:
[After the failure of the daftardars to improve their administrative practices was
evident] I gradually . . . made arrangements with certain sahookars quite
unconnected with the Duftardars to make advances to meet the exigencies of
the Government, and in consequence of the period of the revenue collections
being yet eight months distant, I deprived the Duftardars of the power to
appoint Talooqdars, a privilege which they had hitherto arrogated to themselves . . . I obtained His Highness the Nizam's guarantee for thefirstadvances
from the sahookars . . . he . . . accepted and signed at two different times the
sahookar's papers of requisitions, and the two Wajib ool Urzis I submitted to
him.54
Even more specific is the account given by a later Resident, Richard
Temple. A banker, unnamed by Temple, was introduced to him in 1867
by Salar Jung as the first man to come forward and assist Salar Jung on
his accession to the Diwanship. 55
The banking firm which extended credit to Salar Jung had to be that
of Lachmi Das Lachman Das. A contemporary Court diary entry for
August 27, 1853, noted that Salar Jung had presented the sahukar
Lachmi Das and his brother to the Nizam, who accepted their nazr and
then initialled the government papers submitted to him. 56 Since the
final battle between Lala Bahadur and Salar Jung occurred at the end of
August, this court presentation was the event to which Salar Jung
referred in his written account quoted above. (It was this same banking
firm which assisted Salar Jung I in 'falsifying' the state accounts later on,
from 1871 to 1877. A false set of account books for these years was
prepared to conceal from the Resident payments being made for political activities counter to British interests. In the false accounts, these sums
were labelled 'loans to Luchmi Dass Sahoo.' 57
After Salar Jung's assumption of power, he initiated a gradual
changeover from the Mughlai bureaucracy to a modern, Anglo-Indian
administration. 58 The bankers' roles in Hyderabad politics were ultimately much reduced. The new Diwan, in office from 1853 until his
54
Salar J u n g , Hyderabad State, Miscellaneous Notes on Administration (Hyderabad,
[1856]), 7 (in the Salar J u n g Library, Hyderabad).
55
Richard Temple, Journals Kept in Hyderabad, Kashmir, Sikkim, and Nepal (London, 2
vols, 1887), I, 120-1.
56
Chronology of Modern Hyderabad, 271.
57
IOL, Crown Representative Records, Foreign Department, Confidential-A,
Internal Branch, Section B, nos 23-g of 1891 (R/1/24/5), 7; and see 1892 Proceedings
(R/1/25/16).
58
See my article, 'Mulki-non-Mulki Conflict in Hyderabad State,' in Robin Jeffrey
(ed.), People, Princes and Paramount Power (Delhi, 1978).

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IO.6

KAREN LEONARD

death in 1883, established district and central treasuries, standardized
the currency, and took control of the mints for the government. But
these changes took many years to effect, and Salar Jung relied upon
some bankers and battled others during the first decade of his administration.
Those bankers allied with the ousted Berar talukdars and military men,
notably the Gosain Umraogir, strongly opposed the new Diwan.
Actually, the cession of Berar to the East India Company helped Salar
Jung by dislodging many powerful military men from their land assignments there. He was able to negotiate reduction of troops, and in some
cases dismissal of entire units of Arab and Pathan mercenaries, in return
for some compensation. 59 The East India Company, given a pretext in
1854 when Arabs in Yeshwuntpura fired on an Englishman, also assisted
Salar Jung by offering to help him against the Arabs. 60 This alignment—the Diwan with the East India Company against the talukdars,
military men, and bankers who had profited under the old system—
marked the events of 1857 in Hyderabad.
The rebellions of that year against the British in India reflected local
circumstances wherever they occurred, 61 and in Hyderabad the most
common interpretation of the disturbances has been to blame a disgruntled Rohilla Afghan (Toora Baz Khan) whose forces attacked the
Residency, allegedly seeking payment of back salaries. But a glance at
the incidents on Table 4 involving the Gosain, Umraogir, gives another
hypothesis for further research.
Umraogir had been closely allied with Lala Bahadur and some of the
Arab and Pathan leaders. His relationship with Salar Jung's late uncle,
the previous Diwan, had once been close, but Siraj-ul-Mulk had persuaded Umraogir's own Arabs to turn against him. Siraj-ul-Mulk imprisoned him and then he cancelled or collected for himself most of the
debts due to Umraogir. 62 Once released, Umraogir began raising troops
and allied himself with several of those ousted from their Berar holdings.
Salar Jung imprisoned him for conspiracy in 1855. Then in 1857 Salar
Jung and others charged the Rohilla rebel, Toora Baz Khan, with
instigation by his employer, whom 'everybody knows,' in Begum
Bazar. 63 (It is also noteworthy that the tributary state of Shorapore,
whose Raja rebelled in 1857, was captured and committed suicide, had
59

See the articles in HA, II, 35-43.
' T h e Englishman,' April 6, 1854, in HA, II, 4 0 - 1 .
6 1 Eric Stokes, The Peasant and the Raj (Cambridge, 1978), Chs 5-8.
62
' M a d r a s Spectator,' February 16, 1855, in HA, V, 767-8.
63
Sources for 1855 in table 4; and for 1857, ' T h e Englishman,' August 1, HA, I I I ,
60

215-

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had as its bankers Gosains from Begum Bazar. 64 ) Salar Jung's account
of 1857 did not refer to the murder of Umraogir, which allegedly
occurred in the Diwan's own residence. But he did accuse Gosains and
other Begum Bazar residents of participating in another conspiracy
against him in 1862.65
Clearly, bankers continued to participate in politics in Hyderabad.
Their changing role in the late nineteenth century needs careful investigation.

III. The Family Firms
The historical material on the 'great firms' of nineteenth-century
Hyderabad has illuminated the political events of that time and place.
Now let us see how the details about those political actors and events can
be related to questions about the way the family firms functioned
internally; the role of religion in the business life of these banking
communities; and the way the firms functioned with respect to each
other.
Family firms, it is argued, have many economic advantages. They can
invest in the training of personnel, draw upon relatives for capital, and
provide continuity and social security in ways unmatched by competing
non-family firms. A name and a sense of tradition were valuable assets in
the field of merchant banking. 66 The institution of the joint family has
been viewed as contributing to the success of family firms in India. 67
The stereotypical model of the Hindu patrilineal joint family is
employed; discussion points to the functional role of Mitakshara law
(followed by the Marwaris and Gujeratis), which provides for the
co-parcenary (impartible) estate, managed for the patrilineage by successive eldest males. The Parsis, whose customary law enjoins the practice of partible inheritance, are alleged to have followed English law and
64

Lachman Gir was the major banker there in the 1840s: Meadows Taylor, Story of
My Life, Chs 9 and 11, reprinted in HA, V, 409 and 430.
65
Salar J u n g , 'Administration Report of the Dominions of His Highness the Nizam'
[1863], reprinted in HA, I I I , 151 on, and see 247-51 of same volume. Some banking
firms assisted Salar J u n g in 1857. Shiv Lai M o d Lai received a reward from the British
(Mudiraj, Pictorial Hyderabad, 11,465), probably for supplying the Resident with money,
the new coinage Salar J u n g was introducing then.
66
Burton Benedict, 'Family Firms and Economic Development,' Southwestern Journal
of Anthropology, 24, no. 1 (1968), 2; David Landes, 'Bleichroders a n d Rothschilds,' in
Charles E. Rosenberg (ed.), The Family in History (Philadelphia, 1975), 111 —13.
67
Timberg, The Marwaris, 127-9.

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made wills to avoid the division of family resources.68 Among the
Gosains, the chelas or disciples of a Gosain guru functioned as adopted
sons and carried on the business. Gosains are usually portrayed stereotypically as members of a community of monks, whose 'network of
monasteries and the constant movement on pilgrimage between them'
gave them an institutional framework for business superior even to
family and kin, 69 and whose austere way of life helped preserve their
capital. 70
We have many examples of long-lived family firms in Hyderabad. Six
of the seven firms in Table 1 have existed for over one hundred years.
The material available suggests that these have not operated on a
strictly patrilineal model. There are references to sons-in-law and
nephews as heirs or partners, 71 and at least one instance of a son-in-law
displacing a son as successor to the retiring head of a family firm.72 The
more appropriate model here would be that of a composite descent
group, 7 3 utilizing bilateral kinship ties and adoption to carry out the
firm's economic activities. This has been recognized by Indian writers
on the business communities: one proposes the kindred as the more
appropriate unit of analysis for Marwari business activities.74 Another
defines joint family as including relatives by marriage, not necessarily
co-resident, who share economic activities.75 'Inbreeding,' or the
arrangement of marriages within a close circle of relatives, has been
correlated with the continuity of family firms in some cases.76 Given the
high mortality rates characteristic of societies prior to the demographic
transition, the bilateral kindred or composite descent group is more
likely than a strictly patrilineal group to explain the continuity of these
Hyderabad nineteenth-century family firms. But the marriage patterns
of these families and kindreds have not yet been studied historically, and
68

Amalendu Guha, 'The Comprador Role of Parsi Seths, 1750-1850,' in Economic and
Political Weekly, Vol. 5 (November 28, 1970), 1936.
69
Mishra, Banaras, 98.
70
Ibid., 97; Cohn, 'The Role of Gosains,' 180-1.
71
'Madras Spectator,'February 22, 1850, a n d ' T h e Englishman,'March 15, 1853, in
HA, V, 574 and 742 respectively.
72
Khan, Gulz.ar-i-Asa.fiyah, 630, for Radhakishen's son-in-law, Jagannath Seth.
73
E. Ley ton, 'Composite Descent Groups in Canada,' in C. C. Harris, Readings in
Kinship in Urban Society (N.Y., 1970), 180.
74
B. R. Agarwala, 'Caste in a Mobile Commercial Community,' Sociological Bulletin,
Vol. 4(1955), 141.
75
Arabinda Ghosh, 'Japanese "Zaibatsus" and Indian Industrial Houses: an International Comparison,' American Journal of Economics and Sociology, Vol. 33 (1974), 318.
76
Guha, 'The Comprador Role of Parsi Seths,' mentions inbreeding for Parsis;
Joseph Wechsberg, The Merchant Bankers (Boston, 1966), tells us that of the Rothschild's
59 weddings in the nineteenth century, half were between Rothschilds (351).

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it may be that certain types of preferred marriages have strengthened
the Hyderabad firms.77
The religious element in these Indian family firms, particularly those
of the Gosains, is still often over-emphasized. As Timberg and others
have remarked, the sectarian differences among the Hindu and Jain
Marwaris have had no apparent impact on their business activities.78
Certainly some of Hyderabad's leading bankers were described as
devout men, performing daily pujas, giving out charity, and endowing
temples; such qualities and acts were also attributed to other Hindu
political figures of the time. But they are also described as fun-loving,
fond of cock-fights and engaging in the occasional sword-fight themselves.79
It is particularly difficult to view Hyderabad's Gosains as austere
monks. Their establishments were like those of other wealthy men; their
locality was repeatedly termed 'most opulent' in the city. The contemporary description of Umraogir below has nothing of a religious flavor:
Umraogeer has been repeatedly before the public. He has been a great actor on
this stage of ours . . . He is a Gosaeen, a class of men notorious for their opulence
and their usurious dealings, amongst whom he is noted both as a large capitalist
and for undertaking adventures of the utmost hazard, upon the chance of
obtaining exorbitant gains . . . Umraogeer . . . is particularly noted for a
haughty and fiery temper, for a sort of courage which seems to hazard much by
defiance but which never yet has been seen to come into the contact which
produces the final catastrophe. 80

Yet Gosain establishments, and those of some Gujeratis, were termed
maths (monasteries) in Hyderabad, and some commercial establishments
may have been linked to 'Bairagis' (Hindu Vaishnava ascetics?).81
The way these maths functioned and what the term really meant in
nineteenth-century Hyderabad remain to be investigated.
Social interaction among bankers in the city is difficult to discern from
the available historical sources. Within the localities where most bankers
lived, the heads of the big firms played leading roles. The Holi celebrations, very popular in the Gujerati and Marwari communities, were
77
Peter Dobkin Hall, 'Marital Selection a n d Business in Massachusetts M e r c h a n t
Families, 1700-1900', In Michael Gordon (ed.), The American Family in Social-Historical
Perspective (N.Y.: 2nd edn, 1978), 101-14.
78
Timberg, The Marwaris, 3 5 - 7 .
79
K h a n , Gulzar-i-Asafiyah, 6 2 5 - 3 1 .
80
' M a d r a s Spectator,' F e b r u a r y 16, 1855, in HA, V, 767-8.
81
See the names on the Municipal Survey Maps: M u n n , 1913. G. S. G h u r y e , Indian
Sadhus (Bombay, 2nd edn, 1964) gives religious information a b o u t these a n d other
'orders.'

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KAREN LEONARD

marked by riotous and sometimes violent behavior. Hari Das in Karwan
and Puran Mai's son in Begum Bazar are both said to have mediated
feuds which marred the festivities in their localities.82 Aside from this
information, some data relating bankers to particular local temples, and
the striking contiguity of the bankers' residences with those of Muslim
nobles and military men, little is known about social networks in the
city. But the 'nautch party' hosted by the Muslim banker's son, Syed
Ahmed (Table 4), suggests that the scions of wealthy men of all communities enjoyed private entertainments together. In this case, Syed
Ahmed imprisoned the young Hindu heirs of leading nobles and Marwari bankers at the end of five days of drinks and dancing girls. When
the party was over and his troops detained the guests, he kept the
dancing girls imprisoned along with the young men, as befitted his (and
their) reputations as young men-about-town. 83
The ways in which the banking firms functioned with respect to each
other have been illustrated in the course of the narrative. Bankers
competed with each other in Hyderabad when contracting for land
revenue assignments or 'mortgaged' jagirs and when making loans to
nobles. They competed with each other when hiring bodyguards and
military forces, and they sometimes fought each other. Banking firms
invested separately in specific enterprises, like cotton or opium. They
seem to have taken European partners early in the century in all of the
above from time to time, but these partnerships were not lasting. The
bankers formed political alliances with revenue officials, nobles and
military men, and conflict and lawsuits were not infrequent among all
those engaged in banking activities in the city.
The Hyderabad firms cooperated to varying extents when it came to
making loans, particularly via hundis. When actually drawing hundis
upon firms elsewhere, the Hyderabad firms dealt only with their own
branches or with other members of their caste, as we have seen. But
vis-d-vis the Hyderabad government, the local firms on occasion functioned collectively. The banking firms sometimes formed local coalitions
to raise a particular sum needed by the government. These efforts were
evidently carefully negotiated, however, and disagreements and distrust
characterized them. 8 4 But when two of the leading local firms were
82
Khan, Gulzar-i-Asajiyah, 630 (Hari Das), and 'Madras Spectator,' November 24,
1848, in HA, V, 549 (Puran Mai's son, Prem Sukh Das).
83
'Madras Spectator,' October 3, 1846, in HA, V, 602.
84
When a 'coalition' was being formed in 1847, one firm objected to the inclusion of
Puran Mai (because the government's huge debt to him would reduce their dividends):
'The Englishman,' October 23, in HA, IV, 22. And in 1852, when the Nizam found it
necessary to mortgage a fabulous diamond to the bankers, it was kept in a chest by

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temporarily bankrupt, others covered for them. 85 The Hyderabad
bankers made efforts to act collectively only to fend off excessive government demands or to protect local firms crucial to the continuity of
banking activities.
The attempts by Hyderabad bankers to establish a 'Bank' (1847 and
1852) would have institutionalized the informal and transitory relationships among leading creditors of the State. Blocked by the British, and
perhaps by distrust among the bankers themselves, those efforts did not
succeed. When such a 'State Bank' was finally recognized in 1868,
however, it was a branch of the Bank of Bengal.86 As in the rest of
India, 87 the history of'organized banking' in Hyderabad state has been
linked to the inauguration of European-style banking institutions. We
must redefine banking and its importance in Indian history and rediscover the indigenous bankers and their political and social networks.
Kishen Lai (Shiv Lai M o d Lai), but the key was with Hari Das and it was guarded by 50
Arabs: ' M a d r a s S p e c t a t o r , ' J u n e 7, in HA, V, 715.
85
These were Puran Mai and Shivdut R a m Jaisee R a m , in 1851: see note 40.
86
Manik R a o Vithal Rao, Khayaban-i-Asafi (Hyderabad, 1902-3), 2 0 - 1 .
87
T h e best summary remains that of B. R a m a c h a n d r a R a u , 'Organized Banking in
the Days ofJ o h n Company,' Bengal: Past and Present, Vols 37 and 38 (1929), 145-57 and
60-80.

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