The "Manchesterisation" of Howard Spodek

The basinet skills of Ahmedabad, its indigenous entrepreneurship, set it apart from most Indian cities. The leadership which Brought industry to the city was, and remains, Gujarati. Many traits that mark the leadership today are carryovers from pre-industrial patterns. By , most are jain and Vaishnava banias or Patels from the Ahmedabad and Kaira districts. How the industrial pioneers made Ahmedabad the ''Manchester of ' is the subject of this study.

BY Indian standards Ahmedabad is labour management harmony, continu­ variety of clerical and administrative a rich city. Its wealth rests an ed swadeshi movements, and surging positions both in the Bombay govern­ its 62 textile mills which employ confidence to Ahmedabad and its peo­ ment and privately. He was appoint­ 130,000 people, about one-tenth of the ple. Industry boomed. Finally, since ed Assistant Superintendent of Pava- city's population. They produce about 1933, first because of the general garh in Panchamahals, the highest 1,150 million, yards of cloth annually, depression, then because of war condi­ position to which an Indian in the a quarter of all of India's mill produc­ tions, and finally because of the eco­ political department of Government tion. Although the workers seem un­ nomic policies of the Government of could aspire. With a salary of Rs 300 der-nourished, overworked, and poorly independent India, expansion in the per month, he was the chief Bombay educated, their basic minimum take mills stopped. New economic avenues Government representative in the area. home pay of Rs 150 per month, in­ nave been pursued while mill growth In 1853 his government career tnidcd cluding dearness allowance, puis them has remained stationary. abruptly when he was charged with among the best paid industrial workers taking a bribe. Court, proceeding drag­ in India.' As to the owners and high The Pioneer ged on and although the decisions level personnel, their dress, cars, and The Guzetter for were not unexceptionable, the slur on homes give ample evidence of their Ranehhodlai's reputation forced the prosperity. , compiled in 1879, presents a rosy, British, and compre­ government to discharge him. hensive account of conditions in the Gujaruti Leadership earliest years of industrialization. It From Administration to Business The business skills of Ahmedabad, states that Ahmedabad was renowned Like others of the more lurbulent its indigenous entrepreneurship, set it for its high death rate and dirt and times later, having lost the possibility ajiari from most Indian cities. The that and Moghul rule despoil­ of government work, Ranehhodlai leadership winch brought industry to ed the city, but that in 1817, when the lurried his energies to business. As the city was, and remains, Gujarati. British assumed control of the city, early as 1847, even before Cowasjee Many traits that mark the leadership improvements began. Population eix- Davar's 1854 venture in Bombay today are carry-overs from pre-in- paruled, trade flourished, and the three brought the textile industry to West. dustrial patterns. It is close-knit and traditional Ahmedabad manufactures India, Ranchhodlal had, with the help expert in finance rather than in techno­ of cotton, silk, and gold revived. The of a Major Fulljames, investigated the logy. By caste, most are Jain and city walls were repaired, cesses were possibilities of textile manufacture Vaishnava banias or Patels from one levied for city improvements. ­ along British lines. Then, and again Ahmedabad and Kaira districts. They chants began to amass money and new in 1851, money was raised, English are intensely concerned with the status public building gave evidence of the manufacturers and machine producers and progress of the city which they prosperity. Charles Heimsain in were contacted, and preliminary plans seem to rule on Medicean patterns. "Indian Nationalism and Hindu Social were made. Apparently the investors How the industrial pioneers made Reform" (Princeton, 1964), writes that wanted more security than the new Ahmedabad "the Manchester of reform and educational movements of industry could offer, however, and they India", as Ahmedabadis call their city, increasing strength were spread by withdrew their capital. is the subject of this preliminary re­ Gujaratis. search. Hopefully this sketch will Perhaps the loss of his job and the form the background of a study of the Onto this encouraging scene stepped added time to work on financial affairs personal and psychological motivations Ranchhodlal Chhotalal, whose imagi­ were beneficial, for in 1859 Ranchhod­ underlying entrepreneurship. nation, boldness, ingenuity, and suc­ lal suceeeued in making the desired cess make him a classic example of combination: his imagination and Ahmedabad got its first mill in the Schumpelerian entrepreneur. S M energy, with the skills of British tech- 1861. Slowly, over a period of thirty Edwardes, his best English biographer, nicians, and Rs 75,000 of investments years, the added example of eight more records his birth in 1812 in a close- by wealthy merchants to add to his mills as well as vital changes in econo­ knit, honest, and thrifty family of the own Rs 25,000 investment. Ranchhod mic conditions and attitudes prepared well-placed Nagar Brahmin community laI was put in charge of construction the ground for the quick expansion of of . Like his father, amd like and management in return for 2½ per 1891-1905. Then the Swadeshi move­ many of the subsequent mill leaders, cent on the sale of yarn. Problems of ment and pushed both he was orlhodoxly religious. He fol­ construction followed. Dadabhai the number and the profits of the mills lowed his father into a career in gov­ Naoroji, who was then in England, to new heights. Gandhi came to ernment service. From the lime he served as purchasing agent for the Ahmedabad in 1915 and for sixteen finished his formal education in 1842 machinery. Legend tells that the ma­ years made it his home. He brought until 1853, Ranchhodlal worked in a chinery burned and went down at sea,

483 March 13, 1965 THE ECONOMIC WEEKLY so presumably Dadabhai did the pur­ As with his mills, he gave his public Entry of the Jains chasing twice. Insurance covered the works careful and meticulous atten­ Ten years elapsed before another costs. Ranchhodlal himself spent tion. He attempted an iron smelting newcomer pioneered a mill. In 1877, about three months in Cambay super­ industry and sponsored preliminary Mansukhbhai Bhagubhai founded the vising the unloading of machinery on­ research, but it never came to frui­ first of a number of mills he was to to the bullock-carts by which it was tion. He also was a leader in a plan control. Mansukhbhai was the first of transported 52 miles to Ahmedabad. to dredge the River and the wealthy and established Jam Once in Ahmedabad, the death and make it navigable to the Gulf of merchants of Ahmedabad to invest in incompetence of various English tech­ Cambay (an enterprising but unlikely the new industry. Prior to his entry, nicians led Ranchhodlal and an as­ plan to those who have seen the shal­ the established merchant classes had trologer friend to attempt, unsuccess­ low, narrow Sabarmati in the sum­ 3 lent their money to the new ventures fully, to erect the mill themselves (ap­ mer). of others but had yet to undertake parently an even bigger break with their own plants. Now others follow­ caste traditions than the movement to From Cotton Trade to Textile ed. In 1880, Karamchand Premchand, business had been). Finally, competent Manufacture another wealthy Jain merchant and men were found and the mill opened the father of one of Ranchhodlal's ori­ in 1861. The industrial success of this Brah­ min, former Government servant ginal partners, led a consortium of brought him prestige and honour from five merchants in founding a mill un­ Why Ahmedabad-? both the highborn and the rank and der his own control. He purchased The decision to found the millin file of his city. In his last years it a liquidated steam calico printing Ahmedabad, despite its dry climate, brought him a seat in the Bombay mill built in 1878 and by 1884 had its distance from port facilities and Legislative Council, a position in the added spindles and looms. Thus was lack of railways, and the mediocre Indian National Congress, and, through born the 'Calico Mills'. quality of local cotton surprises many his charity to medical, educational, In 1888 the Trikamlal Harilal Mills people. Why not begin in , where and religious institutions, high per­ opened. Owned by a group of in­ Ranchhodlal had, in fact, directed his sonal regard. The British, too, honour­ vestors, its management was disputed earlier efforts, or in Broach, where ed him with the title of Companion until in 1891, when Maneklal Harilal James Landon had actually begun a of the Indian Empire. With Ran­ became the chief managing agent and successful mill in 1855? The answer chhodlal, Ahmedabad's mill history changed the name of the mill to his seems to lie with the source of capi­ and, more generally, its modern his­ own. Maneklal was also a merchant tal. Ranchhodlal's partners, in addition tory was born. of the Vaishnava bania caste. The to a "Mr White," were Rao Bahadur The Becherdas Mill, Ahmedabad's entry of such people as Mansukhbhai, Magandas Karamchand, and Rao Baha­ second, rose only in 1867, six years Karamchand, and Maneklal signalled dur Premabhai Hutheesingh Kesari- after Ranchhodlal paved the way. the movement of "old money'' into the singh, both leading financiers in Ahme­ The mill remains today the oldest in successful new industry. Although for dabad. It seems natural that they Ahmedabad and is still controlled, several years to come, mill-managing would want the mill in their own city (hough as a public limited company, would remain ancillary to the financial where they could follow its progress by the same family. According to one trading of the banias, now they were without leaving their families or their of the present managing agents, the willing at least to add steam-run other business interests. founder, Becherdas Ambaidas, was a factories to their concerns. Ranchhodlal's Shahpur Mill set an friend of Ranchhodlal, and the success example of pioneering success which of the earlier mill attracted him. Be­ Psychological Impact attracted new efforts. cherdas, like Ranchhodlal, was not of Perhaps the most important contri­ the traditional Ahmedabadi bania bution of the early mills to entre­ Ranchhodlal's mill achieved a re­ caste. He was a patel of the Ahmeda­ putation for technical efficiency that preneurial efforts was the psychologi­ bad Kadwa community, a group which cal impact of the examples. Success stood in parity with the best of often works in education, the civil Bombay mills. Lower wages com­ attracted newcomers. Not only in service, or trade, especially with East Ahmedabad was this success evident. bined with his entrepreneurial Africa. His father had been a banker genius brought about fabulous pro­ By 1890 India had 114 cotton mills carrying on business with the with nearly 3 million spindles, 22 fits which set an example that tri­ at Poona, the Gaekwad of Baroda, and umphed over the slumbering stupor thousand looms and one lakh workers. the military department of the East The Bombay industry, spearheaded by of the conservative citadels of Guja- India Company. Becherdas had a rati capitalism. 2 its Parsi and later Jewish entrepre­ commission from the British to supply neurs, set the pace. Ranchhodlal became the richest man grain over a large region of Western in Ahmedabad. India. With branches for trade esta­ Within Ahmedabad the climate for Before he died in 1898, Ranchhod­ blished, he later moved into cotton economic entrepreneurship improved. lal proposed and carried out other trading, and then to textile manufac­ British rule since 1817 had brought new projects as enterprising as the ture. During the 1858 war, he served peace. Taxes were reduced. Internal mill. He controlled and built another the English and was also titled Com­ trade was facilitated. In 1864 the mill. As member and sometime chair­ panion of the Indian Empire. Again Bombay, Baroda, and Central India man of the municipal committee he like Ranchhodlal, and like other in­ railway linked Ahmedabad with Bom­ pushed through novel and necessary dustrialists afterwards, he became a bay. Later years saw the spread of programmes of water works and drain­ leader in city affairs, serving on the tracks to all parts of Gujarat and age, against powerful and popular municipal committee from 1862 until . With the railway came opposition and even physical attacks. his death in 1889. also the telegraph. Within the city, 484 THE ECONOMIC WEEKLY March 13,'1965 and connecting it with other cities, were knowledgeable in financial orga­ petuity. To dislodge them was almost new roads were built. In the period nisation. Gujarat had for centuries impossible. Thus management and 1861-65, while the American Civil been a centre for national and inter­ ownership were in theory separated, War left India as the chief supplier national trade. The combination of though in fact the agency members of cotton to Lancashire's hungry high trade morality and a smallish and the large mill investors tended to mills, many fortunes were amassed. city, with about one lakh population, be identical. The successful manag­ Although the end of the boom in 1866 where the wealthy men were known ing agency became a magnet for de­ saw many bankruptcies, many fortunes to one another, facilitated capital bor­ posits and investments from the public. remained intact, available for new in­ rowing. For borrowing Ahmedabad With these deposits and with the pro­ vestments. evolved a system of deposits. Indi­ fits of earlier successes, a managing Education, too, advanced. By 1879, viduals would entrust their money to agent could invest his capital in new twenty government schools had open­ successful and known businessmen. mills. From the profits of one he ed. In addition to five private schools The businessmen could use the money could build the capital to start others. which the government aided, a high at their own discretion and, though The managing agency firm could in­ school had been built in 1846, and the money could be withdrawn at any vite to membership a variety of specia­ opened in 1879. The time, usually the deposits were made lists, such as bankers, traders, engine­ Gujarat Vidyasabha (Vernacular So­ on a long-term basis. Repayment and ers, or even managers of other mills ciety) was established in 1848 by A K terms of interest, sometimes as low as who could then pool their knowledge Forbes for the encouragement of ver­ 2 per cent, were worked out privately. and skills. nacular literature and education and The system was based on a high degree of personal as well as business trust. While Indians controlled the finan­ for the collection of manuscripts and ces, and managed with a primary con­ printed books. Under Forbes' super­ Then, as today, an investor often lent personally two or three times the cern for financial matters, the technical vision Ahmedabad's first newspaper, a cadre to run the mills came from weekly, was founded. By 1879 three amount that he invested in the form of stock purchases. Great Britain. Although Bombay had weeklies had a total circulation of 710 already opened the Victoria Jubilee copies. Two libraries were founded, Tradition of Co-operation Institute in 1882 to (ruin Indian tech­ the larger with about 5,000 books. nical personnel, Ahmedabad preferred Thus the facilities for the spread of The examples of professional co­ British men. Similarly the machinery ideas and knowledge expanded. operation evident in Ahmedabad's for the mills was imported from Great traditional mahajans, or trade guilds, Britain, mostly by the firm of Greaves Loan Finance also seem to have influenced the Cotton. This firm, founded in India in millowners, for they early adopted pat­ The new possibilities for economic 1859 understood the potential market terns of mutual assistance. Ranchhod- growth came to a people ready for for machinery and made special sales lal especially seems to have helped investment. Justice Ranade suggested efforts to overcome the reluctance of those who followed his example. That investors to try new machinery. Dur­ that the West Coast of India was more he presided over the opening of every sober, more practical, and more cau­ ing and after the era of great profits new Ahmedabad mill until he died in cotton, from 1861-65, they esta­ tious than other regions of the coun­ suggests a pattern of cooperation try. These qualities, valuable in busi­ blished themselves as the foremost im­ rather than of competition. In the port agency for textile machinery. ness, were especially prevalent in the new endeavour the owners had many traditional bania groups. The Gazet­ common interests and problems. With By 1891, thirty years after the teer describes them as "prudent, sober, a large market, they had little to fear opening of the first mill, Ahmedabad quiet, forbearing, and inoffensive . .. and much to gain from cooperation. had a total of nine mills. The bania curiously thrifty in every-day life''. Among the first of their new organiza­ community had entered the industrial Their Vaishnava and Jain traditions, tions came the Swadeshi Udyam field. Modernized transportation and as Max Weber has pointed out, help­ Vardhak Mandali in 1876. Following communication facilities had been ed foster such characteristics. Their the advice of Ranade, industrialists introduced. Education was spreading. standard of trade morality, though in led by Ambalal Sakarlal, Premabhai Institutions for financing ana manag­ some decline, was traditionally high. Himabhai, and Ranchhodlal founded ing the mills had been developed. A similar judgment would probably this organization to promote the use Channels for obtaining machinery and be made by most people today, 4 of indigenous manufactures. for recruiting personnel from, Eng- though in an era when the goal is a land had been opened. "socialistic pattern of society'', the Managing Agency System phrasing might be quite different. For financing and managing the tex­ Period of Rapid Growth Among the first problems of the tile mills, the managing agency system, The fifteen years from 1891 to ' 905 new industry was the development of introduced by the British, took root. saw two major developments in the financial and managerial institutions Under this system, the investors in a Ahmedabad industry: extremely rapid for the mills. Of the new instruments mill contracted with a group of pro­ growth and the establishment of the which evolved, some came from the fessional managers to pay a commis­ institutions that mark a sizable in­ historic traditions of Gujarati business sion in return for their management dustry. The number of mills rose and some were adopted from British and financial services. Usually at least from nine to thirty-two. Spindleage policies. one member of the agency was an im­ increased from about 2 lakhs to 5.77 Although they knew little if any­ portant share-holder in the mill. In lakhs. Looms rose from about 2,500 thing about machinery, the shroffs, Ahmedabad especially, the agents once to about 7,200. The number of through their experience in money employed, usually held the rights of workers tripled from about 7,500 to lending and cotton trading especially, management hereditarily and in per­ about 21,500. Ahmedabad's capacity 485 March 13, 1965 THE ECONOMIC WEEKLY

grew at almost twice the rate of all preneurs. In contrast to their fore­ Bhagubhai, he founded the Aryodaya India growth, and by 1905, Ahmeda- most position in Bombay, they never Spinning Mills in 1892 in partnership bad mill facilities were about 15 per played art important role in the finan­ with Balabhai Damodardas. The cent at the country's total. cier-dominated Anmedabad arena. By Mangaldas pattern of a boy with a the time that Tata founded the first good education working in a mill As important as the physical growth Parse mill in Anmedabad in 1903, the office and gaining recognition from the was me psychological and institu­ imancy of the industry had passed. owner' who then helped him to start tional change. In 1891, the Mill- on his own was a common experience owners' Association of Anmedabad Problems of Industrial Labour while the industry was in this forma­ was founded with Ranchhoalal as first tive stage. Relatively small, close-knit president. Bombay had established such Another Parsi nun which met with agencies, often supplemented by caste an organization in 1875 to represent less success was begun by Sorabjee D ties made this possible. the interests of the miliowners and Karaka to weave fine cloth from im- Anmedabad was now following suit. portea Briusn yarns. Its failure nelped Mangaldas' partner, Balabhai Damo- In 1894, the Anmedabad stock ex- demonstrate the hold of the British on tiaraas Shodhan, was, like htm, a cnange was founded. Investment in the spinning and weaving market in Vaisnnava bania. His father was a cotton mills was booming and local fine counts above 24s. clerk to a shroff and had arranged to trade could now support a local nar- In the early years of this period get cotton market quotations from ket. The Anmedabad began to face the problems New York and London. These he sup replaced the Bombay market as an of industrial labour. Strikes were pileo to various local merchants. For instrument for meeting the capital numerous. In 1893 every mill in the this work he won the family name of needs of the local mills. Tne investi­ city was snut down by strikes. "Shodnan", which translates approxi­ gation into the possibilities of dredging Workers even attacked Ranchnodlal's mately as "entrepreneur" or "innova­ the Sabarmatt River and opening a house. The working conditions in tor". Balabhai also served in Ran- channel to the Gulf of Cambay, further textile mins had been investigated and cnnodlat's mill as a store clerk. Once indicated that, the mliowners recogniz­ legislation regarding women and child gaining control of one mill, he expand­ ed their common interests. labour had been passed in 1881 and ed to more, first in co-operation with 1891. Although some claimed chat ins brother and then with his son. As Among the managing agency firms, these investigations resulted from managing agent, he applied the profits commissions based on sales generally pressures from Lancashire to drive up of one mill to the capital requirements replaced the system of commissions Indian prices by increasing the cost or of new ones. Also, like other agents, based on production. The 1927 Indian labour, the investigations showed he solicited public and private deposits: Tariff Board Report on textiles noted conditions in the mills to be intoler­ to cover the major capital require­ that this change took place generally able. The working day ran as long as ments and depended on stocks for only in 1895 and was almost completed fifteen nours and men, women, and about one third of his capital. around 1917. It indicated greater chiIdren shabbily treated. The increas­ responsibility on me part of the agents. By 1905, the textile industry of ing size of! the industry spread these Anmedabad had developed an organi­ conditions and they festered. Come to Anmedabad zational and institutional framework, Its systems of finance and management Ahmedabad still trailed behind Three Families were firm. It was developing and at­ Bombay, remaining a regional or na­ Among the families which opened tempting to cope with the problems of tional, rather than international centre. new mills in this period, three were a sizable industry. Labour strikes It had no training institute like Bom­ to become most important in the foreign competition, and tariff policies bay's Victoria Jubilee. It had far future, and each came from a some were becoming vital. Most important fewer mills. It carried on little inter­ what different background. Lalbhat of ail,, textiles had become a respect­ national trade. By the turn of the Dalpatbhai, who opened the able and profitable investment. As century, however, when the Indian Mill in 1897, was a wealthy and ortno- Anmedabad traditionally had a climate National Congress and the Bombay dox Jain bania whose education went which favoured business, it now had a industrialists led the fight against the up to matriculation. Lalbhai was a climate which specifically favoured British free trade policy, Ahmedabad's prominent financier who probably textiles. The early examples, the business leaders and newspapers lent entered the mill industry as just one cnances of working in the mill offices, their voices to the protest. The local new investment. On it his son Kastur- and the backing of experienced men economic sensitivity to national politi­ bhai was to build his fortune. invited and furthered expansion. cal questions which would motivate MangaIdas Girdhardas Parekh's father Anmedabad during the twentieth cen­ tury began to appear fifteen years be­ was a poor clerk who saved his money, Between 1905 and the beginning of fore the arrival of Gandhi. went to Bombay and entered the cotton trade. With two friends he began to World War II, growth in the Anmeda­ New kinds of firms were opened. In trade on the international market, but bad industry proceeded rapidly. The 1899, the firm of Ardeshir D Wadia, with little capital and often improfit­ Swadeshi movement, the needs of with Motilal Hiralal, began as engi­ ably. In the same, year that Mangaldas World War I, the first protective tariff, neers, contractors, and manufacturers passed his matriculation, however, his peaceful labour-management agree; of cotton gins as well as other indus­ tat her executed a highly successful ments, and, above all, the confidence trial machinery. The firm had good international cotton transaction and inspired by Gandhi brought very success. From a capital of Rs 25,000 began to prosper. Mangaldas took a favourable conditions. New techno­ at the beginning, it expanded to Rs 4 job as store clerk at Ranchhodlal's logical and managerial pioneering m lakhs by 1917. Thus Parsis finally first mill. With the financial backing well as the entrance of yet more fami­ entered Anmedabad industry as entre' of Ranehhodlai and Mansukhbhai lies into textiles marked the .'period.

486 THE ECONOMIC WEEKLY March 13, 1965

Swadeshi, the nationalist movement employed an additional 20,000 workers management, one of Ahmedabad's diffi­ to support domestic manufactures, per day. culties continued to be conservatism, gave a necessary and tremendous boost The Indian Tariff Board reports on the to the textile industry everywhere in Gandhi's Contribution textile industry in 1927 and 1932 prais­ India. Breaking forth in Bengal as a As Gandhi helped Ahmedabad to ed the Ahmedabad methods of finance reaction to the partition of 1905, prosper even during years of general through the deposit system and through swadeshi included two schemes: a depression, so he insured labour peace large investments by the agency firm, boycott of British imports and an em­ during years of general unrest. Ahmeaa- but noted that while encouraging phasis on the use of domestically pro­ bad had earlier had the experience of honesty and careful attention to fin­ duced goods. This joint action at once labour violence and in 1918 when a ance, such practices also encouraged exerted pressure on British business general strike broke out to protest conservatism. In some plants, at least, interests to change their government's against the elimination of a "plagae bonus the traditions of conservative financial policies in regard to India, and pro­ bonus", violence threatened again. backing inhibited progressiva innova­ moted the growth of indigenous in­ Gandhi, however, exercising his per­ tion. dustry. While Bengalis tended to em­ sonal influence and fasting to locus Paradoxically, as conservatism crip­ phasize the political importance of the attention on the issue, brought together pled some firms, the new pioneering campaigns, the Gujaratis saw swadeshi Ambaial Sarabhai representing the efforts of other Ahmedabad mills, as economically profitable. India was millowners and his sister, Anasuyaoen especially Calico Mills, brought wiiling to sacrifice better quality in Sarabhai, representing the workers. Ahmedabad to the forefront of the order to create a strong home indus­ Their settlement began a new tradition Indian industry. Ambaial Sarabhai, as try; Ahmetiabadis seized the opportu of peaceful labour relations and equable chief managing agent and great-grand­ nity. The number of nulls in Ahmeda- settlements arranged out of court. son of the founder of the company, bad jumped from 32 in June 1905 to Emerging from the workers' new-found introduced the innovations. Although 52 in June 1910. Spinoleage rose from strength and Gandhi's leadership, the personally reticent and aloof, Sarabhai 577,166 to 917,590, and loomage from Textile Labour Association, generally has a reputation for being progressive, 7197 to 15,526. To run these plants considered India's most effective labour businesslike, anxious to exploit new the number of workers increased from union, was born. Anmedabau had ideas, and with his amazingly accomp­ 21,585 to 30,013. further strikes, until the general one lished family, highly cultured. That in 1923, but almost all were short and he has left and that he, as When the first swadeshi drive had none were violent. Since 1923 no many people say, "does not oelieve in slackened, in 1915, Mohandas Kararu- strikes have occurred.6, A general feel­ charity", evoke a variety of comments. ehand Gandhi came to live in Ahmeda­ ing of harmony obtained between In fact, Ambaial has given considerable bad, bringing with him a new era or labour and management. growth. As ne later aid for all of sums of money to educational and cul­ India, Gandhi introduced new expecta­ Tariff reform helped the industry. tural institutions in Ahmedanad and tions, possibilities, and goals. He too. In 1919 me throughout India. His support for continued the swadeshi drives and was granted financial responsibility, Gandhi's ashram at the time the most important for business, he ins­ and in 1922 it instituted the first Mahaima was scorned for admitting pired a high morale and confidence in protective tariff since 1894. Protecting nanjans is legendary. the furture. the vast; home market for Indian manu­ factures did much to save the textile Pace-Setting Innovator industry from the ravages of the world­ Profits of War When Sarabhai was about five years wide depression between the Wars, old, in 1894, his father died. He was At the same time, World War 1 What swadeshi had attempted to do raised by his uncle, Chimanlal. Nagm- brought profits so great that in 1917 by voluntary measures, the Govern­ ctas. Subsequently, Chimanlal's death the Government imposed an excess ment could now effect through the forced Ambaial to leave Gujarat Col­ profits tax. Wartime snipping snon- tariff. In the protected markets, lege and to enter the textile industry. ages, although depriving India of Anmedabad began to push expansion At about the age of twenty he found foreign markets, also rid her of com of cloth production through a rapid himself the managing director of both petition at home. The mills of Ahmeda­ 7 increase in loom facilities. the Cailco Mills and its sister concern, bad, including those that had just been Jubilee Mills. In the 1918 strike when built in the first swadeshi campaign Conservatism, a Continuing Problem he was but 29 years old, he served as boomed. Although growth marked this period, representative of the Ahmedabad Mill- failures came, too. Even with the The end of the war generally owners Association. In 1922 he de­ help of a protective tariff, foreign brought cut-backs and depression, but monstrated that he was as interested manufacturers as well as the carefully not to Ahmedabad. Here, beginning in pace-selling experimentation as he managed Indian mills could undersell in 1921, Gandhi was leading furtner was in adding to his fortune. Despite the products of inefficient mills. By nation-wide swadeshi drives. Many of dissuation from friends, he pioneered comparison with the war years when the millowners tell of the effect of his finer count spinning in India and profits came to almost all, the post spirit in impressing on them the im­ found quick and impressive success. war years brought more limited re­ portance of a strong Indian economy. Calico began spinning counts even up turns. While the greater number of Despite Gandhi's general opposition to to 140s and led the way to recaptur­ mills prospered, others were sold, machine industry, his work in Ahmeda­ ing from Lancashire the fine yam and liquidated, or closed down. Among bad is credited as one of the driving cloth market of India, From that them was Ranehhodlars original Shah- spirits behind the growth which be­ time on, Ahmedabad turned to pro­ pur Mill. tween 1920 and 1930 added 21 mills, ducing fine cloth. Today that is its 600,000 spindles, 16,000 looms, and Apart from the possibility of mis- forte. 487 March 13, 1965 THE ECONOMIC WEEKLY

In addition to pioneering new pro­ out India. In times of famine he has there and in India. The Sarabhai- ducts and qualities in India, Sarabhai served on relief committees and has Patel agreement began in a joint in­ wanted to replace British managerial himself travelled on foot through vestment in an East African cotton and technical personnel, the mainstay striken villages. He has been an im­ trading concern. Sarabhai was the of the upper echelons, with Indian portant representative to and for 'he principal financier and the Patels held men. He began a programme to Government of India on tariff and a financial interest and served as attract the brightest of college gradu­ textile questions. During periods of managers. When the Patels returned ates regardless of their fields of study. Hindu-Muslim rioting in Ahmedabad from Africa, they jused their pronts to For one or two years he put them he led movements of reconciliation, purchase the Mill in 1943. under the tutelage of his British em­ even at physical risk to himself. ployees and within two years he began Ahmedabadis today generally regard Marriages Strengthen Links the change-over. Sarabhai's plan for him as the final authority on charity, Marriages among the leading mill future Indianization of the mills was municipal matters and industrial poli­ families strengthened the links between a success. cies. In patterns reminiscent of the them. One of Ambalai Sarabhai's sons old nagarsheths and of Ranchhodlal married a niece of Kasturbhai; one of To the present day Sarabhai has in his day, Kasturbhai stands pro- his daughters married the son of continued to employ pace-setting n- eminent in Ahmedabad. Mangaldas Girdhardas Parckin An­ novations. He introduced the first other marriage united the Snodhan plant in India for producing sewing Changed Priorities and Mangaldas families, early partners thread (1922) and diamond mesh in textile entrepreneurship. Socially mosquito netting (1937). At Calico Other millowners also continued to expand their control. The various as well as economically the new class he has installed automatic loom sheds consolidated itself. and has completely air-conditioned branches of the Shodhan, Mangaldas, both the spinning and the weaving Hiralal, and Hirabhai families all ad­ The successful and expanding indus­ sheds. In collaboration with the Tavi­ ded to their textile holdings. Those try also attracted new families. In stock Corporation of London, Calico who had come to textiles from snarafri 1913, Bhikhabhai Jivabhai Patei, born in a farming family and serving as a has worked out programmes for pro­ businesses now found that their priority school teacher, founded a small power per group relations for management of interests had changed : industry weaving factory. In 1917 he expanded and labour teams.'' came first, sharaffi finances and trad­ ing second. Generally the old families the plant and in 1928, despite a damaging flood, he pooled his resources Expansion Along Family Lines who did not invest in textiles, or who invested unwisely, dropped sharply in and opened a new and successful com­ As Sarabhai experimented with importance as the wealth of the tex- posite spinning and weaving mil, the modernized methods of production, tile magnates rose to prominence. The New Rajpur Mill. was demonstrating family of Premabhai Himabhai Nagar- Another Patel from the Kaira dis­ that a business could profitably expand sheth, for example, which had received trict, a caste renowned for their along family lines. In building his the honour of consideration as the success in education, government textile chain to seven mills, he promot­ most prominent business family in the service, and business, Khiushakias ed three mills for the benefit of the city, declined in importance and was Gokuldas Patel of , having sons of his three married sisters. Yet superseded by the new leading fami­ studied up to Matriculation, came to while he expanded his holdings to lies. Also at this time the family of Ahmedabad and found a bank job in create places for his relatives, he was Ranchhodlal left the textile field and 1871. Through the years his position also hiring top-level management for his family fortune, too, diminished in and income grew and in 1914 he and his mills on the basis of merit. After importance. The Becherdas family, his son acquired control of the Hima­ learning the working of the mill, these whose one mill grew but little, liuflet- bhai Mill. Finding this profitable, men often succeeded to the highest ed the same fate. they extended their control to two positions of management, either with more mills in 1925. Kasturbhai or with other millowners In the leading circles of Ahmeda­ who, desiring such highly trained men, bad millowners, personal relations be­ In 1920, the two Marsden brothers, lured them with higher pay. came closer. This led to some forms Bon and Charles, promoted the Mars­ of co-operation among the mills. Since den Mill and, following its success, Kasturbhai seemed intent on coupl­ the market seemed always large added the Monogram Mill in 1927. ing the virtues of family controlled enough, millowners and managers These were the only mills in Ahmeda­ business — quick, unified decision helped one another to open new enter­ bad ever controlled by Englishmen. making, trusted personnel to oversee prises. For example, two cotton trad­ The brothers had come to India, Ben expansion - with the best of open ing families with much experience in in 1907 and Charles in 1916, to serve business practices — personnel chosen Africa, the Patel family, which today as weaving masters. In promoting on the basis of talent. controls the Asarwa mills, and the their own mill, they experienced diffi­ Indicative of the value system among Parikh family, which purchased the culties in finance, the default of a the millowners has been Kasturbhai''' Jupiter mill in 1935, were assisted by British company in supplying machi­ rise to prominence. Not to be over­ the Sarabhais and the Mafatlais (of nery, and the resignation of three of looked is the sheer fact of his wealth Bombay), respectively. Mafatlal-Parikh the directors. In 1921, however, they and the lakhs of rupees of charity he co-operation began with the personal found in Manilal Mulchand a financier has given. Like many millowners he friendship of Mafatlal with Ins chief and helper and the mill began to observes religious prescriptions, and engineer, Bapalal. Through this friend­ succeed. In the early 'fifties, the he serves as president of the Anandji ship, Mafatlal decided to help his Marsdens returned to England, selling Kalyanji, an institution which looks relatives enter cotton trading in Africa out their interests to the grandchildren after Jain temples and shrines through' and later open a mill industry both of Mulchand.

488 THE ECONOMIC WEEKLY March 13, 1965

Modern Management nity to new textile centres to grow, longer sufficient, to meet the complex Apart from new families buying and the surplus areas were forbidden to needs of industry. ATIRA primarily serving as agents for textile mills, jobs expand their facilities. The Govern­ carries on applied scientific research, within the mills opened for new per­ ment also felt that with existing but it also does work in quality con­ sonnel. High-level executive jobs were capacity, these centres could increase trol within the mills and holds occa­ available to new men, unrelated 'to the production by 25 per cent. In fact, pro­ sional conferences on management agents by family or caste. The grow­ duction has risen and technical im­ techniques. It opened with a capital ing sophistication of the mills required provements have been instituted, but of Rs 71 lakhs, of which Rs 19 lakhs increasingly skilled personnel, regard­ the limitation on expansion has damp­ were given by the Central Government. less of caste, Sarahhai's recruitment ened many spirits. In October 1963, Today it encompasses 88 mills, includ­ policies especially favoured well quati- the order was relaxed to permit ex­ ing many from outside the city. More lied college graduates. Such people pansion up to 10 per cent, but suffi­ active in training for management is today serve as important executive cient figures are not yet available to the three year old Indian Instrtute of managers in the Sarabhai and Kastur- evaluate the effect of the new policy. Management in Ahmedabad. Support­ bhai enterprises and, in lesser positions, Diversification of Chemicals ed jointly by the Government of India, in other Ahmedabad mills as well.10 Forbidden expansion, the leading the , the Ford They now take part in entrepreneurial managing agencies have sought, divtisi- Foundation, the millowners, and the decisions. fication, primarily in the chemical Harvard School of Business, it pro­ industry. Kasturbhai, who had already vides degree and certificate clashes in Among the young men who came, business administration. many broke with caste occupational founded the Anil Starch company in traditions. Some had worked in the 1939 and had followed it with the Fears About the Future civil disobedience movements and now Amrit Chemical Company, and the Since World War If, the Ahmedabad found the traditional government jobs dye manufacturing plant, now industry seems to face the future with closed to them. Some were sound made arrangements with American mixed feelings. The stronger mills, Indian Brahmins escaping the growing Cyanamid and Ciba of Switzerland to especially, look to a bright future. anu-Brahmin prejudice in their home begin chemical and drug production, The days of struggling for establish­ regions. Some consciously wanted to Sarabhai, in 1947, opened a plant in ment are past. They thrive and prospei try a new field. More documentation Ahmedabad to manufacture caustic with the finest mills in the world. is needed, but conversations with a few soda, chlorine, and related chemicals. Their reputations are internanal. of the present day managers in the He, too, contacted foreign chemical Mill management is no longer a part- Ahmedabad mills indicate that in the companies and continued to build in time, small-scale enterprise, it requires managerial positions in the mills, this held. His plants in Bombay a«id training, skill, and effort. Those un­ traditional occupational patterns began Baroda make him one of India's most willing or unable to supply these in­ to break down. important drug manufacturers. gredients suffer. The ATIRA, the Ahmedabad Tex­ Finally, to minds trained in terms Renovation and Modernisation tile Industry Research Association, of private enterprise, the government's Since 1933 no new mills have come was established in 1947. The mill regulating policies seem threatening. to Ahmedabad. The last years beJoie industry regards it as a symbol of a Especially since the death of Saruar the war were years of world-wide de­ new age of science in industry. It Patel, the great champion of business, pression that did not favour expansion. provides some of the training, educa­ and the estrangement of Morarji The war itself brought a boom with tion, and research which are today Desai both from Congress and from unparalled profits, but restrictions on necessary for pioneering development. the business communities, Ahmeda- material needed for the war effort pre­ In the construction of ATIRA, as in bad's millowners feel unrepresented cluded the construction of new facili­ the increasing quality of the education and at a disadvantage. Many managing ties. ihey are insuring for their own child­ agents seem uncertain of the indepen­ The war years saw also ;he conti­ ren, the millowners indicate that dence and stability of private enter nuation of Congress' struggle for inde- money and perspicacity alone are no prise in India. This feeling, they say, pendence. In this struggle the Ahm­ Table : Size of the Ahmedabad Textile Industry edabad industry helped with funus and workers, and in 1942, during the "Quit India" movement, with a three month voluntary shutdown of all of Ahmedabad's mills. The influence of Gandhi remained strong in the city. Following the war, the promts that had accumulated were free for invest­ ment in new equipment and machi­ nery. Many mills took this opportu nity to renovate and modernize. In 1947, however, the Government of independent India issued a new policy Source: Figures from the Bombay Millowners Association. ending the possibility for expansion. 1 Figures here refer to the number of mills. The number of mill coin - Ahmedabad, Bombay, and certain other panies is somewhat less, because some companies hold two mills, eg, centres were declared surplus areas in in 1964 sixty-two companies owned 72 mills. textiles. In order to favour the hand- 2 After 1960 the figures include workers on all shifts. Prior to that loom industry and to give an opportu­ time they include only the first shift.

489 THE ECONOMIC WEEKLY March 13, 1965 studied maths. Kind as well as cannot but affect their plans for their stockholders. " See A K Rice : "Productivity and brilliant, he has been most help­ own mills. Within this framework, ful to me. Chandraprasad Desai, Ahmedabad's present executive must Social Organization : The Ahm­ edabad Experiment", London, general manager of Kasrurbhai's work and plan their innovations'. lor Tavistock Publications, 1958. textile concerns, was hired out of the future. 10 S A Kher, general manager of law school in 1932. Expansive Appendix Sarabhai's textile concerns, was and brilliant, he has been kind in Mill holdings by religion and caste . hired in 1928, following his return giving me much time and assist­ Today, of Ahmedabad's 62 mill com­ from Cambridge where he had ance. panies, eight are held by Patels. ten by Jains, two by Marwari , one by a Jain-Vaishnava partnership, and the rest by Vaishnava banias. In many cases, more than one mill is controlled by the same man or the same family. I include Sarnbhai among the Jains though he disavows the reli­ gion, for I have followed the family tradition regardless of the present attitude. The two Marwari compiles are controlled from offices in Calcutta, one by the enormous Birla industrial empire, the other by Kanoria Co, Ltd. Notes 1 Although the basic minimum pay with dearness allowance is about Rs 150, the average pay is Rs 181. Tins figure is supplied by H G Acharya, the Secretary of the Ahmedabad Millowners' Association. Acharya seems to have encyclopedic know­ ledge of The Ahmedabad textile in­ dustry. He has been a kind and helpful adviser in the preparation of this paper, S D Mehta, "The Cotton Mills of India 1854 to 1954' The Textile Association 1954, p 24. K L Gillian of the Australian Na­ tional University, who is preparing a history of nineteenth century Ahmedabad, found the records of this scheme in the Bombay records office and brought it to my atten­ tion. ' Government of Bombay, "Source Material for a History of the Free­ dom Movement in India," v 2, p 605. '- From conversations with Nandas- bhai Haridas, managing agent of Vijaya Mills and Sachin Chaudhuri, editor of The Economic Weekly. 6 In 1964, the City of Ahmedabad had a general strike, but the issue concerned rising food prices rather than any textile mill issue, 7 Bombay had done this earlier in response to the loss of the Far Eastern yarn market. Ahmeda­ bad, never very active in foreign trade, found her motivation in home market conditions. ' Information on Calico's pioneering activities is available in a booklet prepared by the mill, evidently for

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