THE RISE OF THE BRITISH MANAGING AGENCIES IN NORTH EASTERN INDIA 1836-1918 M. G. Manton. School of Oriental and African Studies MPhil ProQuest Number: 10672984 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a com plete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. uest ProQuest 10672984 Published by ProQuest LLC(2017). Copyright of the Dissertation is held by the Author. All rights reserved. This work is protected against unauthorized copying under Title 17, United States C ode Microform Edition © ProQuest LLC. ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 ABSTRACT OF THESIS This thesis takes as its subject the foundation and rise to commercial power of the British Managing Agencies in Calcutta in the nineteenth and early twentieth centuries. As private partnerships they initiated and controlled a substantial body of commercial, industrial and agricultural concerns, in transport, coal, jute, financial services and, importantly, in tea. This topic has been largely ignored by other business historians, who have preferred to study the Managing Agencies’ eventual decline and extinction during the following half- century. However, it is equally instructive to examine the health and vigour that propelled young businesses towards the power and prosperity which blossomed before 1914. The thesis examines in some detail five Managing Agencies and the individual entrepreneurs who founded and ran them, necessarily selected according to the availability and usefulness of primary sources but providing a reasonably representative range of characteristics and business activities. In the course of this examination the thesis also examines the industries in which they were particularly engaged-jute, transport, tea, coal and indigo. However the insistence of Indian nationalist historians on the privileged position of British business rather than the merits of its performance which has suggested the issues which the thesis particularly examines: the degree of commercial skill possessed by British incomers; the impact of imported British technical innovation, notably steam power and mechanised jute textile production; the possibility that British commercial interests colluded to erect barriers to entry for Indian entrepreneurs; the importance of access (possibly preferential) to British investment capital and bank finance; the extent of preferential support from the imperial government; the absence of competitive Indian entrepreneurial activity before 1914. 2 CONTENTS Page INTRODUCTION 4 Chapter 1: GILLANDERS ARBUTHNOT & CO. 29 a privileged and well-funded Gladstone dynasty, with major interests in jute but a wide field of operation. Chapter 2: MACKINNON, MACKENZIE & CO. 57 From relatively humble beginnings, a few individuals built a new business which grew to include an important shipping line. Chapter 3: BIRD & CO 94 Also from relatively humble beginnings, with no specialist skills, a major business was built. Chapter 4: THE TEA INDUSTRY 115 A new development for India, created by Britons and the British Managing Agencies (notably Williamson Magor), which became a major asset to the national economy. Chapter 5: JAMES FINLAY & CO. 141 The impact on Indian commerce of a mature and well-funded Scottish business, which developed major interests in tea and jute, and suffered from the fatal decline of indigo. CONCLUSIONS 182 BIBLIOGRAPHY 201 INTRODUCTION The Managing Agency institution This thesis takes as its subject the foundation and rise to commercial power of the British Managing Agencies in Calcutta in the nineteenth and early twentieth centuries. As private partnerships they initiated and controlled a substantial body of commercial, industrial and agricultural concerns, in transport, coal, jute, financial services and, importantly, in tea. Maria Misra summarised the position: "By the late nineteenth century there were about sixty significant managing agency houses, of which a dozen had capital assets of between £100,000 and £2 million. Most British private direct investment in India in the colonial period was represented by the Managing Agencies, and by 1914 they controlled capital of over £200 million in India."1 If there were sixty such firms, each with an average of four partners, it is indeed remarkable that fewer than 250 mainly Scottish entrepreneurs were collectively responsible for generating such growth. This invites an exploration of the factors which contributed to their achievement: those personal qualities which made them entrepreneurs; the context of a rapidly developing commercial and technological environment; the apparent lack of indigenous competition. This topic has been largely ignored by other business historians, who have preferred to study the Managing Agencies' eventual decline and extinction during the following half-century. Maria Misra is one such, and more substantially B. R. Tomlinson has returned to the subject of "decolonisation" several times.2 It is as though a forensic dissection to find the cause of death is seen as more instructive than an examination of the health and vigour that propelled young businesses towards the power and prosperity which blossomed before 1914. 1 Maria Misra, Business, Race and Politics in British India c. 1850-1960, Oxford, 1999, pp. 3- 4. 2 B. R. Tomlinson,The Political Economy of the Raj: the Economics of Decolonisation 1914- 1947, London, 1979; 'Colonial Firms and the Decline of Colonialism in Eastern India 1914-1947', Modern Asian Studies 15, 3 (1981), pp. 455-86; 'British Business in India 1860- 1970/ in R. P. T. Davenport-Hines and Geoffrey Jones [eds],British Business in Asia since 1860, Cambridge, 1989; The Economy of Modern India: 1860-1970, Cambridge, 1993. Although most of them were started in the mid-nineteenth century it was not until 1936 that the Managing Agency achieved a legal definition: "a person, firm or company entitled to the management of the whole affairs of a company by virtue of an agreement with the company and under the control and direction of the directors except to the extent, if any, otherwise provided for in the agreement and includes any person, firm or company occupying such position by whatever name called".3 What this meant in practice was that a Managing Agency effectively had total control of the managed company, with the shareholders exercising no more than nominal authority. Mostly the firms started very modestly with two partners and perhaps an. assistant, as a conventional agency house (what would be called an import/ export agency today). They traded opportunistically in a wide variety of goods. For example, Finlay's, a substantial Scottish concern and to that extent atypical, opened their Calcutta branch office relatively late, in 1870, and it exported raw cotton, imported cotton piece-goods, and to a lesser extent coal, iron and other metals. Shellac, hides, vegetable wax, buffalo horns, rice, yam, silk, jute and gunnies were shipped with varying success while salt, beer and wine were imported.4 To these functions the agencies soon came to add the promotion of new enterprise, forming companies, drumming up investments, investing some of their own money and, most lucratively, providing management services on very long contract. In north-east India they promoted tea estates, jute mills, coal mines, shipping lines, flour mills, paper mills, cement factories, engineering and construction concerns and even ice factories. In the twentieth century there were also Managing Agencies operating in western India, mainly in the cotton industry, but here the British were much less successful in gaining a substantial foothold, and after a few false starts they left the field to Indian business. The exception was Finlays', who managed three cotton mills in the West in the twentieth century. 3 In the Amending Act of 1936, amending the Companies Act of 1913, cited in Lokanathan, The Managing Agency System, p. 19. 4 [James Finlay & Co.]James Finlay & Company Limited: Manufacturers and East India Merchants 1750-1950, Glasgow, 1951, p. 90. 5 R. S. Rungta provides a useful table of companies founded or existing in Calcutta in the early days between 1817-1850: Managing Agents Bengal Bonded Warehouse 1838 Association Calcutta Docking Company 1830 Rustomji Cowasji Steam Tug Association 1837 Carr, Tagore & Co. Union Steam Tug Association 1850 Apcar & Co Eastern Steam Navigation Co 1848 Benares & Mirzapore Steam Co 1847 Calcutta Steam Terry Bridge Co 1839 Carr, Tagore & Co. P &0 Steam Navigation Co (reg in 1840 UK) India General Steam Navigation Co 18441844 Carr, Tagore & Co Bengal Coal Company 18205 Carr, Tagore & Co Sylhet Coal Company 1847 Bengal Indigo Company 1848 Assam Company (reg in UK) 1839 Bowreah Cotton Mills 1817/18 New Fortgloster Mills Co 18486 Notably no British Managing Agencies were listed as operating then. The pioneering enterprise of Dwarkanath Tagore and his British partners in Carr, Tagore, founded in 1834, set out a blueprint7 for Managing Agency practice in 1836 when they promoted the formation of the joint stock Calcutta Steam Tug Association and assumed its management.8 This pattern, deliberately or not, was followed closely for as long as the system survived, including the opportunities for playing both ends against the middle where interdependent companies were under the same management. The history of the rise and fall of Tagore's remarkable business is brilliantly detailed by Blair B. Kling9, and its fall undoubtedly cast a long shadow over the decade following the failure of the 5 Rungta derived this date from E. J. C Stewarf s Facts and Documents relating to the Affairs of the Union Bank of Calcutta, Appendix E, Calcutta, 1848, but Kling (see footnote 10) states that Naraincory Proprietors, creditors of Gilmore and Company, "in 1843 .. .joined with Carr, Tagore and Company to form a joint-stock association, the Bengal Coal Company, which remained under the management of Carr, Tagore and Company." 6 R.