¹ Bagchi, A. K., Private Investment in India 1900–1939 (Cambridge, 1972), p. 166.CrossRefGoogle Scholar

² The remark quoted was used by the All-India Manufacturers' Organization in 1944 and is cited in ibid., p. 166.

³ Ray, R. K., Industrialization in India: Growth and Conflict in the Corporate Private Sector 1914–47 (Delhi, 1979), esp. pp. 356–8.Google Scholar

⁴ Ibid., pp. 13–14, 36, 357–8. Dr Ray claims support for his argument from a work by Gurtoo, D. H. N., India's Balance of Payments (1920–1960) (Delhi, 1960), which concludes that there was a ‘sudden, massive and persistent withdrawal of capital from India' in the 1930s (p. 96). Unfortunately, Gurtoo's case for private foreign investment is based on a comparison of G. D. Birla's estimate of Rs 585 crores in 1929 (Economic Journal September 1932) with B. R. Shenoy's estimate of Rs 565 crores in 1939 (Eastern Economist October and November 1945) (Note: one crore is ten million, usually written 1,00,00,000). Gurtoo assumes that these two estimates are comparable because they use much the same categorization of investment types (p. 100); however, if Shenoy's estimates are read carefully it is clear that this assumption is not valid. Shenoy, although dating his survey at 1939, was in fact using averages of earlier estimates with no allowance for the passage of time. His figures for capital of rupee companies registered in India and for capital invested in partnerships and private firms in 1939 are derived from comparisons between various estimates made in 1929–30.Google Scholar Shenoy's aim was to provide a more accurate alternative to Birla's estimate, not a later comparison with it (see Banerji, A. K., India's Balace of Payments 1921–1922 to 1938–1939 9London, 1961), pp. 161–9.Google Scholar

The only modern estimate of private foreign investment is that made by Dr Banerji in the work just cited. He puts the figure for foreign private investment in trade and industry at Rs 302 crores in 1921 and Rs 413 crores in 1938 (pp. 171, 175, 183), His figures for rupee investments controlled by the expatriate sector (based on issued shares and debentures) suggest declines in such investment between 1921 and 1938 (in Rs crores) in jute mills (-2.53), engineering (+3.32), tea plantations (+2.04), railways (+0.74), sugar mills (+9.14) and miscellaneous enterpriese (+0.72). Overall, he estimates a rise in British-held rupee investments from Rs 139.36 crores in 1921 to Rs 155.33 crores in 1938 (pp. 101, 125, 210–23). Dr Banerji also estimates that the dividends paid by Indian companies in which British capital was invested were higher, on average, than the returns on investments made in the United Kingdom (p. 87).

⁵ The best example of this trend is the partnership between Gillanders Arbuthnot, a Calcutta-based expatriate group, and Goodlass Wall, a British manufacturing group, in establishing subsidiary companies in India to manufacture paint and chemicals. Other similar cases are the alliance of Octavius Steel with G.E.C., Turner Morrison with Pinchin Johnson, and Barry & Co. with Jensen & Nicholson. In all these cases the expatriate group contributed some capital and management skills (see Tomlinson, B. R., ‘Foreign Private Investment in India 1920–1950’, in Modern Asian Studies, 12.4 (1978), Appendix II).Google Scholar

⁶ See Mehta, M. M., Structure of Indian Industries (Bombay, 1961), p. 333.Google Scholar

⁷ According to the breakdown in Mehta, Structure, pp. 346–7, of the companies managed by 17 leading expatriate managing agency companies (most of which were based in Calcutta), 80 per cent had been in jute, coal and tea in 1911, 66 per cent in 1931 and 64 per cent in 1951. There was some expansion in other fields, 63 new companies being established outside jute, coal, tea and cotton between 1911 and 1931, and a further 18 between 1931 and 1951. Companies in these peripheral fields represented 32 per cent of the total managed in 1931 and 35 per cent in 1951, as against 17 per cent in 1911. Yet a comparison with Indian managing agency houses seems to demonstrate a lack of adventurousness among the expatriates. Of companies managed by the three leading Indian managing agencies in 1911, none were in jute, coal or tea; only one company was managed in these fields in 1931 and only three in 1951. The Indian houses had much more extensive interests in cotton and, increasingly, in other sectors of the economy. In contrast to the expatriates, the great period of expansion for the Indian houses was in 1931–51 rather than in 1911–31. In 1911 the Indian houses had managed six firms, four in cotton and two other; in 1931 they managed 19 firms, one in jute, 10 in cotton and eight other; by 1951 they managed 88 firms, 72 of which were outside the old staple industries. Whereas the expatriates had expanded outside their core in the 1910s and 1920s, before the benefits of tariff protection had had much effect on the process of import-substitution, the Indian managing agencies boomed in the 1930s and 1940s, profiting from protection and the war economy, and establishing 63 firms outside the traditional sectors, as against only 18 established by the expatriates.Google Scholar

⁸ Ray, Industrialization, p. 356.Google Scholar

⁹ Estimates of the profitability of Indian industries in our period are very difficult. The only comprehensive series is the index numbers calculated by the Economic Advisor to the Government of India for 1928–42, with 1928 as base (see Subramanian, S. and Homfrey, P. W. R., Recent Social and Economic Trends in India (Delhi, 1946), Table XVII; reproduced, with a number of major errors of transposition, in Ray, Industrialization, Table 15). This index shows that jute profits fell sharply between 1928 and 1930, reaching 9% of their 1928 level in 1931, and then did not recover to 40% of their 1928 level until 1940 (in 1938 there was an average loss). Profits in tea recovered faster, but on averages losses were made in 1931 and 1932. Profits in coal were more buoyant than those in jute, but even so regularly exceeded their 1928 level only after 1938. By contrast, profits in sugar boomed from 1931 onwards, reaching 250% of their 1928 level in 1932 and 1933, while profits in paper were virtually unaffected by the slump and regularly passed their 1928 level from 1933. The shortcoming of these figures is that they do not provide comparisons of relative profitability for the base year. General evidence from the Investors' India Yearbook and the annual Review of the Trade of India suggests that in 1928 tea, coal and sugar were not particularly profitable compared to earlier years, while returns in jute and paper were relatively good. The detailed analyses of working of various companies available in the Investors' India Yearbook for 1928–29 indicate that average gross profits, as a percentage of paid-up capital, for 47 jute mills in 1928 was 43%; for coal the average figure for 68 mines was 13%, although 18 of the mines made a loss; for 3 paper mills the average profit was 7.6% of paid up capital, and for 4 sugar mills 7.5%.Google Scholar

Overall, the performance of coal mines in the 1920s was mixed. While large mines with good machinery paid good dividends for most of the decade, about half the coal companies at work paid no dividends at all in the 1920s (see Buchanan, D. H., The Development of Capitalist Enterprise in India (New York, 1934), pp. 266–7).Google Scholar There is evidence that the jute industry was strikingly profitable in the fifteen years after 1915, allegedly earning 90% p.a. on its capital between 1915 and 1924 according to two Dundee labour leaders—not, perhaps, the most dispassionate of analysts. Buchanan concluded that ‘it is doubtful if any other group of factories in the world paid such handsome profits between 1915 and 1929’, although he stressed that individual cases sometimes went against the trend (ibid., pp. 252–3). It is only fair to say that the evidence available at present is so sketchy that it could equally well be used to argue that the expatriate firms refrained from expansion into new lines because their traditional activities were so very profitable in the 1920s, as that they failed to diversify because their traditional activities were so unprofitable in the 1930s.

Finally, it is worth nothing that the three staple expatriate industries—coal, jute and tea—had been subject to periodic over-production since the late nineteenth century.

¹⁰ Timberg, T. A., ‘The Rise of Marwari Merchants as Industrial Entrepreneurs to 1930’ (Ph.D. thesis, Harvard University, 1972), pp. 235–6, quoted in Ray, Industrialization, p. 286.Google Scholar

¹¹ Timberg, T. A., ‘A Study of a “Great” Marwari Firm: 1860–1914’ in Indian Economic and Social History Review, VIII (1971), p. 265.Google Scholar

¹² Dr Timberg is strangely uninterested in making comparisons with the expatriates: the question which he is trying to answer is why Marwari entrepreneurs were so much more successful than other Indian groups, especially the Bengalis.Google Scholar

One wider comparison should also be discussed here. Some economic historians of Japan are fond of pointing to what is thought to be the unique structure of Japanese trade and industry—the zaibatsu firms—as a major factor in Japanese economic growth in the late nineteenth and early twentieth centuries. The major zaibatsu (Mitsui, Mitsubishi, Sumitomo and Yasuda) rose to prominence in the 1920s; their strength is thought to have been a well-integrated institutional structure capable of combining trade, industry and finance and able to branch out into several fields at once. As Prof. Rosovsky has stressed: ‘They provided a low-income Japan with the possibility of exploiting scale economies, and their diversification permitted what Lockwood has called “combined investment”—i.e. the simultaneous development of complementary industries. Zaibatsu also economised what must have been a scarce factor, i.e. individuals capable of running modern businesses; and through the operation of their affiliated banks they were most adept at mobilising scarce capital resources. Given that the issue of that day—as now—was growth rather than economic democracy, there developed in Japan a certain kind of “bigness” which was unacceptable elsewhere but quite suitable in this setting’. Rosovsky, H., ‘What are the “Lessons” of Japanese Economic History?’ in Youngson, A. J. (ed.), Economic Development in the Long Run (London, 1972), p. 241.Google Scholar

But it is worth asking just how unique the zaibatsu system was, at least in these respects. If one were looking around the world of 1914, or even of 1929, for comparisons with it, the expatriate firms of British India would seem to fill the bill exactly. They, too, had achieved vertical and horizontal integrations that allowed them to indulge in ‘combined investment’; they, too, had linked trade and finance with industry; they, too, economized on management skills through the managing agency system. In fact, in 1914, the sector of the Indian economy that operated on modern business lines could be said to have been more zaibatsu dominated than was the Japanese one. And yet the expatriate firms of India declined, relatively and absolutely, at the same time as the Japanese zaibatsu that imitated their structure so closely were rising.

¹³ Timberg, T. A., ‘The Origins of Marwari Industrialists’ in Beech, R. and Beech, M. J. (eds), Bengal: Change and Continuity (Michigan State University, Asian Studies Center, South Asian Series Occasional Papers no. 16, mimeo.), p. 151.Google Scholar

¹⁴ Ray, Industrialization, pp. 278–9.Google Scholar

¹⁵ See Tomlinson, B. R., The Political Economy of the Raj: the Economics of Decolonization in India 1914–1947 (London, 1979), p. 43.Google Scholar

¹⁶ See The Gazetteer of India Volume III: Economic Structure and Activities (New Delhi, 1975), p. 474. The three mills whose dividends were surveyed by Buchanan—Budge Budge, Fort Gloster and Gourepore—paid dividends amounting to 215%, 180% and 300% of capital stock in 1918; 110%, 150% and 220% in 1919 and 132.5%, 200% and 250% in 1920 (see Buchanan, Capitalist Enterprise, p. 252).Google Scholar

¹⁷ For evidence of repatriation see the many accusations made by Indian businessmen and politicians about rupee exchange policy in 1919–20 being determined to aid the transfer of expatriate resources to Britain. For a case of reinvestment, see the case of Bird-Heilger's ‘war baby’ companies below.

The balance of payments data available do not enable an accurate estimate of actual repatriation in individual years to be made. Dr Banerji assumes that all dividends paid by Indian rupee and sterling companies were repatriated; this gives him, on the basis of a calculated dividend series, a total figure of Rs 299.6 crores for repatriated profits for 1921–38, which can then be set against the total of Rs 111 crores worth of new private foreign investment in the same period (see Banerji, India's Balance of Payments, pp. 86, 171 and 175: this figure for private foreign investment differs from that given in ibid., Table XI, p. 183, because capital invested in corporations and Native State loans has been excluded). However, all these figures are based on so many untestable assumptions, and are at such a high level of generalization, that it would be unwise to make too much of them.

¹⁸ According to Bagchi's figures, real investment in the jute industry (based on machinery imports at constant prices) averaged Rs 1.41 crores p.a. between 1920–21 and 1924–25 (Rs 3.89 crores p.a. at current prices), as against an average of Rs 1.2 crores p.a. (Rs 1.98 crores p.a. at current prices) in 1908–09 to 1913–14, and an average of Rs 0.84 crores p.a. (Rs 1.58 crores p.a. at current prices) in 1924–25 to 1928–29. Imports of jute machinery accounted for 11% of the total current value of all imports of machinery into India in 1920–21 to 1924–25, and 36% of the total value at 1904 prices (see Bagchi, Private Investment, pp. 80, 273).Google Scholar

¹⁹ For the latest contribution see Ray, Industrialization, pp. 228–30.Google Scholar

²⁰ Rosen, G., Some Aspects of Industrial Finance in India (Glencoe, 1962), pp. 42, 53.Google Scholar

²¹ Thus Buchanan remarks of coal companies in the 1920s that ‘the principal source of capital has been the trading community of Calcutta, especially the firms of managing agents' (Buchanan, Capitalist Enterprise p. 267). Bagchi makes the same point about jute: ‘Capital for most of the mills came from investors resident in India.… A large proportion of the initial capital probably came from the managing agents themselves. Some companies also found practically all the money needed for working capital in this way.…’ (Bagchi, Private Investment p. 275.)Google Scholar

²² Hazari, R. K., The Corporate Private Sector (New Delhi, 1966), p. 117. One lakh is one hundred thousand, usually written 1,00,000.Google Scholar

²³ I am grateful to Sir Paul Benthall for permission to consult his brother's papers.Google Scholar

²⁴ This account is drawn from Ray, Industrialization, pp. 268ff, which relies on the company history, Harrison, G., Bird & Co. of Calcutta: A History Produced to Mark the Firm's Centenary 1864–1964 (Calcutta, 1964, privately printed). ‘Birds’ is used in this article as a convenient title for the whole group.Google Scholar

²⁵ See unsigned note ‘Re. Accounts and Finance Department’ of 15.4.41 in Benthall Papers (henceforth BP) XVI, and advertisement in Investors' India Yearbook 1938–9. In terms of size of capital, jute trading and manufacturing overshadowed everything else, next came the coal mines, with Titaghur Paper Mills coming not far behind the entire coal group; other manufacturing interests were small by comparison (see Ray, Industrialization, pp. 270–1).Google Scholar

²⁶ See E. C. Benthall to Sir George Godfrey of 21.11.31 in BP VII and E. C. Benthall to P. H. Browne of 12.11.31 in BP II. The internal correspondence of Birds' partners is riddled with nicknames and initials; for the sake of convenience these have been replaced in the references by surnames.Google Scholar

²⁷ G. B. Morton to E. C. Benthall of 22.7.41 in BP XV.Google Scholar

²⁸ Diary Entry 24.1.29 in BP VII. Benthall went on to note that in this case he would keep the ‘master hand’ himself.Google Scholar

²⁹ E. C. Benthall to J. A. McKerrow of 29.6.37 in BP XI: a marginal note states that this had been the policy at TPM for some time.Google Scholar

³⁰ See P. J. Grigg to H. V. Hodson of 24.1.39 in Grigg Papers file 2/11, quoted in Tomlinson, Political Economy, p. 53.Google Scholar

³¹ Ray, Industrialization, pp. 270–1.Google Scholar

³² E. C. Benthall to G. B. Morton of 22.2.41 in BP XVI.Google Scholar

³³ See for example Bagchi, Private Investment, pp. 263–4, 267–9; Ray, R. K., ‘The Crisis of Bengal Agriculture 1870–1920—the Dynamics of Immobility’ in Indian Economic and Social History Review, x (1973), pp. 244–94;CrossRefGoogle Scholar and Mukherji, S., ‘Imperialism through a Mercantilist Function’, in Essays in Honour of Prof. s. C. Sarkar (New Delhi, 1976), p. 731.Google Scholar

³⁴ Thus, as Bagchi notes of the period 1914–29, ‘the mills on the Hooghly had practically a captive supply of jute, and they also were monopolists as far as jute manufactures were concerned’ (Private Investment, pp. 275–6).Google Scholar

³⁵ Exports of raw and manufactured jute represented on average over 50% of the exports of Indian merchandise from Calcutta in the 1920s, and about 25% of India's total merchandise exports.Google Scholar

³⁶ See Investors' India Yearbook 1925–6, pp. 183–4.Google Scholar

³⁷ See Ray, ‘Bengal Agriculture’, pp. 260–5. Timberg, on the other hand, notes that ‘by 1915 we read: “A large share of the sea-borne and inland trade of Calcutta was in the hands of Marwari merchants”’ (Origins, p. 163).Google Scholar

³⁸ M. P. Thomas to E. C. Benthall of 4.12.28 in BP I. The Investors' India Yearbook noted in 1926–27 that ‘growers have realized that a crop of over 100 locs means poor prices and are in consequence holding up jute which they are storing in the villages in peels’ (p. 182).Google Scholar

³⁹ ‘In the internal trade in jute, the Europeans were the dominant element as soon as one left the villages’ according to Bagchi (Private Investment, p. 265).Google Scholar

⁴⁰ See ibid., p. 278 and fn. 45.

⁴¹ See E. C. Benthall to Sir George Godfrey of 15.5.29 in BP VII: ‘Since I see no possibility of stopping the existing phutka we might as well acknowledge the fact and try to get one in which we can safely and openly deal’.Google Scholar

⁴² Diary Entries 10.2.29, 19.2.29, 7.3.29 and E. C. Benthall to Sir George Godfrey of 15.5.29 in BP VII.Google Scholar

⁴³ E. C. Benthall to Sir George Godfrey of 15.5.29 in BP VII.Google Scholar

⁴⁴ See ‘Note as to a basis of discussion between Sir E. C. Benthall and Bird & Co. (London) Ltd.’ of 25.6.35 and unsigned comment on this of 27.6.35 in BP X. The most successful Indian firms were Cotton Agents (Birla Bros.), Nagarmull, Tolaram, Lohia and Ramjeedas.Google Scholar

⁴⁵ See G. B. Morton to E. C. Benthall of 23.8.35 in BP X.Google Scholar

⁴⁶ In 1932 the spokesman of the expatriate-dominated Calcutta Jute Dealers' Association complained that the growth of the futka market had meant that European mills could no longer obtain jute at an acceptable price. While Indian merchants took note of the futures market in offering rates for up-country jute, the expatriates did not, basing their rates solely on an estimate of expected demand and supply within the IJMA restriction scheme (see Bagchi, Private Investment, pp. 283–4).Google Scholar

⁴⁷ This account is based on ibid., pp. 280–3 and the excellent annual summaries in the Investors' India Yearbook.

⁴⁸ ‘Government intervention in the jute trade’, memorandum by E. C. Benthall of 29.6.35 in BP V.Google Scholar

⁴⁹ The Government of India estimated that in 1935 production of jute manufactures in India was somewhat below its pre-war level, while the number of mills had increased by 60%, the number of spindles by 60% and the number of looms by 90%. See ‘Memorandum re the question of controlling the output of manufactured jute in Bengal’ enclosed with Addl. Secy. Government of Bengal (Finance, Commerce and Marine Department) to Secretary Indian Jute Mills Association no. 8775 of 12.3.35 in BP V.Google Scholar

⁵⁰ ‘Government intervention in the jute trade’, loc. cit. BP V.Google Scholar

⁵¹ Memorandum by B. M. Birla, enclosed with letter to E. C. Benthall of 14.3.34 in BP X. It is interesting to compare this estimate of initial capital required to found a jute mill in 1934 with Bagchi's estimate (see Private Investment pp. 264, 274) that the minimum investment needed for a viable jute mill in the period 1910–23 was over Rs 2 million. On Bagchi's figures for 1923 a mill of 100 looms would have cost Rs 16 lakhs for machinery alone, and Rs 27.5 lakhs overall. Thus the 300 loom Associated mill such as Birla refers to could represent an investment of almost 50 times the new one capable of equal output under the IJMA scheme.Google Scholar

⁵² Investors' India Yearbook 1928–9, p. 183.Google Scholar

⁵³ Memorandum by G. B. Morton of 22.8.35 in BP X.Google Scholar

⁵⁴ See ibid. and E. C. Benthall to Mr Campbell of 26.6.35 in BP X.

⁵⁵ ‘Government intervention in the jute trade’ loc. cit. BP V.Google Scholar

⁵⁶ On this last point, New Delhi commented, ‘…the Government of India cannot overlook the fact that if they agreed to restrict production for jute manufacturers those engaged in other industries could claim similar assistance. There are very few industries in which potential production is not greatly in excess of actual demand, and in which a measure of protection from internal competition would not result in temporary benefit to the capitalists concerned.’ ‘Memorandum re the question of controlling the output of manufactured jute in Bengal’ loc. cit. BP V. In 1932 the Government of India had refused to become involved in imposing a restriction scheme for jute because of fears of being sucked into the position of regulating the internal economy too closely. The idea of using labour legislation to prevent non-Association mills working longer hours had been specifically ruled out of consideration. See Government of India Finance Department file 17(65)F of 1932 (NAI).Google Scholar

⁵⁷ ‘Government intervention in the jute trade’ loc. cit. BP V.Google Scholar

⁵⁸ This account is based on papers in BP VI. Perin's plans came to nothing.Google Scholar

⁵⁹ J. B. Sanklatvala to E. C. Benthall of 1.9.35 in BP VI.Google Scholar

⁶⁰ See A. R. Dalal to H. P. Bennett of 16.10.35, E. C. Benthall to J. A. McKerrow of 19.10.35, Biren Mukherjee to J. B. Sanklatvala of 16.10.35 and ‘Aide Memoire’ by J. A. McKerrow of 23.8.35 in BP VI.Google Scholar

⁶¹ Telegram Sanklatvala to Benthall 13.11.35 in BP VI.Google Scholar

⁶² See Note by E. C. Benthall 26.3.37; S. A. Roberts to H. P. Bennett 1.4.37; telegram Birds (Calcutta) to Birds (London) of 10.5.37 in BP XI; E. C. Benthall to S. A. Roberts of 19.9.37 in BP XIII and E. C. Benthall to S. A. Roberts of 8.11.37 in BP XIV.Google Scholar

⁶³ E. C. Benthall to J. A. McKerrow of 19.10.35 in BP VI. Norman was an important figure because the Bank of England was heavily involved in providing finance for the British iron and steel industry.Google Scholar

⁶⁴ ‘Memorandum of Discussion with Sir Andrew Duncan 1.11.35’ by E. C. Benthall in BP VI.Google Scholar

⁶⁵ E. C. Benthall to J. A. McKerrow of 28.11.35 in BP VI.Google Scholar

⁶⁶ J. A. McKerrow to E. C. Benthall of 23.8.35 in BP VI.Google Scholar

⁶⁷ E. C. Benthall to J. A. McKerrow of 3.10.35 and 28.11.35 in BP VI.Google Scholar

⁶⁸ It was increased by the practice of rival groups of shareholders hiring attorneys to represent them at shareholders' meetings. In Bombay often the only people who attended such meetings were the rival advocates hired by each side (see E. C. Benthall to Sir George Godfrey of 15.5.29 in BP VII).Google Scholar

⁶⁹ As Benthall wrote to his brother Paul in 1941 of the Orissa Mineral Development Corporation, ‘it has in the past been a great advantage that in this Company we have been able to avoid interference from the shareholders. We have in consequence been able to build it up into its strong financial position.’ E. C. Benthall to A. P. Benthall of 5.10.41 in BP XV.Google Scholar

⁷⁰ See correspondence in BP XV.Google Scholar

⁷¹ Diary entry 10.9.29 in BP VII.Google Scholar

⁷² E. C. Benthall to A. P. Benthall of 24.8.41 in BP XV.Google Scholar

⁷³ ‘Memorandum on shares held in Birds Companies by subsidiaries’, enclosed with A. P. Benthall to E. C. Benthall of 28.10.37 in BP XIV. This meant, of course, that the companies had to be run in such a way as to please the shareholders who had given proxy powers to the managing agents.Google Scholar

⁷⁴ See listings for these companies in Investors' India Yearbook 1938–9. By 1938 General Investment had a capital of Rs 2.5 lakhs and investments worth Rs 3.4 lakhs, while Investment and Finance had a capital of Rs 4.5 lakhs with investments worth Rs 7.5 lakhs. Sir Edward Benthall, and his brother Paul, were also involved in several other investment companies, notably the New India Investment Corporation. This company, founded in 1936 with a capital of Rs 23 lakhs, had an Indian majority on the board and an Indian firm of company secretaries. The directors included E. C. Benthall, Sir Badridas Goenka (Chairman) and G. D. Birla. It was Benthall's ‘firm friendship’ with Goenka that had got him involved in this (see E. C. Benthall to A. P. Benthall of 15.12.37 in BP XIV).Google Scholar

⁷⁵ See Birds Investments Ltd balance sheet for 30.9.37 and ‘Memorandum on shares held in Birds Companies by subsidiaries’ in BP XIV. The balance sheet gives only the number of shares held, not their worth.Google Scholar

⁷⁶ By the 1950s all the investment companies had become a very important source of intercorporate investment and control (see Hazari, Corporate Private Sector, pp. 118–9, 131–2).Google Scholar

⁷⁷ ibid., p. 119.

⁷⁸ ‘Memorandum on shares held in Birds Companies by subsidiaries’ loc. cit. in BP XIV.Google Scholar

⁷⁹ H. P. Bennett of the London office was a trustee, but could be outvoted by the other executors. It is worth noting that the terms of Lord Cable's will laid an obligation on his successors to continue in business in India, and thus the alternative of repatriation of diversification was not open to them.Google Scholar

⁸⁰ See E. C. Benthall to A. P. Benthall of 24.8.41 in BP XV: E. C. Benthall to G. B. Morton of 17.8.41 and G. B. Morton to E. C. Benthall of 8.12.41 in BP XVIII.Google Scholar

⁸¹ G. B. Morton to E. C. Benthall of 8.12.41 in BP XVIII.Google Scholar

⁸² In 1948 the managing agency of Clive Mills was transferred to Shree Krishna Investment Co. Ltd.Google Scholar

⁸³ Minutes of Partners' Meeting of 3.1.41. in BP XVIII.Google Scholar

⁸⁴ E. C. Benthall to A. P. Benthall of 25.1.41 and E. C. Benthall to G. B. Morton of 9.11.41 in BP XV.Google Scholar

⁸⁵ G. B. Morton to E. C. Benthall of 22.7.41 in BP XV.Google Scholar

⁸⁶ In 1941 Benthall saw the worst future as being simply that ‘we are… at the end of an era in capitalist organisation and as time goes on we shall be less and less able to build up our resources out of profits as in the past’ (see E. C. Benthall to A. P. Benthall of 25.1.41 in BP XVI).Google Scholar

⁸⁷ Diary entry 3.6.45 in BP VII.Google Scholar

⁸⁸ Diary entry 30.4.44 in BP VII.Google Scholar

⁸⁹ In the 1920s Birds had been anxious to preserve an Indian shareholding in Titaghur Paper Mills (preferably a holding by G. D. Birla) to aid the case for a tariff. By the late 1930s, however, the firm wanted no extension of protection as this would encourage new units of production which would threaten TPM's established market (see Diary entry 29.6.30 in BP VII and J. A. McKerrow to E. C. Benthall of 23.11.37 in BP XIV). TPM relied heavily on government purchases of paper to give an assured market and the company operated a ring for tendering with the other established paper manufacturers, Indian Paper and Pulp Co. and Bengal Paper Mills. When, in 1928, a new Indian company, the Punjab Pulp and Paper Mills, received a contract from the Punjab Government before it had even started production, Birds considered an appeal to the Commerce Member of the Government of India (see E. S. Tarlton to E. C. Benthall of 15.12.28 in BP I). However this did not prove necessary as the Punjab mill closed down after nine months.Google Scholar

⁹⁰ ‘Memorandum of conversation with Mr Gandhi on 29.9.31 at 4, Deanery Street’ by E. C. Benthall in BP II. This, of course, was advocacy, but then much of the evidence on which the opposite case of collusion between bureaucrats and expatriates to inhibit the growth of Indian industry is based is also advocacy. It seems as unwise to try to write the history of Indian industry in the twentieth century on the basis of the evidence given by aspiring industrialists to the Banking Enquiry Commission and the Tariff Boards as it would be to try to write the political history of the same period on the basis of the evidence given by aspiring politicians to the Indian Statutory Commission. Yet such evidence forms the basis of existing analyses of Indian industrial (under)development.Google Scholar

⁹¹ Apart from more weighty considerations, it is doubtful how many business historians would themselves pass the ‘whelk-stall’ test.Google Scholar

⁹² Thus there was a crisis in the running of TPM in 1928–29 when Indian directors wanted higher dividends while the expatriate managing agents wanted increased investment. Benthall advised that an attempt be made to coerce the directors, ‘as we can then at a future date make it clear to the Tariff Board that we made repeated efforts to get our directors to raise fresh capital and tackle the job properly but that they refused’ (E. C. Benthall to E. S. Tarlton of 1.11.29 in BP I).Google Scholar

⁹³ See especially ‘Note of conversation with F. P. Pudamjee 31.7.35’ in BP X. In general it seems to be very important to find out a great deal more about the distribution and sales aspects of Indian industrialization.Google Scholar

⁹⁴ For another, although rather different, example of the relations between the ‘organized’ and ‘unorganized’ business sectors in India, see Gordon, A. D. D., Businessmen and Politics: Rising Nationalism and a Modernising Economy in Bombay 1918–1933 (New Delhi, 1978), Ch. 3.Google Scholar

⁹⁵ Links between manufacturers and distributors, and the development of selling networks, seem to be an especially important subject. There is evidence, for example, that one reason why Birds did not go into cement manufacture through the Bisra Limestone Co. in the late 1930s was because they were being paid generously by Indian manufacturers to remain a selling agency alone (see S. A. Roberts to R. E. Alexander of 20.7.37 in BP XIII).Google Scholar

⁹⁶ A useful recent summary of the literature on theories of entrepreneurship and the nature of the firm is provided in Hopkins, A. G., ‘Innovation in a Colonial Context’ in Dewey, C. J. and Hopkins, A. G. (eds), The Imperial Impact: Studies in the Economic History of Africa and India (London, 1978), p. 83–7. What seems to be necessary in these terms for the study of Indian entrepreneurship is to remain close to Gerschenkron's position of the importance of changes in the structure of economic opportunities in determining the emergence of entrepreneurs, but to analyse the nature of these opportunities in something other than neo-classical terms. This is, of course, what Bagchi has tried to do, but he has not taken the individual firm as the basic unit of analysis. Indeed, in his Private Investment in India, he seems to have virtually no interest in particular circumstances at all.Google Scholar