'Business Culture' and Entrepreneurship in British India, 1860-1950

Author(s): A.-M. Misra

Source: Modern Asian Studies, Vol. 34, No. 2 (May, 2000), pp. 333-348
Published by: Cambridge University Press
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Modern Asian Studies 34, 2 (2000), pp. 333-348. ? 00oo Cambridge University Press
Printed in the United Kingdom

'Business Culture' and Entrepreneurship in

British India, 1860-I950

A.-M. MISRA

In the late nineteenth century British expatriate enterprise enjoyed

extraordinary success. A few large firms effectively dominated the

external trading sector and the modern industrial economy of

Eastern India. Based in Calcutta, these firms have been credited with
the introduction into India not only of modern industry, but also of
modern corporate organization.' However, having reached a peak of
dominance in the early 1900s, British enterprise seemed to lose its

dynamism and became increasingly associated with the old and

declining sectors of the Indian industrial and trading economy.

For historians of the raj the causes of this are still the subject of
lively debate. Explanations fall into two broad categories: the first
and more conventional view suggests that after the First World War
British business in India was subject to serious disadvantages owing

to the political uncertainty of the period and the consequent

weakening of British business privilege.2 The second view is that in

the peculiar economic conditions of inter-war India, Indian entrepreneurs found themselves better placed to exploit business, and par-

ticularly manufacturing opportunities, than did British entrepreneurs. The first view, which attributes expatriate business success to
privileges granted by an imperial government has been seriously

undermined. Recent research has called into question the raj's

alleged bias in favour of British business; it now seems clear that the

government of India had its own financial priorities and had little

' This was the view of D. H. Buchanan in The Development of Capitalistic Enterprise

in India (New York, 1924); but is now disputed. For an overview of the debate see
R. K. Ray's Introduction, in R. K Ray (ed.), Entrepreneurship and Industry in India,

18oo-1947 (New Delhi, 1992).

2 A. K. Bagchi, Private Investment in India 900oo-939 (Cambridge, 1972), pp. 16570; M. Kidron, Foreign Investment in India (Oxford, 1974), PP. 35-40.

oo26-749X/oo/$7.50+$o. 1o
333
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334

A.-M.

MISRA

interest in promoting specific

decline of the raj had relativ
Moreover, the inevitability of

been

obvious

whereas

British

to

expatriate

firms

were

bein

itors in industrial innovation and rates of investment from the late

192os.4 The second view, that changes in the nature of the world
economy led to the decline of British business is more convincing:
the new multinational type of enterprise was much more suited to
industries where large-scale investment of capital and organizational
complexity were required. British expatriate firms, with their antiquated structures, were unable to adapt to these new circumstances.5
However, we are still left with the problem of why it was mainly
British companies which failed to make the transition to multidivisional, modern industry. Some Indian enterprises, which had
been almost exclusively mercantile, smallscale, family firms, transformed themselves into pioneers of advanced and heavy industry.6
British expatriate firms, however, did not adapt in this way even
though they had considerable advantages. They may not have had an
intimate knowledge of Indian markets, but they had the advantage of

extensive contacts in the European and North American economies.7

This should have enabled them to use foreign technology, capital
and co-operation to establish a competitive advantage over Indian
firms also attempting to move into modern industry. So why, then,

was their strategy so different? This article will argue that although
the impact of economic and political change was important, a central
reason for the difference between the fate of British and Indian

enterprise lies in their diverse attitudes towards business activity

their self-image as businessmen: what might be called their 'busine

culture'.

' B. R. Tomlinson, 'India and the British Empire, 1880-1935', in Indian Economic
and Social History Review, vol. XII, no. 4 (1975), PP. 338-77; 'India and the British
Empire, 1935-1947', IESHR, vol. XIII, no. 3 (1976), pp. 331-49.
4 B. R. Tomlinson, 'Colonial Firms and the Decline of Colonialism in Eastern
India 1900-1914', Modern Asian Studies, 15(3), 1981, pp. 455-86.
5 This view is presented in B. R. Tomlinson, 'Foreign Private investment in India,
1920-1950', Modern Asian Studies, 12(4), 1978, pp. 655-77.
6 For detailed case studies of this process see T. Timberg, Industrial Entrepreneurship Among the Trading Communities of India (Princeton, 1969); D. Tripathi, Business
Houses in Western India (Ahmedabad, 1990).
7 M. D. Morris, 'South Asian Entrepreneurship and the Rashomon Effect, 18oo1947', Explorations in Economic History, 16 (1979), PP. 341-6 1.

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'BUSINESS CULTURE' IN BRITISH INDIA 335

This argument will be pursued by analysing the busin

a group of British managing agency houses active in

late nineteenth and early twentieth centuries and showing

affected decision-making. The article will then briefly co

ish attitudes to business with those of J. N. Tata, the

heavy industry magnate, to demonstrate some of the
between Indian and British approaches to business inno
early twentieth century.8

II

The British Managing Agency Houses rose to prominence in India

after the Mutiny, although some of them had links with the original

independent merchant enterprises that displaced the East India

Company in the late eighteenth and early nineteenth centuries.'
Most of these firms were founded by Scots of not particularly high
social status with a background in trade or agriculture and they continued to recruit heavily from Scotland throughout the period.'0 By
the end of the century they were involved in a wide range of indus-

trial and commercial activities, from jute manufacturing, coal

mining and transport to insurance, banking and the provision of
agency services for manufacturers based in Britain. There were
about sixty significant Managing Agency Houses and about a dozen
dominant ones. In 1915 almost half the total employment in industry
in India was provided by these kinds of firms."

8 This paper is based on the papers of the Gillanders, Arbuthnot firm, which are

part of the Gladstone family archive at Hawarden; the Benthall papers at the
Centre of South Asian Studies, Cambridge (Benthall was the senior partner of Bird
and Co); the Inchcape papers at Guildhall, London; the James Finlay company
papers held by Glasgow University, and the Thomas Duff and Co. papers held by

Dundee University. All of these archives consist primarily of partners' correspondence and are, therefore, remarkably frank about the reasons and motives determining decision-making in these firms.
9 For a detailed account of the origins and development of the British Managing
Agency houses see P. S. Lokanathan, Industrial Organization in India (London, 1935),
and R. K. Nigam, Managing Agents in India (New Delhi, 1957). For a recent view of
their significance in the Indian economy see B. R. Tomlinson, The Economy of Modern

India, 186o--z97o (Cambridge, 1993), pp. 116-20o.

0o S. Jones, Two Centuries of Overseas Trading: The Origins and Growth of the Inchcape
Group (London, 1986), pp. 1-37; and her Merchants of the Raj: British Managing Agents
in Calcutta Yesterday and Today (London, 1992).
" Lokanathan, Industrial Organization, p. 62.

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336 A.-M. MISRA

These firms had an unusual struct

modern holding companies which, althou

themselves, controlled a large number

panies in which they had only small s
made their money not through investm
by providing a range of managerial, f
protected by long-term legal contracts
did make in the companies were prima
legal management contracts. So, for ex
Co. controlled assets of ?1.5m, even th
at that time was worth less than ?o.5m
The precipitate decline of the Manag
the inter-war period suggests, however,

advantage of the opportunities offered

ment in the thirty years before indepe
opportunities was demonstrated by th
entrepreneurs and the success ofJapan

even of multi-national companies ba

The managing agencies, however, failed

diversify into the expanding, new indust

ing up in India after the First World W

steel, chemicals, construction, transpor
Tomlinson has argued that the reason
aging agencies lacked capital, but this i
firms themselves clearly did not regard

a common theme among British witn

Commission in 1916 that there was no
As one said: 'I have never experienced a
difficulties are very rare.' Similarly,
both Gillanders, Arbuthnot and Co. an

they were overwhelmed with offers of c

The attitudes of these businessmen sug

lack of capital which deterred firms fro

their deeply-held beliefs about the nat

12 R. K. Hazari, The Corporate Private Sector (N

13 B. R. Tomlinson, 'British Business in India

and G. Jones, Business in Asia since i86o (Lond
" Evidence of W. Ironside, Report of the Indi

(Cmnd. 5107, 1919).

'5 A. G. Gladstone to T. Gladstone, 23.5.46, G

G. Harrison, A History of Bird and Co. of Calcut

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'BUSINESS CULTURE' IN BRITISH INDIA 337

large sums necessary to invest in modern industries w

involved turning their private firms into public limited compa

would have diluted the partners' capital holdings and theref

autonomy and control over the future of the firm.
These businessmen's commitment to the small, partnersh
and the consequent reluctance to expand was not the produ
influence of a prevailing aristocratic culture, the wish to
leisured or politically active life of a landed gentleman, n
necessarily hostile to industry in itself, as some historians
gested;'6 it was part of a more general attachment to a par

individualistic set of attitudes towards business." The central con-

cern of these businessmen was to maintain full personal control over

their firms: they insisted on having room for manoeuvre and preferred, therefore, to spread their risks across a wide range of activities; they refused to tie themselves or their capital down in long-term
projects and took a short-term view of profit; they wanted to be able
to seize any business opportunity and move capital quickly in order
to take advantage of new ventures. This meant that they spread risk
across a large number of ventures to conserve capital, and insisted
on maintaining control of those ventures in which they invested so
that they could withdraw capital rapidly in response to changes in
market conditions.

This business strategy placed a high value on the gut instinct of

the individual entrepreneur, or the 'business brain' as these businessmen described it;'" hence they disliked having to rely on complex

and time-consuming technical advice. Entrepreneurs of this kind

tended to have a rather romantic approach to the way business was
done, a belief that business should be exciting and bucaneering,
rewarding energetic individualists and eschewing the cold bureaucratism, allegedly characteristic of the large-scale, hierarchical and
professionally managed corporation which was becoming common,
particularly in the United States.'" British business in the raj therefore found the merchant partnership form of the Managing Agency
'6 M. Weiner, English Culture and the Decline of the Industrial Spirit (Cambridge,

1985), pp. 127-54.

"7 It has recently been suggested that an exceptionally individualistic approach

to business among British entrepreneurs may help to explain the loss of dynamism
in the British economy in the twentieth century. See W. Lazonick, Business Organization and the Myth of the Market Economy (Cambridge, 1991), pp. 25-7.
18 Ironside, evidence, Report of the Indian Industrial Commission.
'9 A. ChandlerJnr, Strategy and Structure: Chapters in the History of the American Indus-

trial Enterprise (Cambridge, Mass, 1962).

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338 A.-M. MISRA

House an ideal vehicle for the translation of this 'business culture'

into practice. Frequently businessmen made conscious decisions not

to diversify or innovate because innovation would have come into

conflict with these values.

This set of attitudes seemed to derive, to some extent, from

these businesses' early mercantile origins. An individualistic and

adventurous approach had been appropriate before the Indian

Mutiny, when British business in India was mainly involved in
financing export and import trade, and business was conducted by
a series of rather unstable partnerships in which the only source
of capital had been the personal wealth of individual partners.20
Yet the attitudes of these businessmen suggests that these values
continued to be influential when they no longer had any strong
economic rationale and the Managing Agency Houses had become
much larger and more stable. The overriding concern of the managing agents was with managerial autonomy and absolute control,
even though this strategy restricted the amount of capital they

could raise. Henry Gladstone, of Gillanders, Arbuthnot and Co.

admitted as much when he objected to the possibility of changing
the status and structure of the company in 1927, arguing: 'I can't
help feeling that we may find the restrictions of a joint stock
company rather irksome. A private partnership is so absolutely
master in its own house.'21 Bird & Co. showed a similar overriding
concern with autonomy when offered the opportunity to go into a
joint venture in the promising Indian steel industry in 1935. In
order to mobilize the capital required to join this venture it was
suggested to Edward Benthall, the senior partner in the firm, that
Birds should become a public limited company. He was adamant

that this should not happen, saying: 'Once the public are con-

cerned with the firms we all believe that their disintegration will
not be long delayed. We are strongly opposed to such a step if it
can be avoided by any practical means.'22

There were several similar new opportunities for Gillanders

Arbuthnot in engineering and steel ventures, again requiring high

expenditure of capital which could have been easily raised by turning

Gillanders, Arbuthnot and Co. into a public limited company. In the

mid-1920s this strategy would also have had considerable tax advant20 A.-M. Misra, 'Entrepreneurial Decline and the End of Empire', (Oxford Univ.
D.Phil. thesis, 1992), p. 22.
21 H. Gladstone to A. Gladstone, 31.3.27, Glynne-Gladstone MSS, file 259422 E. Benthall toJ. McKerrow, 28.11.35, Benthall MSS, box 6.

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'BUSINESS CULTURE' IN BRITISH INDIA 339

ages for the individual partners. Yet, again the senior par

Gladstone, rejected the idea, saying that he wished to

company as a private partnership; as he emphatically

me that is not a matter of pounds, shillings and pence. W

care not to impede the safe and smooth running of t

hasty and unwise changes.'23
It is clear, then, that although these companies were a
business opportunities, and could see that they would
they placed a higher value on maintaining their exclusive
autonomy within their private firms. They therefore cho
remain in old and clearly stagnating businesses, such
coal, which required less capital. The partners were oft
the maintenance of control was at the expense of inn
diversification. Edward Benthall, writing in 1928, admi
strategy was inhibiting the development of the business a
capital was used to buy protective shareholdings in the co
already managed in order to maintain control and by
others from buying shares in the firm; as he explain
forward and constructive policy is out of reach. Our m
keep things going, to avoid serious mistakes and increa
holdings'.24 This refusal to open up shareholding inevi
miserly attitude to the use of capital and companies form
rules governing the amount of capital which could be inve

enterprise. So Lord Inchcape, senior partner in th

agency, operated a rule before the First World War th

sound business to invest more than ?1io,ooo in any ind
ture.25 In 1919 Gladstone admitted that although the
industry was clearly 'one of the soundest and potential
perous sectors in India' he was unwilling to commit t
capital required to control a mill, as this went against
will simply not tie up more than ?15,000 in any one co

This refusal to commit money to one interest and the co

spreading risk meant that the partners of Managing A

were required to oversee the running of several compa
different fields.27 Inevitably management was not as

23 H. Gladstone to A. Gladstone, 31.3.1927, Glynne-Gladstone M

24 E. Benthall quoted in G. Harrison, History of Bird and Co., p. 17

25 H. Gladstone to B. Eddis, 17.12.19., Glynne-Gladstone MSS, fi

26 H. N. Gladstone to A. d'A. Willis, 26.10.22, Glynne-Gladstone
27 In 1911 a large managing agency group might manage over a
joint stock companies: for example, Andrew Yule and Co. manag
Co. 19, Indian Investors' Year Book (Calcutta, 1916).

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340 A.-M. MISRA

competent as it might have bee

of the calibre of their administra

of James Finlay and Co. was su

of their jute mills. The litigant

there is no public confidence in yo

you have a double interest in your
shareholders are largely subordinat
and financiers. The way in which
aged has made it the laughing stoc
ests your senior partner has to su
vast that the affairs of the Cham

share of his time.28

Another consequence of the managing agents' conservative attitude

towards capital was their insistence that the capital they employed
should show swift returns and thus never be committed for too long.
Such 'short-termism' ruled out certain kinds of investments. So, one

reason Bird and Co. refused to participate in the proposed steel venture in mid-193os was that projected profits would not be realized
for at least seven years.29 Gillanders, Arbuthnot and Co. in 1928
decided against investing in road transport schemes, again on the
grounds that 'ten years is too long to wait for a return'.30
This insistence on keeping capital constantly on call seems to have
had a direct impact on the level of technological sophistication in
many of the enterprises. A partner of James Finlay and Co. in 1893
admitted that one of their jute mills had failed because of antiquated
machinery, 'all to save a few thousand rupees'.31 Gladstone's attitude
was typical: when a firm lost money, the solution was usually to cut
costs by halting innovations; so, in 19o09, he noted:
the mills have all reached a point where the strictest economy in all directions
must be exercised. Why should we not do what ship-owners do in bad times.
Cut down repairs to a minimum and reduce crews. Surely a great deal more

can be done to save expenditure.32

Even as late as 1941 it was clear that these attitudes had not
changed. Benthall halted the re-equipping of one of the firm's paper
mills: 'renovations must slow up. It is more important that we have
28 Quoted by Sir James Muir, Finlay MSS, UGD 91/78/4.
29 E. Benthall toJ. Mckerrow, 28.11.35, Benthall MSS, box 6.
3o H. Gladstone to H. Bateson, 19.3.28, Glynne-Gladstone MSS, file 2616.
3' Memorandum by Sir Allan Arthur, 1893,James Finlay and Co. MSS, 91/274.
32 Report by H. N. Gladstone on his visit to Calcutta, 26.2.o09, Glynne-Gladstone
MSS, file 2724, p. 16.

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'BUSINESS CULTURE' IN BRITISH INDIA 341

a first class cash position'.33 British businessmen's con

approach to investment even drew the critical attention o

ernment; the Indian Industrial Commission of 1916 com

British managing agency houses cannot escape criticism for be

conservative in their methods of business and exhibiting undue
to embark on new ventures. In other words they have been i

develop commerce rather than industries and to have been less help
might have been the case in clearing the way for industrial progre

The managing agents' commitment to the small partner

and their highly individualistic business style, was streng

their intellectual attachment to the economic tenets of laissez faire.35

This ideology obviously provided intellectual legitimacy for their

merchant style and identity: it justified the persistence of small, private competitive market-oriented firms in the face of clear pressures
to merge, integrate and rationalize. Identifying the political ideology

of these businessmen is a complex issue which can only be examined

briefly here, but there are three aspects of these laissez-faire views
which are particularly evident among British businessmen in India.36

Firstly, that there should be strict adherence to free trade theory,

secondly, there was a strong belief in the preservation of small competitive firms, and finally, there was an antipathy to business involve-

ment in politics and dealings with the state.

Many of the new industries which developed in India in the interwar period were initially protected by tariffs.37 This was because the

state, partly in its search for revenue, tried to encourage domestic

industries. It was, however, surprised at the unwillingness of British
expatriate business to take the manufacturing opportunities created
by protection. It is clear that British firms did not involve themselves
in new industries partly because they were ideologically opposed to
the principle of protection. As Benthall explicitly stated in 1941: 'I
think we should have to avoid like the plague anything that involves
protection, as it would seem that any peace must be based on inter* E. Benthall to G. Morton, 22.2.41, Benthall MSS, box 16.

34 Report and Evidence, Indian Industrial Commission.

5 It may be that the businessmen in India were peculiarly enthusiastic about

laissez faire: recent work has argued that there were divisions within business in
Britain over this question at the end of the nineteenth and beginning of the twentieth centuries, see G. D. Searle, Entrepreneurial Politics in Victorian Britain (Oxford,
1993), pp. 166-202.
36 For further development of these ideas see A.-M. Misra, The Rise and Fall of
British Entrepreneurship in India, 1870-1970 (Oxford, 1995).
7 Tomlinson, The Economy of Modern India, pp. 133-5-

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342 A.-M. MISRA

national collaboration and freedo

mitment to free trade was a com
ness community. The Indian Min
benefited from protection for s
wrong in principle'.39

The laissez-faire instincts of

them to stress the importance

conducive to the survival of small firms even when economic crisis

threatened these firms' viability. In the 1920s and 1930s overproduc

tion of raw jute led to a profound crisis in the jute processing industry.40 The government suggested, in response, that the industry be
rationalized through company mergers, arguing that this would pro

duce larger plants enjoying economies of scale which would then be

in a position to recover competitiveness.4' Benthall's firm managed
some of the largest and most successful jute mills and would cer-

tainly have been a beneficiary of rationalization, but he was emphatic

that these plans had to be resisted: 'There is a growing tendency for

smaller firms to be pinched out owing to the altered conditions of

trade between Britain and India ... At first glance it would appear
that the government have some anti-capitalists in their midst.'42
Even though the failure to rationalize the jute industry meant that
the firm continued to make losses, Benthall was willing to accept this
as the price to be paid for preserving competition: 'As a fundamental

principle I feel we are not entitled to the making of large profits i

we are not prepared to stand up stoutly to periods of poor trading.'43

These entrepreneurs were as hostile to business involvement in

politics as they were to state involvement in business. During the
1930s, as part of its anti-Congress strategy, the British Governmen
in India tried to establish a new conservative business party designed
to engage the support of business groups, Indian and British, by
offering them influence over policy. Some Indian businessmen were
enthusiastic about these corporatist overtures, but the response of

8 E. Benthall to G. Morton, 32.7.41, Benthall MSS, box 15, 1942.

9 Indian Mining Association, Annual Report (Calcutta, 1924), p. 164.
40 For a fuller discussion of the economic and political background to this crisis,

see 0. Goswami, Industry, Trade and Peasant Society. The Jute Economy of Eastern India

9Ioo-0-947 (New Delhi, 1991).

41 Government of India memorandum to the IndianJute Mill Association (IJMA),

June 1935, Annual Report of the IJMA, vol. II (Calcutta, 1935), PP. 167-73-

42 E. Benthall to G. Morton, 28.8.37, Benthall MSS, box 15.

43 Ibid.

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'BUSINESS CULTURE' IN BRITISH INDIA 343

British entrepreneurs was much more wary.44 C. Hilton-B

ing of the firm Parrys (a Madras-based agency house

public service and involvement in politics was seen ther

serve of cranks and self-advertisers'.45 Edward Benthall remarked

that:

we have been at infinite pains for a number of years to try to provide some

constitutional protection against the interference in our business by any

new governments. It seems to me to be flying in the face of providence to

adopt a policy of running to the government whenever we are in difficulty.46

He was not only suspicious of Indian politicians, but considered that

the very mild interventionist stance of some British Conservatives
exhibited 'socialistic leanings'.47 It is not surprising, therefore, that
corporatist initiatives failed. Businessmen refused to establish polit-

ical influence when they had the chance, and were subsequently
ignored during the transition to independence.48

III

The approach of some Indian businessmen to the opportunitie

innovation and diversification in the Indian economy at the t
seem to have been very different. The most outstanding examp
the entrepreneurial dynamism present among indigenous bus
groups is Jamsetji Tata (1842-1905), the founder of India's iron
steel and hydro-electric industries in the late nineteenth and e
twentieth centuries. Tata is, of course, an unusual case, but it w
seem that Tata's transition from traditional mercantile to modern

industrial activities was being emulated by other Indian entrepreneurs, many of whom also had close associations with the nationalist

44 A.-M. Misra, 'Entrepreurial Decline and the End of Empire', pp. 167-82; C.
Markovits, Indian Business and the Indian National Congress, 931 -39 (Cambridge,
1985), pp. 78-81. The latest research on the response of British businessmen to
the corporatist initiatives attempted in Britain at this time suggests that similar
hostility was prevalent among metropolitan business elites. The reluctance among
businessmen to accept a more 'managed' form of capitalism seems to be in marked
contrast to the experience of Germany in the same period: see the essays by S.
Tolliday and W. Lazonick in B. Elbaum and W. Lazonick (eds), The Decline of the
British Economy (Oxford, 1985).
45 C. Hilton-Brown, Parrys of Madras (Madras, 1934), p. 58.

46 E. Benthall to G. Morton, 12.6.35, Benthall MSS, box lo.

47 Ibid.

48 A.-M. Misra, 'Entrepreneurial Decline', pp. 187-9.

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344 A.-M. MISRA

movement, such as the Birlas, D

J. K. Kasturbhai.49
A study of Tata's attitudes to bu
contrast with those of the Briti
By the early 189os when he was
years in business, Tata had transf
trading company into the large
financed and managed industri
were still very few Indian industr
ence, there were more Indian tha
modern sectors."5 At the same
returning to their original fina
turned his attention to the dev
company, again investing large
he persevered despite initially pes
tial for a steel industry in India a
aging mining and prospecting r
Tata's firm was about to becom
manufacturer in India.5'
In sharp contrast to his Britis
style was characterized by a willin
to invest in new technology and t
his mercantile origins at an ear
became entirely industrial. Aft
trading firm in the mid-186os
Bombay cotton mill industry. D
fications of his first mill, Tata
Lancashire in 1871, where he s

for six months. On his return to India he founded another mill at

Nagpur which began production in 1877. Building a mill so far from

Bombay was a bold step, the intention of which was to exploit the
proximity of the cotton crop. It was not a success, but Tata's reaction

49 There are no primary sources yet available for a study ofJ. N. Tata. However,
both he and the company have been the subject of many biographies of which b

far the best is F. R. Harris, Jamsetji Nusserwanji Tata: A chronicle of his life (2nd edn,

London, 1958). See also D. E. Wacha, The Life and Work ofJ. N. Tata (2nd edn
Madras, 1915); S. K. Sen. The House of Tatas (Calcutta, 1975). For an account of
other Indian entrepreneurs whose business careers followed a similar course see

also Tripathi, Business Houses: and Timberg, Industrial Entrepreneurship.

5o Tomlinson, The Economy of Modern India, p. 143-

5' The following account is based on the Harris,Jamsetji Tata.

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'BUSINESS CULTURE' IN BRITISH INDIA 345

to its faltering start was to invest in yet more new mach

labour training.
In 1886 Tata founded a new company for the productio
quality cloth, the Swadeshi 'self made' or 'India-made' m

his Empress and Alexandra mills, founded earlier, this mill w

a name with explicitly nationalist overtones. However, th

mill like the Empress, was initially a failure, largely beca

producing a poor quality cloth which proved to be di

export.52 To solve this problem the new mill was, like it

sors, completely overhauled and re-equipped, using capit
could only be acquired by risking Tata's personal fortun
Tata founded his last cotton textile enterprise, the Advan

in Ahmedabad. The mill, as its name suggests, was ex

equipped with the most modern plant and machinery.

So, after his early failures Tata invested in the most rec

ment for his mills, even making a visit to Japan in order to

ize himself with the latest technical innovations. He became famous
for introducing ring spindles into his mills before either his Bombay

or even his Manchester competitors.53 He was also the first in

Bombay to weave the finer cottons which were in direct competition

with British imports. Tata, unlike his British counterparts, always

made generous provision for depreciation in his accounts to cover
the cost of regular replacement of machinery.54

Tata's sympathies with political nationalism may help to explain

his willingness to forego easy profit and his apparent obliviousness
to risk. It is currently fashionable to dismiss economic nationalism

as a motivating ideology among India's early industrialists.55

However, there is evidence that Tata had links with early national-

ist thinkers and it seems reasonable to conclude that he shared their

belief in the overriding importance of industrializing India. Although

it is well known that Tata was among the founding members of

the Indian National Congress in 1883 and remained a member for
the rest of his life, he is still thought to have been fundamentally

52 Ibid., pp. 26-30.

53 Y. Kiyokawa, 'Technical Adaptations and Managerial Resources in India: A
Study of the Experience of the Cotton Industry From the Comparative Viewpoint',
Developing Economies, XXI-2 (June 1983), pp. 97-133.

4 Harris,Jamsetji Tata, pp. 9-30o.

55 C. Markovits denies that Indian capitalists were 'in abstracto, committed to
industrialization at all', Markovits, Indian Business, p. 185-

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346 A.-M. MISRA

apolitical." However, after Tata's death

nationalist Pherozeshah Mehta commented:

'The current notion that Mr Tata took no part in public life, and did not
help and assist in political movements, is a great mistake. There was no
man who held stronger notions on political matters . . .'57

It is clear that Tata took an interest in politics and provided Mehta

with financial help to set up the politically important Bombay Presid-

ency Association. He was also closely connected with the prominent

nationalist journalist, Dinshaw Wacha, and helped to finance a

number of early nationalist newspapers in Bombay in the 187os and

188os, including the Bombay Gazette and the Indian Spectator.58 Tata's
politics, like those of many early moderate nationalists, seem to have

been fuelled by mounting anger at the failure of the British, in the

187os and 188os, to live up to their own liberal principles. He was
dismayed, as were many Indians of his class and education, by the
racism of the raj: he kept a file of press cuttings on the subject of
European racial abuse of Indians, and in spite of his warm friendship
with many individual Englishmen, he commented: 'If some Englishmen treated us more considerately, there would be more harmony
than there is ... it is in the clubs and institutions that a certain

amount of antipathy is stirred up.'59 Perhaps more importantly, h

ever, he was outraged by any form of economic discrimination

the British. So, he was incensed by the systematic overchargin
Indian textile manufacturers by British machine makers, and
consequence made efforts to use American and German suppli
when he could.60 The imposition of excise duties on Indian cot

goods in 1894 led Tata to one of his few public protests aga
British policy, as did the discriminatory treatment of In
exporters to Japan under the terms of the 1898 Anglo-Japane

Trade Treaty. His public criticism of the British government on

56 Gita Piramal comments that Tata successfully conveyed the impressio

being too immersed in business to take any interest in politics: G. Piramal, 'E
preneurs and Political Awareness', in D. Tripathi (ed.), Business and Politics in In
(Ahmedabad, 1991), p. 1575 P. Mehta, quoted in Harris, Tata, p. 248.
58 Tata is also reputed to have funded the publication of the famous denuncia
of British economic policy, Prosperous British India?, by W. Digby; C. Dobbin, U
Leadership in Western India: Politics and Communities in Bombay City, 1840

(Oxford, 1972), p. 197 and Harris, Tata, p. 247; Sen, The House of Tatas, p. 13
5 Harris, Tata, p. 84.
60 Ibid., p. 256.

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'BUSINESS CULTURE' IN BRITISH INDIA 347

issue provoked a British official to send a memorandum o

London:

Mr Tata is much in with the Congress Party. In public he loses no opportun-

ity of abusing England and even calls any article made in England by a bad
name. He boasts that in his commercial dealings he prefers foreign to Brit-

ish goods. I suspect that his enquiries, in this matter [the Anglo-Japanese

treaty] are not bonafide and I think we should be cautious. He is immensely

wealthy.61'

Given Tata's close friendships with nationalists and his nationalist

views, it is probable that he shared the outlook of the nationalist

economic thinkers, Dadabhai Naoroji and M. G. Ranade, on the

importance of industrial modernization to India. Both Naoroji and
Ranade, whom he also knew from his days at Elphinstone College
and the Bombay Presidency Club, argued that Britain had deindustrialized India; India, they maintained, had possessed an industrial
base which had been destroyed by the malign impact of British trade,

fostered by British merchants with the assistance of their Indian

counterparts. Indian businessmen, therefore, could contribute to the
nationalist cause by building a heavy industrial sector in India staffed
and financed indigenously.62 Ranade, who initiated a series of 'industrial conferences' to run concurrently with the annual meetings of
the Indian National Congress, was particularly insistent that industrialization was the principal goal of Indian nationalism, while merchant enterprise was less valuable.63

It does not then seem unreasonable to conclude that nationalism

played some part in Tata's grand schemes and may help to explain
why he was willing to make such large investments in conditions of
uncertainty. The testimony of Tata's contemporaries certainly suggests that he was in part motivated by the desire to prove that India's

indigenous businessmen were the equals of the most advanced entrepreneurs in the rest of the world. As Sir Stanley Reed, an Indian
civil servant who had close connections with Tata, said of him:
I can imagine the cynic raising his eyebrows at the thought that the pursuit

of wealth through the development of industry can be dominated by the

61 B. Shri Saklatvala and K. Khosla,J. N. Tata (New Delhi, 1979), pp. 80-1.
62 B. Chandra (ed.), Ranade's Economic Writings (Delhi, 1990), p. 67, and B. Chandra, The Rise and Growth of Economic Nationalism (Delhi, 1969), pp. 34-37; A. and M
Mukherjee, 'The Indian Capitalist Class and Foreign Capital, 1927-1947', Studies
in History, i (1) (1979), pp. 105-48; A. Mukherjee, 'Imperialism and the Growth of
Indian Capitalism in the Twentieth Century', Economic and Political Weekly, 12 March
1988, pp. 531-46.
63 Chandra, Rise and Growth of Indian Nationalism, pp. 8 1-9.

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348 A.-M. MISRA

idea of service ... But to ignore the missio

blind to one of the strongest forces in the w

IV

In 1925 the Tata Industrial group cont

trial capital. The partnership firm of G
had capital assets of a little over ?1m.
that the approach to business of Britai
preneurial individualists was not cond
twentieth, largely because these firms
tile distaste for the long-term commit
trast, embarked on real innovation and
as early as the 187os and 188os; he com

industrial pursuits and refused to intere

Eastern mercantile trade as his fath

commit huge capital sums to the const

necessary mortgaging personal wealth
The evidence presented here suggests
tion between business culture, political
strategy. In particular, it would seem
rigidly individualistic, small-firm appr
to exploit the opportunities of heavy

the other hand, Tata's broadly 'nat

inclined him to risk-taking on an altog

envisaged by British Managing Agenc
emphasizes the importance of business
certainly more convincing in explaining

Agency Houses in India than an explana

economic factors.

64 S. Reed in his introduction to Harris, Tata, p. xv; for a similar view, see the
memoir of Lovat Fraser, Iron and Steel in India (London, 1916), pp. 16-17.

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