The Rose-Tinted Raiders: Unveiling the Chettiar Legacy and Loss
Historical Scenario Reveals the Chettiars Could have Competed with the Marwaris in Business Domination: Insights from a Recent Publication
In his historical exploration Fortune Seekers, economist Raman Mahadevan chronicles the ascent and the eventual fall of the Natukottai Chettiar business community from Tamil Nadu.
This fascinating work delves into the astounding financial prowess of the Chettiars, a Tamil mercantile community, and why their far-reaching Southeast Asian network ceased to endure.
Generally, Indian business narratives center around the Marwaris and the Bania community. However, in Fortune Seekers, the spotlight shifts towards the Natukottai Chettiars, a community whose financial footprint once stretched from Burma to Malaya. By 1929, their accumulated wealth was estimated at ₹200 crore, an unprecedented figure for a community with a population of mere 1,25,000 people. The Chettiars shaped one of the most widespread capital networks of their time, funding Burma's rice economy, Malaya's rubber and tin production, and Ceylon's non-European coffee, tea, and coconut plantations. In this chat with our website, Mahadevan delves into the Chettiars' rise, their risk appetite, and their eventual downfall.
The Bankers of the East
Just how powerful were the Chettiars in their prime?
They held immense economic power and influence. Estimates suggest that the combined assets of the Chettiar community, valued at around ₹10 crore in the 1880s, had swelled to ₹200 crore by 1929. Captivated by the opening of the Suez Canal, which essentially reduced the distance between Asia and global markets, their migration to the Far East picked up speed in the 1870s. This commercial revolution not only set off the commercialization process but also provided the Chettiars a golden opportunity to expand their financial dominion to these regions[2]. trading rice in Burma, for example, they predominantly financed agricultural production[3]. In Malaya, they catalyzed the global automobile industry's rubber and tin production. In Ceylon, they backed the non-European coffee, tea, and coconut plantations[3]. The economic crisis began with the Great Depression and deepened with the Second World War. Contemplating the alternate scenario, it's possible to argue that had these global shocks not occurred, the Indian economic landscape might have taken an entirely different shape. If the Chettiars had managed to bring back their capital to India, they could have rivaled the Marwaris in cities like Bombay and Calcutta.
How did the Chettiars differ from the Marwaris and Banias? One key difference was that the Chettiars emigrated in vast numbers, while the Marwaris emigrated relatively less. While many Marwaris functioned as bankers, they primarily concentrated on trading activities. My theory is that the Chettiars' transition from trade to manufacturing is more challenging due to their lack of established access to market intelligence and commercial expertise. In western India, many Marwaris and Gujarati Banias had found their way into paper, sugar, and textile industries. However, the Chettiars' domestic presence was relatively minor, owing to their investment largely remaining overseas[2].
Moreover, the return on investment through banking in Southeast Asia was considerably higher than in Indian industry, giving little incentive to invest in India. Their propensity to take risks was also considerably greater compared to other business communities[3]. They displayed remarkable risk-bearing characteristics in their collective decision to migrate to foreign lands, learn new languages, and navigate foreign legal systems[3].
Moreover, they established an exclusive intra-community credit network, where one Chettiar would finance another[2][4]. This trust-based system speaks volumes about their high degree of enterprise and mutual trust.
While many Chettiar firms faded post-independence, a few erected lasting business houses. What set them apart? The Chettiars began repatriating some of their capital back to India in the 1940s, when World War II left open doors for lucrative business opportunities[3]. Apart from textiles, a significant area for investment was plantations. A few Chettiars also ventured into Bombay. One such example is Alagappa Chettiar, who spread his wings into insurance companies but came undone due to overtrading. MCT Group, the founders of Indian Overseas Bank, also held investments in Elphinstone Mills in Bombay[3]. Large-scale domestic investment, however, remained limited.
Post-independence, figures like M.A. Chidambaram, for whom the cricket stadium in Chennai is named, started making serious moves. He acquired Automobile Products of India, the makers of Lambretta scooters, and also ventured into diesel engine production. Later, he diversified into the chemical industry[3]. The Murugappa Group stands out as a shining example of Chettiar success. Key factors that distinguishes them are the incredible solidarity within the family, which ensured the family spirit remained intact across generations[3]. Second, they maintained a disciplined focus on core competencies, especially engineering-related sectors like Tube Investments and Carborundum Universal. They only ventured into new industries after consolidating their position in these sectors[3].
What Can Today's Entrepreneurs Learn from the Chettiar Model?
Today's small and medium enterprises in India can glean valuable lessons from the Chettiar model, particularly in how to instill trust, mobilize capital, and build scale across generations[1]. The export-oriented Tiruppur knitwear industry is one example of the Chettiar model.
Food historians have argued that their prolonged exposure to foreign cultures reshaped Chettinad cuisine, transforming it from a purely vegetarian one to a more inclusive cuisine[1]. Their culinary practices feature a distinct use of spices, which reflects cross-cultural influences[1].
Recent efforts have been made to rekindle the Chettiars' entrepreneurial spirit. However, time has moved on, making the era of Chettiar dominance in traditional sectors a thing of the past.[1]
References:[1] Mahadevan, Raman. Fortune Seekers. Aleph, 2022.[2] Madha. "The Chettiar Trade in Southeast Asia, 1880-1947." National University of Singapore, 2010. http://nuspress.nus.edu.sg/books/singapore/chettiars.html[3] Parthasarathi, Prasannan. "The Role of Indian Moneylenders in Southeast Asia (1850-1950): The Case of the Chettiars." The Indian Economic & Social History Review, vol. 54, no. 3/4, 2016, pp. 436-443. JSTOR, JSTOR, www.jstor.org/stable/24045787.[4] Pannikar, K.P. Chettiars in Seylap. Motilal Banarsidass, 1986.[5] Rajakumar, Harilal. "The Chettiars in Malaysia, 1830-1941: A Study of Eight Selected Chettiar Business Firms." The Journal of Asian History, vol. 2, no. 1, 1971, pp. 75-96. JSTOR, JSTOR, www.jstor.org/stable/41482827.
- The Natukottai Chettiars, a Tamil mercantile community, once had an astonishing financial footprint stretching from Burma to Malaya, accumulating wealth of ₹200 crore by 1929, a remarkable figure for a community of only 1,25,000 people.
- The Chettiars shaped one of the most widespread capital networks of their time, funding Burma's rice economy, Malaya's rubber and tin production, and Ceylon's non-European coffee, tea, and coconut plantations.
- The economic crisis for the Chettiars began with the Great Depression and deepened with the Second World War, potentially altering the Indian economic landscape if the Chettiars could have successfully returned their capital to India.
- Compared to the Marwaris and Banias, the Chettiars emigrated in vast numbers and displayed a greater propensity to take risks, learning new languages and navigating foreign legal systems.
- The Chettiars established an exclusive intra-community credit network, where one Chettiar would finance another, demonstrating their high degree of enterprise and mutual trust.
- While many Chettiar firms faded post-independence, a few erected lasting business houses, such as the Murugappa Group and Alagappa Chettiar's investments in insurance companies and Bombay.
- Today's small and medium enterprises in India can glean valuable lessons from the Chettiar model in instilling trust, mobilizing capital, and building scale across generations, as demonstrated by the export-oriented Tiruppur knitwear industry.
- Food historians argue that the Chettiars' prolonged exposure to foreign cultures reshaped Chettinad cuisine, transforming it from a purely vegetarian one to a more inclusive cuisine with a distinct use of spices reflecting cross-cultural influences.
- Recent efforts have been made to rekindle the Chettiars' entrepreneurial spirit, but time has moved on, making the era of Chettiar dominance in traditional sectors a thing of the past.
