Wednesday, November 09, 2005

Indic Mercantilism

The history of India is one of a vibrant and dynamic mercantilism. I would highlight just one example out of several i.e. the international trade carried out by south Indian merchants from 650 to 1250 AD. I have simplified the narrative to keep it short and might have not done justice therefore to the complexity of the issue. The intent is to spotlight the mercantilist ethos, the delegation of royal authority to municipal-level bodies and the "privatization" of administrative tasks, such as policing and adjudication. Commerce was largely a private activity in early India unlike classical China. The mercantile communities in India were organized on a corporate basis and enjoyed administrative autonomy. The Hindu legal texts ensured that mercantile guilds had the freedom to frame their own laws and regulations. The maintenance of law and order, the collection of revenue and the mediation of disputes were delegated by royal charter to mercantile guilds. Such bodies were granted tax exemption and immunity from royal encroachment. The demarcation of responsibility between the royal, the mercantile and the religious facilitated an economic surplus.

Business syndicates convened separate artisan guilds, trading associations and military outfits under a single corporate identity in the Pallava and Chola periods. The "Ticai Ayirattu Ainnuruvar" or the 500 guilds of the 1,000 districts, the "pattinen-bhumi nattu-chettis" or the traders of the 18 lands, and the "vanik gramam" or merchant villages were just three examples. These consortiums, established under royal charter, were similar to the free cities of medieval Europe. They acted as bankers, fund managers and money lenders. They participated in the purchase, sale and insurance of merchandise across political boundaries. They took part in the wholesale and retail trade in textiles, metals, pearls, gems, ivory, elephants, horses and grain. Much of their overseas commerce was based on promissory notes, not the actual circulation of gold coins.

The Narada Dharma Sutra legitimized the association of merchants, money lenders, craftsmen and military personnel under an overarching corporate umbrella on the grounds that this ensured protection of property and the more effective discharge of trade. The federated Indian guilds had a president (pattana swami), an elected executive council (ubhaya nanadesi or lead multi-national) and branches in several countries as evidenced by early medieval inscriptions in Burma, China, Java, Sri Lanka, south India, Sumatra and Thailand. They recruited military outfits such as the "vira-kodis", the "velai-karar" and the "sreni bala" to defend their ships, caravans and overseas ports. The Tamil and Kannada kings hired the services of such corporate mercenaries as well.

The mercantile associations administered several ports and urban centers in South India. The king delegated prescriptive rights to these separate administrative units. An example that comes to mind is Nagapattinam. The elected "nagaram", an autonomous council in the Chola period, was responsible for the delivery of municipal services. Hindu temples acted as a center of capital accumulation and a banker in such cities, lending money at 12% interest, for commercial activity. The Hindu law books insisted that the private good had to be reconciled with public welfare. This explained the mercantile emphasis on charity, the maintenance of irrigation channels in the surrounding countryside, the upkeep of temples and the delivery of municipal services.

This commercial regime had its shortcomings. For one, it was an oligopoly based on control over the entire production chain by a few syndicates. Nonetheless, the complex system was remarkable in its emphasis on private initiative and maritime activity in years past.

Rajendra Chola decimated the Sumatran-based Srivijayan naval confederacy in the 11th century to ensure that these federated guilds had free access to China.The beginnings of the Tamilization of parts of Sri Lanka can be traced to this era. This south Indian mercantile regime, however, declined in the 14th century. The demise of the Chola kingdom meant the absence of a broader facilitating framework. The Delhi sultanate, under Alla'udin Khilji, momentarily annexed Madurai under Malik Khafur. Meanwhile, Arab seafarers had briefly taken over the lucrative Indian Ocean trade until their eviction by the Portuguese conquistadors in the 1500s. These factors notwithstanding, the rich history of private trade, commercial vigor and maritime shipping continues to inspire students of classical south Indian history.

For those interested in delving deeper into the subject, I recommend R.K. Mukherjee, "A History of Indian Shipping and Maritime Activity from the earliest times", London, 1912; T.V. Mahalingam, "South Indian Polity", Madras: 1955; Clarence Mahoney, "The Effect of Early Coastal Sea Traffic on the Development of Civilization in South India", University of Pennsylvania: 1968; K. Indrapala. "South Indian Mercantile Communities in Ceylon circa 950-1250" in Ceylon Journal of Historical and Social Studies, December, 1971; and N. Karashima, "Ancient and Medieval Commercial Activities in the Indian Ocean:Testimony of Inscriptions and Ceramic Sherds", Tokyo: Taisho University Press, 2002.


doubtinggaurav said...


Two quick questions.

1) Is there any co-relation between guilds and proliferation of castes ?

2) What was the basis behind prohibition in scriptures to cross Black Waters ? Or was this limited to Northern India ? (In "Wealth of Nations", Adam Smith mentions that this prohibition was due to the fact that Hindu scritpures forbid lighting fire over black waters.)

history_lover said...

@Jaffna ,What about Andre Wink's three volume - Al-Hind: The Making of the Indo-Islamic World ?

Jaffna said...

Gaurav, History Lover,

The issue of the prohibition against crossing the waters was a later development and never fully implemented. There is a parallel in Ming dynasty China where the Confucian bureacrats forbade overseas travel to maintain their control. Korea was known as the Hermit Kingdom at one time and Tokugawa Japan had also banned overseas travel.

A time had come when Indic civilization had similarly lost its momentum, turned inward and insular, and developed regressive rules such as the prohibition against crossing the sea. It was a control mechanism. It was never implemented in the South and not in Gujarat either. I think it largely applied to the Brahmin and Jain priesthood.

I would argue that professional guilds and castes are inter-related - one led to the other. Others might contest me on this one but the link is there nevertheless.

I would love to read Andre Wink's book. I miss the United States where I had access to all and sundry in terms of books. I would get hold of it someday.

Here's trivia for you. When Captain Cook "discovered" New Zealand, he as met by the indigenous Maoris who gifted him with a bell. This bell has a symbolic connotation for New Zealand, much like the first thankgiving in Plymouth Bay in Massachusetts has for the United States with the Pilgrim Fathers and the Native Americans having harvested the corn together.

This bronze bell can be viewed in the New Zealand museum. It has a Tamil inscription on it authored by a Muslim trader. So the outreach of the south Indian Muslim trader was far reaching. I would argue, although some would contest me, that Islam spread to Malaysia and Sumatra in the 1300s AD in part due to the missionary activity of Gujarati and Tamil Muslim traders. This link remains. Mahathir's father is a south Indian Muslim, his mother Malay.

In my travels in Mindanao, I saw similar evidence.


doubtinggaurav said...


Yes I have read how Chinese and Japanese civilization turned insular and isolationist.
While I do not know that whether control was a reason behind it, the ostensible cause was that Chinese/Japanese civilization was most superior and the outer world was full of savages.
(I think for the almost same reason Chinese kings had a habit of making bonfire of history books and impaling scholars).

The reason I was piqued about Indian case was because of reading the statement made by Adam Smith (i.e. lighting fire over black waters), it seemed to me more of a case of "mistranslation and literal interpretation" than "turning isolationist and insular" since Adam Smith was hardly a Indic scholar, I thought you could confirm.

While it was not implemented in South (from what I know), it was , however, practised in Gujarat (I have read how Mahatma Gandhi was fined by his community for going to London by sea).

I just finished "Among the Believers" by V S Naipaul, where he mentions how Malaysia and Indonesia was converted by Indians, first to Hinduism and Buddhism and subsequently to Islam,
The peaceful process of conversion might be the reason that Islam praticed was more Latitudinarian than that pratised in Sub continent.


Jaffna said...


I can not comment on Adam Smith. You might be right there on the mistranslation but I can not be certain.

Gujarati merchants did travel to Yemen in the 11th century (and before). There was a large Gujarati trading community in southern Arabia complete with the annual "rathyatra" which the Sultan had permitted.

The issue of M.K. Gandhi does ring a bell but Gujarat always looked beyond the seas.

Here's other trivia. The island of Socotra off the coast of Yemen (it is a sizeable island) had a colony of Indian traders in the pre-Islamic era. Socotra was named after the Sanskrit Sakha-dhara-dvipa - i.e. the island of spices (i think...).

In China, the later ban on foreign travel was clearly a control mechanism. Cheng Ho, the Chinese eunach mariner who had traveled to the coasts of East Africa in the 1300s, posed a threat to the Confucian bureacracy. The base of power would have shifted to international trade as opposed to scholarship of the classical texts which the bureacrats were determined to avoid. A Ming dynasty edict explicitly banned foreign travel. In the Japanese instance, it was fear of foreign traders in the context of colonialism. Call it a policy of isolationism.

I am a layperson and stand corrected on these issues but this is what I remember....


history_lover said...

The Sunni Shafi school of thought present in Kerala and parts of Tamil Nadu is also present in parts of Malaysia and Indonesia(Aceh for example).The Aceh province of Indonesia (which is said to be the most islamicized) had trade links with Hadramaut/yemeni traders.

By the way Jaffna ,Andre Wink's book has been published by Oxford University Press in India

doubtinggaurav said...

"I am a layperson and stand corrected on these issues but this is what I remember"

Surely you are joking, Mr Jaffna :-)

Jaffna said...

Thanks, Gaurav :-)

History lover, the shafi'i school of Islamic jurisprudence is interesting in that it largly coincides with Muslim populations inhabiting the entire Indian Ocean area - i.e. Somalia to the Maldives to Mindanao. I call it the "Indian Ocean school of Sunni jurisprudence". Purportedly the most conservative school of Shariah, it has actually enabled a very liberal ethos.

Best regards

history_lover said...
This comment has been removed by a blog administrator.
Arundhati Rajasingham said...

Intriguing post on ancient Indian commerce and private initiative. Will try to buy the books you suggest.

history_lover said...

The prevalence of shafi'i school all around the Indian ocean is an indicator of the trade links which existed then.
Jaffna Others would argue that the Hanbali school (present in parts of Saudi Arabia) is the most conservative.In fact the relatively new Wahabi school has evolved out of the Hanbali school of thought.

Anonymous said...

Jaffna, good edit. there was an indian commercialism in pre-modern times that indicated the energy of the hindu world view. the mataram and madjapahit empires in indonesia reflected this as did angkor in cambodia. i hope that india recovers the concept of india inc as it strives to reclaim its position in asia.

Sachin Phadte said...

Dear Jaffnaji,

If you are interested in being in touch with some email friends that I have in Sri Lanka, you can contact me at:

They would be most interested in what you have written.

Sachin Phadte


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