Article Written By EIH Researcher And Writer
Aaloy Gangopadhyay
These two cities officially started its journey on trade and commerce with the onset of colonialism. But historical evidence points out the fact that the existence of unknown systematized trade existed before colonialism by the British. When trade increases, employment also increases which attracts immigration of people both internally and externally. Slowly that place becomes a hub of economic activities. The tale of events in Calcutta and Mumbai are not only different from each other, but also signifies a nail biting contest to become supreme financial hub. Slowly and steadily, both the cities emerged as economic hubs of India. Eventually and systematically Bombay or Mumbai surpassed Calcutta or Kolkata due to socio-political, socio-economic and socio-cultural factors.
MUMBAI, INDIA – MAY 31, 2008: Real Estate – Skyscrapers – Highrise Buildings – under construction – Mukesh Ambani Building – Mumbai Skyline – Arabian Sea – Housing – Aerial view of South Mumbai – Marine Drive (Photo by Kunal Patil/Hindustan Times via Getty Images)
Kolkata
Geographically both the cities are located with close proximity to seas. Bombay is adjacent to the Arabian Sea while Calcutta is nearer to Bay of Bengal. The geographical location of Mumbai port on the west coast made it an economic hinge and trade window to the western countries of Europe, Central Asia, Africa while ports of Calcutta connected to East Asian and South East Asian countries like China, Indonesia, Japan, etc. The major blow that Calcutta faced was the low purchasing power of eastern countries and decrease in volume of trade due to low demand, colonial tariffs and increase in imports while Bombay flourished due to opium trading and textile industries. Interestingly in the early 1830’s and 1860-64, Calcutta’s imports and exports outstripped Bombay.
Socio-political factors dealt with personal interests of viceroys, governors and leaders and most importantly, political stability and peace. Calcutta witnessed movements and revolutionary activities by the freedom fighters and revolutionaries which disrupted trade and commerce while Bombay stayed at relative peace despite movements and political insurgencies. Calcutta had more varied trade, larger volumes of trade passed through her port and she was the British capital until 1911.
From the late 18th century, under Governor Gerald Aungier’s policy of attracting merchant communities, proved to be a providential policy for Bombay. The last few decades are further proof of Bombay’s ability to adapt. As manufacturing shifted to other cheaper areas and the mills declined, Bombay was reinvented as a service city. The policy of the government has also thus far allowed the city to remain at the top of the financial ladder. Thus the combination of the factors mentioned above ensured that Bombay became and remains the financial capital of India. Bombay had a different characteristic regarding socio-cultural factors which enhanced trade. Merchant communities like the Jain baniyas and Parsis were induced to come to Bombay. Three Parsi families were most active in Bombay’s textile industry: Petit, Wadia and Tata. Those who came to Bombay, came to seek their fortune, to trade, to work, leaving all other considerations behind. Be it the more “westernized” Parsis or the traditionally conservative Marwaris in Bombay, business came first.
Gerald Aungier, Governor of Bombay Presidency
Though like any other part of India, caste and religious restrictions existed, in Bombay unlike other places, they were secondary. This to a large extent allowed entrepreneurship to flourish. It is only in Bombay that a Parsi orphan, Jamshedji Jeejeebhoy, with limited education could begin as a dabba batliwalla and progress to the First Indian baron of the empire. In time, Bombay would attract Marwaris, Memons, Kojahs, ‘Goans, other Konkanis, Sindhis and thousands from the hinterland of Maharashtra. One of the greatest oddities of Bombay was that business was dominated by Indians. In Calcutta, while Marwari businessmen did flourish as agents, trade companies and cash crop plantations were owned by Europeans.
Jamsetji Nusserwanji Tata
There are other reasons behind the decline of Calcutta as a trade center which gave opportunity to Bombay to become supreme financial hub and capital of India. Bank of Bengal catered to a much larger area and population in mostly poor areas. Thus it had higher deposits. However, Bombay clearly collected more deposits per person than Calcutta. Thus prosperity was more widely spread across Bombay compared to Calcutta. The World Wars were major factors as the gradual position of Calcutta weakened.
Bombay port’s importance grew. It was used as a major military base for Mesopotamia and East Africa. Bombay was naturally a much better port anyways compared to Calcutta. Calcutta port was eighty miles up the river from the sea making it difficult for cargo ships. Rates were higher too. Bombay was near the Suez Canal and received the bulk of imports from European countries and Cape. Development of Railways linked Bombay to not just Deccan (which was the original purpose) but to Punjab areas as well. Karachi was closer to Punjab but Bombay was preferred given railways. Indigenous bankers in Bombay offered exceptional facilities. Bombay had three more markets: Stock exchange, cotton and bullion. Its bullion markets in Jhaveri Bazaar and Shaikh Memon Street were India’s largest. Calcutta just had jute which was mainly exported. There was Calcutta stock exchange but the one in Bombay was much older and significant perhaps due to its proximity to Western financial centres.
Bombay Stock Exchange
Graph of Trade between Bombay and Calcutta
Another factor is the choice of location of India’s central bank. The location of the central bank is an important factor, as suggested by Kindleberger. John Maynard Keynes and Sir E. Cable made a memo on establishing a central bank in India in 1914. The two cities put forth as potential sites to headquarter the bank were Calcutta and, believe it or not, Delhi. Bombay was not even considered. Delhi was preferred then as it was considered independent of the three Presidency bank offices. However, by the time of the RBI’s formation in 1935, the contest was between Calcutta and Bombay. The former represented the past and the latter was the future. Thus it was decided to make both cities joint headquarters for India’s central bank.
Prafulla Chandra Ray
Prince Dwarkanath Tagore
Despite the efforts of Prafulla Chandra Ray who founded the Bengal Chemicals and Prince Dwarkanath Tagore who traded salt and had six ships, Bengalis in general did not participate in business activities due to intellectualism, cultural constructivism, art, music and literature. Even those unknown Bengalis who tried to undertake business activities ended in failure due to lack of capital, laziness, legal and social barriers. Post independence, Calcutta travelled towards economic dissolution as it focused towards peasantization and proletariatism of economy. The trouble started when the Commies took over. Gheraos, hartals, protests and peasant movements proved a massive flight of capital in industrial activities. Slowly the companies like Hindmotor, Bengal Chemical, Jessop Co. & Limited, etc were sinking. To make matters worse, yuppie MBAs took charge superseded senior, able MBAs to dilute business activities and to work as agents of political parties in order to promote trade unionism.
Thus the comparative analysis between Calcutta and Bombay proves that the psycho-social factors of casteless approach and interactive based initiatives proved to be a boon for Bombay where only prioritization of business, trade and commerce enabled financial supremacy whereas Calcutta emphasized on politicization of economic activities and fuelled “Annihilation of Jobs” through proletariatism, shutdown, protests, union culture and political hooliganism.
Bibliography
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R.M.Lala, For the Love of India, The Life and Times of Jamsetji Tata, Penguin Books, New Delhi, 2006
Gillian Tindall, City of Gold; The Bibliography of Bombay, Penguin Books, New Delhi 1 992
Dharma Kurnar, Tapan Ray Chaudhuri, Meghnad Desai, Cambridge Economic History of India Vol 2, c. 1757-c. 1970, Cambridge University Press, 1983.
Amar Faooqui, Opium City, The Making of Early Victorian Bombay, 3 Essays Collective, December 2005, ISBN 8 1-88789-32-1
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Claude Markovits (2011), “Premier Industrial Centres Bombay and Calcutta” in The Oxford Anthology of Indian Business, edited by Medha Kudaisya, Oxford University Press, Delhi
RBI (1970), History of Reserve Bank of India (1935-51) Vol. 1, Times of India Press, Bombay
Charles P. Kindleberger (1974), “The Formation of Financial Centers: A Study in Comparative Economic History”, Princeton Studies in International Finance No.36
