American War set Gujarat cotton afire 150 years ago

AHMEDABAD: Imagine a situation where you wake up in the morning and pull out cotton from your bed and pillow and rush to the market to sell it. It’s not an exaggeration. In 1863 and 1864, Ahmedabad, Bharuch and Surat had indeed witnessed such situation when the prices of cotton had skyrocketed from Rs 100 a bale to Rs 800. The phenomenon had taken place due to the Civil War in America 150 years ago.
As the US marks the end of four-year long Civil War on June 22, 1865, Gujarat and Mumbai remember the event with bittersweet memories. “The most obvious outcome of the event was a sudden jump in demand for the cotton for major textile centers such as Manchester and Lancashire. As the cotton supply from the US stopped, the British looked at Indian markets and started procuring the cash crop by tonnes,” said BJ Institute director Professor Ramji Savaliya.
City-based historian Makrand Mehta said that Gujarat and Central Provinces (today’s Madhya Pradesh) were two major regions producing cotton. “The satta (speculative) market ruled the roost at that time. As the prices kept soaring, many — from the poorest to the richest — decided to take advantage as people went for production, processing, supplies, trading and speculation. Many shifted base from Gujarat to Mumbai, the biggest cotton market,” he said.
Thus, when the war ended ultimately in June 1865, the speculative market crashed overnight. Book ‘Surat Sona ni Murat,’ says many reputed firms in the state with over 100 years of history had gone bankrupt.
The ‘finders’ of profit
According to Mehta’s book ‘The Ahmedabad cotton textile industry,’ during the Civil War, Damodardas, Ranchohodlal and their friends Achratlal Girdharlal and Premabhai Hirabhai were commonly known as ‘Shodhan Company’ for having discovered a way of getting direct information from England and the US on the prevailing cotton rates and thus, making profits. Damodardas’ family later adopted the adjective ‘Shodhan’ as surname. Interestingly, few of the established business houses of the city indulged in wild speculations during 1864-65.
Bank that lasted for three years
Among the businessmen who profited from the cotton boom, Premchand Raichand (or Roychand), a native of Surat, was the most prominent. He shifted base to Mumbai during the war years and made fortune. From the money, he commissioned landmark Rajabai Tower in Mumbai, Education School in Ahmedabad and several institutions in Surat. He found Bank of Surat in November 1864 with natives of Surat for financial operations revolving around cotton trade. The bank expanded with manifold deposits in March 1865 and was renamed Bank of Gujarat. The news of the end of the war poured cold water over the bank’s plan of expansion in India and abroad. Hence, it closed operations in March 1867.
When poets wrote about evils of ‘satta’
Two prominent figures of Gujarati literature — Dalpatram and Narmad — had burnt their hands at ‘satta’ and both had written poems about the vices of speculation. Mehta says that Dalpatram had been to the residence of AK Forbes, his friend and senior English officer, in Mumbai after losing almost everything and selling his haveli at Haja Patel in Pol in Ahmedabad. He did not speak anything about the need of money for three days. On the fourth day when he was leaving dejected, Forbes told him that he knew the reason for his visit and had arranged for collection of money from his fans in Mumbai who not only had collected a good sum but also waived off his debts.