Indigenous Banking Firms in Mughal India: A Reply

Karen Leonard

doi:10.1017/s0010417500013323

Abstract

In the April 1979 issue of CSSH I proposed a theory: The financial services of leading indigenous banking firms were indispensable to the Mughal state, and the diversion by these firms of resources, both credit and trade, from the Mughals to other political powers in the Indian subcontinent contributed to the downfall of the Mughal empire (p. 152). John F. Richards's article in the present issue takes exception to that theory, challenging the evidentiary basis for my assertions. While stating that further research was admittedly necessary to test and fully substantiate the theory, I certainly offered evidence that these banking firms supplied working capital to the empire and its officials for military campaigns, trade, construction, karkhanah (workshop) production, and personal loans. I also discussed the bankers' regulation of the valuation, exchange, and circulation of currency, and particularly the hundi system of bills of exchange. The political potential of these financial services – of their performance or nonperformance, and on what terms – is obvious. Indeed, I cited instances of political interactions between bankers and officials.

Highlights

In the April 1979 issue of CSSH I proposed a theory: The fi nanc ia l se rvices of leadin g indi geno us banking firms were ind ispe nsable to the Mug hal state, and the di versio n by these firms of reso urces, bo th credit and trade, fro m the Mu gha ls to othe r po litical po we rs in the Indi an s ubcontinent contributed to the downfa ll of the Mughal e mpire (p . 152)
Whi le stating that furt her research was ad mittedly necessary to test and fully substantiate the theory, I certai nly offered evidence th at these bankin g fi rms supplied wo rking capital to the e mpire and its officials for military campa igns, trade, co nstructio n, ka rkhanah production, and persona l loans
Richards concedes th at my analysis of the eighteenth-ce ntu ry acti vities of bankin g firms - the ir mi gratio n fro m Mug hal-controlled urban centers to o the rs; the ir ex te nsio n of credit and trade to ne w regio na l powe rs, inc luding the European trading co mpanies; the ir in vo lve ment in the collec tio n of land revenue - is accurate. He attac ks the theory, ho wever, by statin g that he canno t find "sufficient ' · ev idence to support my assumptio ns about the services and importance of the banking firms in the sixtee nth and seventeenth centuries