From Hamza Alavi at http://ourworld.compuserve.com/homepages/sangat/Colonial.htm The rapid export-led growth of Indian textile production was brought about by new weavers entering the trade rather than by changes in technology. New entrants needed funds for working capital and to buy the necessary equipment. A system of cash advances, called dadni loans, developed whereby prospective buyers of cloth would advance the money, in return for which, in a sellers market, the lender/buyer would pre-empt delivery of the finished goods from the weaver. Some scholars have mistakenly taken that system of dadni loans to be analogous to the English 'putting out system' which was a precursor of the industrial revolution in England. (e.g. Habib, 1969:67-68). Habib and other Indian scholars have argued that India was itself on the threshold of an industrial capitalist revolution that was thwarted by the impact of colonial rule. (cf. Bipan Chandra et. al., 1969 and Habib, 1969) That seems to be a mistaken view. There is an important difference between the Indian system of dadni loans and the English putting out system. In the case of dadni loans, the weaver was given the loan by the prospective buyer of his product which thereby bound him to deliver the finished goods to that buyer. But, given the money, the weaver was left to his own devices to procure his raw materials and work on them. The buyer-moneylender, the dadni-merchant, did not handle the raw materials or equipment and was not involved in the process of production in any way. By contrast, in the 'putting out system' the entrepreneur took the raw materials round to the weavers, from door to door, and collected the finished cloth. He soon realised that instead of going from door to door, he could simplify his task by bringing all his weavers under one roof. That gave rise to the factory system which, in turn, led to mechanisation and a transition to the Industrial Revolution. That dynamic was absent given the financial organisation of production in India. After its conquests in India, after 1757, the East India Company, operating through its agents called goomasthas, transformed the system of dadni loans in a manner that was designed to subordinate the weaver totally to the Company's agents. Their object was to pre-empt the weaver's services at low prices, as against other competitors, including other European operators who were thus elbowed out. The Company developed a practice of forcing advances on unwilling weavers. A historian writes that before domination by the Company 'They (the weavers) used to manufacture their goods freely and without oppression, restrictions, limitations and prohibitions. There was no attempt to restrict their goods to the one market of the East India Company.' (Sinha, 1961: 159). Then it all changed.
This archive was generated by hypermail 2b30 : Fri Aug 02 2002 - 00:00:04 EDT