06 bombay as a trading centrePresentation Transcript
Bombay as a trading centre A look into the history of Mumbai
The changing Bombay
The origins of Bombay• King Bhimdev established his kingdom in the region in the late 13th century, and brought many settlers to the islands.• he Muslim rulers of Gujarat captured the islands in 1348, and they were later governed by the Gujarat Sultanate from 1391 to 1534.• The Treaty of Bassein between the Portuguese viceroy Nuno da Cunha and Bahadur Shah of the Gujarat Sultanate placed the islands into Portuguese possession in 1534.• Charles II of England received possession of the islands in 1661 as part of the dowry of Catherine of Braganza, daughter of King John IV of Portugal, and leased them to the British East India Company in 1668.• The islands were invaded by the Mughals towards the end of the 17th century.• During the mid-18th century, the city emerged as an important trading town, with maritime trade contacts with Mecca and Basra.• Economic and educational development characterised the city during the 19th century with the first-ever Indian railway line beginning operations between Bombay and neighbouring Thane in 1853.
Development of Bombay - I• The educational and economic progress of the city began with the East India Companys military successes in the Deccan. The Wellington Pier (Apollo Bunder) in the north of Colaba was opened for passenger traffic in 1819 and the Elphinstone High School was established in 1822.• The construction of the new mint commenced in 1825.• With the construction of a good carriage road up the Bhor Ghat during the regimes of Mountstuart Elphinstone and Sir John Malcolm gave better access of the Bombay Island to the Deccan.• This Ghat, which was opened on 10 November 1830, facilitated trade in a large measure. By 1830, regular communication with England started by steamers navigating the Red and Mediterranean Sea.• The Asiatic Society of Bombay (Town Hall) was completed in 1833, and the Elphinstone College was built in 1835. In 1836, the Chamber of Commerce was established.
Development of Bombay - II• In 1838, the islands of Colaba and Little Colaba wrre connected to Bombay by the Colaba Causeway. In the same year, monthly communication was established between Bombay and London.• The Bank of Bombay, the oldest bank in the city, was established in 1840, and the Bank of Western India in 1842.• The Cotton Exchange was established in Cotton Green in 1844.• Avabai Jamsetjee Jeejeebhoy funded the construction of the Mahim Causeway, to connect Mahim to Bandra and the work was completed in 1845.• The Bombay Spinning and Weaving Company was the first cotton mill to be established in the city on 7 July 1854 at Tardeo in Central Bombay.• The Bombay, Baroda, and Central India Railway (BB&CI) was incorporated in 1855.• The Commercial Bank, the Chartered Mercantile, the Agra and United Service, the Chartered and the Central Bank of Western India were established in Bombay attracting a considerable industrial population.
Development of Bombay - III• The outbreak of the American Civil War in 1861 increased the demand for cotton in the West, and led to an enormous increase in cotton-trade.• The Bombay Shipping and Iron Shipping Companies were started in 1863 to make Bombay merchants independent of the• English.• The Bombay Coast and River Steam Navigation Company was established in 1866 for the maintenance of steam ferries between Bombay and the nearby islands; while the opening of the Suez Canal in 1869 revolutionized the marine trade of Bombay• The Bombay Port Trust was promulgated in 1870 for the development and administration of the port• The Bombay Electric Supply and Transport (BEST), originally set up as a tramway company:• The Bombay Stock Exchange, the oldest stock exchange in Asia, was established in 1875.• Bombay Time, one of the two official time zones in British India, was established in 1884 during the International Meridian Conference held at Washington, D.C in the United States• The Princess Dock was built in 1885 as part of a scheme for improving the whole foreshore of the Bombay harbour.
Key trading activities• Cotton• Opium• Internal trade – related with the above• Banking to facilitate trade• Shipping
Cotton trade• Huge opportunity provided by the American Civil War – Manchester, the centre of manufacturing cotton in England, starved of cotton due to the lack of supply from the US – Huge demand, at inflated prices, of cotton from India• Collapse of this trade when the Civil War ended in the US
Land reclamation• The huge expansion of the cotton trade created huge demand for infrastructure to handle• This directly led to the following: – Accelerated reclamation of land – to connect railway lines to the port areas – Floatation of land companies for these purposes
The role of the Govt of India• Early efforts at land reclamation concentrated on the small creeks crossing the islands. Several of these were dammed or filled in during the eighteenth century.• Dalhousie’s policies – A department of public works was established in each presidency, and engineering colleges were provided. – An imperial system of telegraphs followed. – Dalhousie encouraged private enterprise to develop railways in India for the good of the people and also to reduce absolute dependence on the government.
The Govt & land reclamation• The Govt of the Bombay Presidency wished to create the land links between the newly created railway systems and also the port and warehousing areas• It was also important to introduce ‘cotton presses’ in the warehousing areas – unpressed cotton took a lot of space and attracted higher duty by space than pressed cotton
The Bombay Bubble• In the late 1850s and early 1860s, many companies created in Bombay – Banks – Financial Associations – Land & Reclamation companies• Directors of many such companies indulged in speculation in the shares – At one time, the premia on such shares were up to 96%! – Most of the speculation was done on ‘time bargains’
The bubble bursts• The American Civil War ends – US cotton once again available to the manufacturers in Manchester• The demand for Indian cotton dropped very sharply• When the ‘time bargains’ were due for delivery, most speculators were caught short
July 1, 1865• The market collapsed• Some of the biggest banks and commercial houses were bankrupt• Individuals became insolvent Shades of 1991/2!
The resurgence of Bombay• The private land companies working on the foreshores were bought out• The Bombay Port Trust was created• More stringent financial controls were created• Bombay Stock Exchange created• Manufacturing replaced trading as the biggest driver of economic prosperity – 82 cotton mills and engineering concerns• Bombay grew to be one of the largest financial centres in Asia