THE PERIOD OF COLONIAL RULECarr, Tagore & Co. was the prototype of the later managing agencies
which became so prominent in India. Whenever Tagore thought of a new
profitable venture—a coal mine or a steamship company, for example—he
sponsored the founding of a new firm for this purpose and put Carr,
Tagore & Co. in charge of managing the enterprise. In this way he built up
a captive market. For instance, he could sell coal from the mine at a higher
rate than the ordinary market rate to the steamship company which he also
controlled. He also sponsored a pioneering venture in the banking business
by founding the Union Bank together with several other Calcutta
merchants. This was supposed to be an independent bank and not
subservient to any one company, it was to follow conservative banking
principles and was not to get involved in speculative ventures of individual
firms. In fact, it did work along these lines quite successfully for several
years, although Tagore himself did not refrain from heavily influencing the
conduct of the bank’s business. But the next economic crisis of 1846–7
swept away both the Union Bank and Carr, Tagore & Co.
Tagore, who died in London in 1845, did not live to see this. After his
death no other Indian entrepreneur achieved comparable success, because
the favourable conditions which marked the years of his prosperity were
not to be found again in later periods, nor had they ever prevailed before
his time. Prior to 1830 the East India Company and the agency houses had
dominated the scene; after 1847 began a new period of Indian economic
development which was less favourable to Indian private entrepreneurs.
The years from 1830 to 1847 were a period of rapid expansion in the
export of agricultural produce; the East India Company, which was no
longer permitted to trade on its own account, worked like an export bank
by financing the business of Indian traders so as to transfer the tribute in
this way to London. After 1847 the railway age began also in India and
British capital was invested in the construction of thousands of miles of
Indian railways. The British investors got a guaranteed rate of return of 5
per cent on their investment, which was a very good rate at that time. In
India everybody who had some money to spare would expect a higher rate
of return in trade or in moneylending. Thus there was a split capital
market and the types of investment which attracted British and Indian
capital were clearly set apart.
During these years of economic change the British had penetrated
deeply into the interior of India and had organised the revenue settlement
of many provinces. The ‘permanent settlement’ remained restricted to
Bengal and Bihar. In the South, Tipu Sultan and the Marathas had
established a rather rigorous direct assessment of the peasants; in the
North the assessment of zamindars or village communities prevailed. The
British continued nearly everywhere the type of assessment set up by their
immediate predecessors. But they were much more efficient in revenue
collection. The Mughal revenue administration clearly differentiated