March 15, 2021
11 am EST
“Wagering on the Future: Cotton, Credit and Contract Law in Colonial Bombay.”
Meghna Chaudhuri, Visiting Assistant Professor, Department of History, Boston College
Meghna Chaudhuri is a Visiting Assistant Professor at the Department of History, Boston College. She is working on her book project “A Measure of Value: Life, Land and Agrarian Finance in South Asia, 1830-1960.”
Descriptions of Bombay between 1863 and 1865 abound with references to “ephemeral schemes,” a “mania” for shares which seemed to have gripped the city in a fever dream. For a brief time, while Bombay’s hinterlands became the principle supplier of cotton for global production, and the end of the American Civil War seemed a distant probability, brokers fueled a huge credit bubble that drew in ordinary residents, Parsi entrepreneurs, Gujrati and European shipping and financial firms. Land reclamation companies linked to general term lending companies popped up by the dozen, all linked to a network of banks including the government run Bank of Bombay. A large proportion of the speculation in shares, and mechanism for extending credit lines through those shares occurred via “time bargains.” These forward contracts proceeded on the unspoken premise of permanent deferral, as both parties at the end of each contract was buying, selling, and borrowing against a contract for shares whose value lay in their continuous circulation rather than in any reflection of value residing in a correlated capital asset. Trading in futures and options was illegal in common law, and was prosecuted as such in the numerous cases that were heard at the Bombay High Court as numerous time bargains officially contracted for July 1, 1865 were defaulted on. Using the time bargain contract during Bombay’s share mania as a lens, this paper will track this early moment in the evolution of contract law in South Asia before futures trades were slowly incorporated into common law across the empire from the 1880s onwards. In doing so, the paper will also illuminate how the mixed race composition of the protagonists of the speculation bubble shaped the legislative and judicial approaches to the cases in contrast to ways in which the colonial state legally defined a separate economic sphere inscribed as culturally specific native gaming and gambling practices.