COMMERCIAL PRACTICES Bills of Exchange (Hundi)
During this period hundis or bills of exchange became an important from of money transaction.
Hundi was a paper document promising payments of money after a period of time at a certain place.
To begin with, the practice started because of the problems involved in carrying large amounts of cash, for commercial transactions.
The merchants interested in carrying cash to a particular place would deposit it with a sarraf who would issue a hundi to the merchants.
The merchants was to present it to the agent of the sarraf at his destination and encash it.
This started as a safe and convenient method of transferring money.
The use of hundi was so widespread that even the imperial treasury and state were using it.
Many big merchants also issued hundi.
A commission was charged by the sarrafs om each hundi.
The rate of exchange depended of the rate of interest prevalent and the period for which it was drawn.
The period was calculated from the date of issue to its presentation for redemption.
The rate fluctuated as it also depended on the availability of money at the time of issue and maturity.
If money supply was good, the rate would drop.
In case of scarcity, the rates rise.
To give you a rough idea a few rates are provided.
In normal times 1 ½ per cent was charged for hundis from Patna to Agra and 7-8 per cent from Patna to Surat.
For the hundi drawn at Ahmedabad for Burhanpur 7 ¼ per cent was charged in 1622.
Banking
The sarrafs apart from issuing bills of exchange, also received money for safe deposit.
This was returned to depositor on demand.
The depositor was paid some interest on his deposits.
The rate of interest payable to depositors kept changing.
The rates available for Agra, for 1645 and Surat for 1630 works out around nine and half percent per annum.
The backers in turn would give money on loan to the needy on a higher rate of intrest.
Usury and Rate of Interest
Money lending for personal needs and commercial purposes was an established practice.
Much of trading was conducted through the money taken on interest.
Generally the sarrafs and merchants both indulged in money lending.
Sometimes the moneylenders were called Sah, a distinct category.
The loans were taken for various purposes.
The money was taken on loan by peasants for paying revenue and repaid at harvest.
Nobles and zamindars would take it for their day-to-day expenses and repay it at the time of revenue collection.
Money lending for business purposes was also very common.tapan Roy Chaudhuri shows that peasants took loans at a high rate of 150 per cent per annum in Bengali in the eighteenth century.
The rate of interest fox Patna in 1620-21 is given as 9 per cent annum, while around 1680 it seems more than 15 per cent.
At Qasimbazar (Bengal) the rate of interest in 1679 is given as high as 15 per cent per annum while the rates for the corresponding period for Madras (8 per cent per annum) land Surat (9 per cent per annum) were much less.
The English factory kept a vigilant eye on the interest rates and would supply money to their factories in various regions after taking loans from the place where interest was lowest.
Buottomry
A number of uncertainities and risks were involved in long distance sea coyages.
These uncertainties gave rise to a new practice called ‘avog’ or bottomry.
It was a type of speculative investment which was quite popular during the period of our study.
In Bottomry money was lent at high rates ranging between 14 to 60 per cent.
The money was lent to be invested in a cargo for a particular destination.
The rate of interest depended on the risks involved.
The lenders were to bear all the risks of voyage.
Insurance (Inland and Marine)
Another important commercial practice prevalent in India on a limited scale was that of insurance or bima.
In many cases, the sarrafs used to take responsibility for the safe delivery of goods.
The English factory records also refer to the insurance of goods, both inlands and overseas.
The rates for sea voyages were higher than goods going throught land.
MERCHANTS TRADING ORGANISATIONS AND THE STATE
Since towns were the centres of commercial activities, the administractive officers there looked after the smooth conduct of trade.
The maintenance of law and order and providing peace and security were important for better business environment.
This was the responsibility of the kotwal and his staff in the towns.
Merchants had their own guilds and organizations which framed rule.
We get references to such organizations in our sources.
In Gujarat, these were called mahajan.
The most influential and wealthy merchants of the town was called nagar seth.
Sometimes it was treated as hereditary title, Nagar seth was a link between the state and the trading community.
If there were certain disputes among the merchants, the mahajans resolved them.
Generally their decisions were respected by all.
The Mughal administration also recognized these mahajans and took their help in matters of conflicts and disputes or to seek support for administrative policies.
In 1639, Shah Jahan invited Virji Vohra, one of the biggest merchants of Surat, to enquire into the grievances of merchants against the governor of Surat.
The merchants in spite of huge resources (Virji Vohra is said to have left an estate of Rs.
80,00,000 at his death) did not take much interest in politics.
Shaista Khan tried to monopolise a number of commodities, especially saltpeter.
Mir Jumla, another prominent noble, was a diamond merchant.