Letter from America: The Rohingya Question – Part 2

By Dr. Habib Siddiqui

When the British occupied Arakan, the country was a scarcely populated area. Consequently,

formerly high-yield paddy fields of the fertile Kaladan and Lemro river valleys germinated nothing but wild plants for many years.

It is worth noting here that those valleys in the pre-Burman colonization period used to be cultivated by Rohingya Muslims and Hindus, whose forefathers were abducted from Bengal in the 16th and 17th centuries by the Magh and Portuguese pirates to work as slave labors.

Rice Cultivation, Indian Immigration and the Chettiars

With the overthrow of a despised regime and the emergence of a new friendlier administration promising an era of prosperity and encouraging return of the refugees, the descendants of some of those former refugees to British Bengal (today’s Bangladesh) who had fled Bodawpaya’s persecution were lured back to Arakan.

As noted elsewhere by this researcher and others, the vast majority of these returnees, however, were Maghs and not the Rohingya Muslims and Hindus who had settled permanently in more prosperous southern parts of the Chittagong District and came to be known as the Rohis by the local population. Likewise, most of the Chakmas, many Marmas and other smaller tribes (and even many Maghs) refused to go back to Arakan from Bengal. [The latter enjoy full citizenship rights in Bangladesh.]

As the demand for rice increased – not just in fertile deltas of Bengal and Burma, and the nearby territories of Thailand and Malaysia but also in far away Europe, the British began to develop Burma as the rice bowl for the British Empire.

As noted by Sean Turnell, a political economist, Burma’s entry into the commercial imperatives of the British Empire, the conversion of the Delta into rich paddy-producing land initially required little capital. Britain’s great ‘exchange banks’ took care of shipping, milling and other export-finance needs, and up until the middle of the 19th century the amount of capital required ‘on the ground’ in land preparation was slight.

In the early years of British rule in ‘Lower Burma’ the growth in rice exports was founded on cheap and surplus labor within cultivator families, and upon abundant land that required little more than clearing. That is, in those early years of British occupation, make-up labor from outside was not necessary to grow rice in Burma.

In 1857, after the Sepoy Mutiny in India (or more appropriately, India’s First War of Independence) was suppressed by the British colonial government, the price of rice increased by some 25%. With the increase in rice price, land holdings were extended by cutting down the mangrove forests and by draining swamps, which required money. Thus came the Chettiars from Tamil Nadu to provide the necessary loan for cultivating land, because the British banks would not grant loans on mortgage of rice lands and the British government did not consider it necessary to open land mortgage banks or agricultural loan agencies. The Chettiar money-lenders charged an interest rate that was considered to be exorbitant by vast majority of the loan-seekers. In line with its policy of laissez faire the British government did not attempt in any way to control the usurious rates of interest.

Who are the Chettiars?

Sean Turnell provides some useful information which is worth sharing here. The Chettiars (also spelled Chettyars), or more properly the Nattukottai Chettiars, Hindus by faith, came from the Chettinad tract of what is now Tamil Nadu. Chettinad was a collection of 76 villages which, at the time of their activity in Burma, stretched from Ramnad District and into Pudukottai State of ‘British’ India. The Chettiars were originally involved in salt trading, but sometime in the 18th century they became more widely known as financiers and facilitators for the trade in a range of commodities. By the early 19th century finance had become the primary specialization of the Chettiars, and they became famed lenders to great land-owning families (zaminders) and in underwriting their trade in grain through the provision of hundis and other indigenous instruments. Of course, they became known to the British Imperial authorities as bankers who had been ‘for centuries developing and perfecting to a remarkable degree a system of indigenous banking’.

The first Chettiars seem to have arrived in Burma at the outset of British rule – in

1826 accompanying Indian troops and laborers in the train of the British campaign in Tenasserim during the first of the three Anglo-Burmese wars. By 1880 the Chettiars had fanned out throughout Burma and by the end of the century they had become by far the ‘the most important factor in the agricultural credit structure of Lower Burma’. By 1905 it was estimated that there were 30 Chettiar offices in Burma. According to the Burma Provincial Banking Inquiry Report (BPBE), the most dependable source on the extent of Chettiar operations, this number had increased to 1,650 by 1930. Nearly every well-populated part of Lower Burma there was a Chettiar within a day’s journey of every cultivator. They essentially became the money lenders in the agricultural sector.

One example highlighted by the BPBE was in Prome, where it was estimated ‘that Chettiars lend one-third of all the crop loans directly and finance the Burman lenders to such an extant that Chettiar money forms altogether two-thirds of all loans’. In terms of functional distribution, Chettiar loans were overwhelmingly employed in agriculture. Two-thirds of all Chettiar loans outstanding in 1930 were held by agriculturalists, the remainder roughly categorized as ‘trade’. Chettiar lending was secured against collateral, and mostly against title to land.

The influx of paper money in the Burmese economy brought in temporary laborers, coolies, clerks, mechanics, cooks, etc. from the British Empire. (Even U.S. President Obama's Kenyan born Muslim grandfather served as a cook to a British officer in Burma.) As we shall see below, most of those temporary workers did not live longer than the cultivation-harvest period. The Chittagonians who were even closer and costing the least money to cross the Naaf River did not stay longer than required to finish such tasks as planters and harvesters.

Burma has always been xenophobic, racist and bigotry-ridden. But no other group was probably as much vilified as the Hindu Chettiars were in the British colonial period. Sean Turnell writes, “The economic history of Burma contains a number of contentious themes, but none has been as divisive as the role of the Chettiars. Celebrated as the crucial providers of the capital that turned Burma into the ‘rice-bowl’ of the British Empire, this community of moneylenders from Tamil Nadu were simultaneously vilified as predatory usurers whose purpose was to seize the land of the Burmese cultivator.

The truth, as in so many things, was more nuanced. The Chettiars were the primary providers of capital to Burmese cultivators through much of the colonial period, but the combination of the collapse of paddy prices in the Great Depression, the Chettiar insistence of land as collateral, and the imposition of British land-title laws, did bring about a substantial transfer of Burma’s cultivatable land into their hands. The Chettiars did not charge especially high interest rates and, indeed, their rates were much lower than indigenous moneylenders. Nor did the Chettiars set out to become landlords, fearing that this would only antagonize the local population and lead to reprisals against them. Their fears were prescient, for in the end the Chettiars were expelled from Burma, in the process losing the land they had acquired and much of their capital.”

With the opening of the Suez Canal in 1869, the price of rice soared, which, led to more acreage for cultivation in Lower Burma.

Chettiar success in Burma came to a terrible end with the onset of the global Depression of the 1930s. Paddy prices had been trending downwards across the latter half of the 1920s, but they went into a steep decline in 1930 and remained at unremunerative levels until after the Second World War.

The impact of the collapse in paddy prices was soon felt amongst the cultivators of Burma’s lower delta, whose general situation was summarized by Burma’s Commissioner of Settlement and Land Records in his annual report to the Government for 1930-31: “The year was one of extreme depression for agriculture in Burma. The…agricultural economy had for many years had been based on the assumption that the price of paddy would be Rs.150 or more per 100 baskets. The result was that contracts for wages were made and loans were taken on the same scale as in previous years at the beginning of this cultivating season. Consequently when the crop was harvested, after the labour had been paid for at the rates agreed upon, and the rents paid in kind at the old rates, the tenant though left with the same share of produce, found its value reduced by half, and was unable to repay his loan and often not even able to pay the interest.”

It is worth mentioning here that a handful of British farms entirely controlled the wholesale trade in rice, and Indian and Chinese merchants controlled the retail trade. As noted by Aung, the British farms agreed upon themselves not to buy any rice until the harvesting season was long past and the new planting season was approaching. The farmer, therefore, had no option but to sell the rice at a lower price, and, thus, default on loan payments. Of course, at the end of this cycle of distress were the Chettiars. Unable to collect even interest payments on their loans, let alone the principal, increasingly Chettiars came to foreclose on delinquent borrowers and to seize the pledged collateral. For the most part this was land. By 1936 they have become owners of 25% of land in the 13 Principal Rice-Growing Districts of Burma.

Exposed to the understandable anger of indigenous cultivators and the demagoguery of Burmese nationalists of all stripes, they became easy scapegoats not just for the current economic distress, but the foreign domination of Burma’s economy. According to historian Harvey, “Alien in appearance and habits, the Chettyar was the butt of the Burmese cartoonist, he was depicted as Public Enemy No.1, and the violence of the mob was directed against him, a canalization, a projection of the people’s own faults and failings on to a convenient victim.”

In the vernacular press the demonization of the Chettiars soared to extreme heights, and they were accused of all manner of barbarities well beyond a mere rapacity for land. Forgotten there was the fact that the total Chettiar loans outstanding as at 1939 was £50 million, a figure, which according to Furnivall was ‘the equivalent of all British investments in Burma combined’.

According to Turnell, “The Japanese invasion of Burma in 1942 brought with it many harrowing scenes, but few would match that of the flight of the Diaspora of Indian merchants, workers, administrators and financiers who had done much to transform Burma in the colonial era.

Prominent amongst those fleeing the onslaught of the Japanese, just as they had been prominent in the transformational role played by Indians in Burma beforehand, were the Chettiars of Tamil Nadu. Scapegoats then and now for the misfortunes that heralded the breakdown of Burma’s colonial economy, the Chettiars were not allowed to return to their lives and livelihoods following the granting of Burma’s independence in 1948. Portrayed by British colonial officials and Burmese nationalist politicians alike as almost pantomime villains in Burma’s 20th century dramas, they left the stage as unambiguous victims.”

To be continued...


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⇒ http://rumpunsuara.blogspot.com/2012/12/letter-from-america-rohingya-question.html