Transcription
How did Mumbai become rich? Until 1750, Bombay was a group of islands with no greatness. Then something changed with a controversial commodity, drugs and in particular opium. The sale of opium is illegal in India today. But that commodity made Bombay rich.
In the 1750s, opium was being produced in two parts of India. The first one in Vanasi and Patna on the eastern side of India. The second one in the central region of Malwa that is today in Madhya Pradesh. Both the regions were ruled by Maharajas. But in 1757 and 1764 the British East India Company won a battle that gave them full control of Varanasi and Patna. These two regions became part of the Bengal presidency.
With control of the two regions, a big source of opium was under the control of the East India Company. But East India Company did it differently. They established a monopoly on the entire opium business. Opium could be cultivated only if it was to be sold to the East India Company. East India Company would pay farmers in advance to grow raw opium. In return, the farmer would supply opium at a fixed price. The raw opium would then be processed in the factories of the British. The finished product would then reach Kolkata where it would be auctioned to traders and merchants. The East India Company would make a profit of 400% to 500% on the trade. The traders would take that opium and smuggle it to the one market addicted by it, China.
China wanted more and more of opium. That's where the other opium producing region comes in. Malwa in Madhya Pradesh. It was not under the British rule and thus had no restrictions on opium production. The Bombay merchants stepped into Malwa. Bombay merchants do at Malwa. What East India Company does in Varanasi and Patna. They provide money to farmers to grow opium and money that was double the amount East India Company paid to the farmers. Then the merchants processed the opium and exported it to China from Bombay. China loved the Malwa opium as it was 25% to 30% cheaper than the Bengal opium and more potent than the Bengal opium controlled by the East India Company. The merchants in Bombay had hit a bonanza. Opium prices were high and so was the demand. The biggest merchant became a young man Jamsetjee Jejeebhoy.
The British were not happy. They controlled Bombay in 1805. They put a ban on export of opium from Bombay. But Malwa opium found its way through another port Daman close to Bombay which was under the control of the Portuguese. The Portuguese levied a tax for the transit of the opium. The trade went on and Bombay merchants became richer and richer. By 1823, the 40-year-old Jamsetjee Jejeebhoy earned 2 cr rupees and became arguably the richest man of India. In 1830, the British gave up. They allowed the export of opium from Bombay on payment of a transit tax. The results are instant. In 1816, exports of Bengal opium were four times of Malwa opium. By 1831, exports of Bengal opium were only half of Malwa opium. The British earned wealth from the transit tax. It became the second biggest revenue source for them.
Around the same time, a new trader enters Bombay, David Sassoon, and he rises fast. Meanwhile, the Chinese are completely addicted to opium. The Chinese government decides to act tough against the export of opium. They seize an entire Bombay consignment in China. The opium traders complain to the British and in 1839 the first opium war breaks out between Britain and China. Britain wins the war and extracts major concessions from China. The biggest beneficiary David Sassoon. Sassoon replaces Jamsetjee Jejeebhoy as the top player in opium. The third player in the opium trade is the Tata family. Nusserwanji Tata learned about the China trade and exported Indian opium to China and tea and silk from China. The trade makes him very wealthy. Bombay gains as well due to their wealth as well as many other opium trade players.
The British used part of the tax revenues for investing in infrastructure project that reimagined the transportation of goods and people and is today the lifeline of Mumbai, railways. In 1853, the first train is inaugurated from South Bombay to Thane. Meanwhile, Jejeebhoy's family funded the construction of the Mahim causeway in 1841 that connected Bandra to the rest of Bombay. The family helped set up the JJ hospital in 1845. They even funded the oldest art institution of India in 1857, the JJ School of Art. He thereafter invested in an industry that defined Bombay for the next 100 years, cotton, where he held 13 directorships.
But the key player in cotton were the Sassoon family. They deployed the opium money into cotton. They took the trade further by building Sassoon dock in 1875, the first wet dock of Bombay that helped grow the cotton industry. In 1925, they were the single biggest mill owners in the city with 14 textile mills and Bombay was the cotton capital of India. Like Sassoon, the Tata family also moved away from opium into the cotton business. They set up the business in the 1870s. They then built Taj Hotel in 1903 and the Tata Airlines in 1932. In a way, railways, docks, airlines across Bombay had one starting point, opium, because that's what made Bombay rich.