Nagarattars Business History

                    In the sixteenth and seventeenth centuries, the Vijayanagar empire disintegrated after four centuries of rule. In the far south, conflict over the spoils between Bijapur and the Marathas, complicated by the most southward efforts at Mughal expansion, stimulated conflict between the kingdoms of Madurai and Tanjavur. The European trading companies arrived, and governmental centralization declined in the face of widespread civil wars . Yet the fortunes of South Indian trade apparently followed an independent course. For some mercantile groups and especially for the Nakarattars, trade flourished during this period. In fact, growth in key sectors of South India's commercial activities may have contributed to the Vijayanagar empire's decline.

                   European guns and artillery made war less expensive. Local chiefs, called palaiyakkarars (or, in British usage, "poligars") could more easily afford relatively small but effective armies. The resulting declarations of independence created numerous "little kingdoms" ruled over by a varied assortment of chiefs, rajas, palaiyakkarars, setupatis, tondaimans , and others. Many of these local "warrior chiefs" demanded recognition as rulers on a par with their nominal suzerain, the Nayak of Madurai, who was the Vijayanagar deputy in charge of the entire southern region.

            The Nakarattar caste adapted to their political and economic environment in a modest fashion, at least during the seventeenth century. Their own oral traditions suggest that they were primarily employed as salt traders within a small area of ninety-six villages in the northern part of present-day Ramanathapuram. District .  In the eighteenth century,  salt in various forms was produced in coastal regions of southern India and traded for inland consumption in exchange for items such as wheat, cotton, rice, dry grain, tamarind, cumin seeds, and long peppers. Castes other than Nakarattars (especially Telugu Komati and Baliga Chettis)  involved in the coastal and international trade. Typically, kings and European companies rented coastal salt "farms" under their control to important merchants and dubashes , who then had salt transported by Muslim traders on cattle back to inland customers. 

       Similar state of affairs existed during the seventeenth century, and that during this earlier period Muslim traders were the source of salt for small-scale Nakarattar traders. It does seem clear that the total scope of Nakarattar trade was only a shadow of what it was to become. Certainly, their subsequent history proves that their itinerant salt-trading activities and the social organization that supported these activities had prepared the Nakarattars to take advantage of the changing commercial environment of South India. 

       In the eighteenth century, the primary Nakarattar occupation—inland salt trading—became dramatically less profitable. In 1792, a widespread drought and famine reduced or halted trade between inland salt consuming and coastal salt-producing regions of the Madras Presidency. The East India Company was able to eliminate them as middlemen in the salt trade and assume monopolistic control over salt production . This may be something of an exaggeration, since the East India Company promptly turned around and rented out salt beds to the highest bidder. But the ultimate effect of these various events was that the price of salt to salt traders, more than doubled from that before 1805.
                        The Nakarattar caste responded to the hostile "push" of salt trade disruption and East India Company pricing policies as well as to the lucrative "pull" of opportunities for money lending. In a process that is still unclear, Nakarattars developed a sophisticated financial apparatus which included provisions for making forward loans to agrarian producers, for extending short-term and long-term loans to political and military leaders, and for transmitting hundis (bills of exchange) among themselves and their clients. Along the way, Nakarattars evolved from a geographically restricted community of salt traders to a powerful, long-distance merchant-banking caste. Details of this process are hard to come by. Historical records of Nakarattar business activities only really begin in the later part of the nineteenth century. But such information as is available provides a marked contrast with the picture of localized salt trading portrayed in traditional written and oral accounts of pre-European Nakarattar history.
                           Nakarattar commercial activities extended even beyond the Tamil mainland. By the end of the eighteenth century, they had gained control of pearl fisheries in the Ceylon Straits and the Gulf of Mannar, usurping this position from Muslim Maryakarar merchants who had previously been granted control of the fisheries by the Setupati (Raja) of Ramnad in the seventeenth century . Various factors seem to have been in play. For one thing, the setupati's influence in granting fishery rights had become considerably eroded. As early as the eighteenth century, administrative rights over the fishery were being strongly contested by the Dutch, by the Raja of Tanjavur, and by the Nawab of the Carnatic. The different claims of these parties were apparently withdrawn only in return for a financial settlement from the Nakarattars . In addition, the Nakarattar takeover may reflect a close financial relationship that Nakarattars built with the setupati who was, perhaps, their largest client zamindar. That is, Nakarattar merchants may have been in a position to influence the setupati to exercise whatever powers he still retained over the straits. In any case, the Nakarattars were ultimately able to exercise monopoly control over the fisheries until 1836, renting them out to Maravar and Paravar boating crews from Tuticorin.
          From at least 1820, Nakarattars also dominated the major coastal trade in arrack and other coconut products from Ceylon to Madras, in rice and cloth from Madras to Ceylon and, arguably, in salt from Madras to Calcutta and rice from Calcutta to Madras and Ceylon. It is difficult to gauge the degree of their domination, but according to contemporary observers, they had cornered the Ceylon rice market, controlling all imports not only of Tanjavur rice but of Bengal rice as well. 

            The Nakarattars' position in the Ceylonese rice market allowed them to take advantage of a marked imbalance of trade strongly tilted in favor of rice exports from Madras to Ceylon. Ceylonese importers made up differences in the trade balance with British sterling, which was earned by trading in the European market for Ceylon cinnamon, spices, coconut products, and increasingly—until the coffee blight appeared in 1868. But Nakarattar agents in Colombo—holding a monopoly on the import of rice—were unwilling to accept sterling as payment unless there were exceptional sterling shortages in India. Accordingly, Ceylonese rice traders appointed their own agents in Madras to whom they sent their sterling bills for sale. They then sold rupee drafts on those agents to the Nakarattar bankers in Ceylon, who discounted (i.e., cashed) the hundi in rupees or rupee credit at a standardized discount rate. The Nakarattar bankers, in turn, sent the hundis to Madras where they could be redeemed at face value (see Figure ). British merchants and plantation owners in Ceylon met their rupee needs in a similar fashion. The Nakarattars "were thus in a position practically to hold the Colombo merchants [Ceylonese and British] to ransom, while the latter were at the same time dependent on the sterling exchange in India 

Reports of Nakarattars trading Bengali rice in Ceylon are also interesting in that they lend support to present-day oral traditions describing the northward expansion of Nakarattar trade and the establishment of Nakarattar firms in Calcutta as early as 1820 .  

               Late eighteenth-and early nineteenth-century Nakarattar commodities trading was tied to some kind of exchange banking system. That is, Nakarattars combined their trade transactions with purely financial transactions such as money lending, the remittance of funds between geographically distant locations, and even quasi-governmental treasury functions to the extent that governing authorities made use of Nakarattar financial facilities. Like any other system of credit extension and financial intermediation, the system worked ultimately because of the mutual confidence (strongly qualified by the lack of any viable alternative) between Nakarattars and their clients. During the colonial period, the Nakarattar system worked more successfully than did most of its competitors. Overall, the record of Nakarattar enterprise remains extremely sketchy throughout the early nineteenth century, both in Ceylon and in Madras (and even more so in Calcutta). Yet, such as it is, the evidence suggests that by 1850 the Nakarattar had already enlarged their economic niche from domestic trade to international trade and had become a major force in the commercial world of Southeast Asia.
            After the "Poligar Wars" of 1799–1800 and the establishment of British rule in 1801, the surviving palaiyakkarars were largely converted into British renters and—following the Bengali practice—were called zamindars . But the change of name and the cessation of violence did little to alter the revenue needs of these palaiyakkarars -turned-zamindars . On the contrary, the period from 1800 to 1850 is widely regarded as one of British overassessment and overcollection of land rents or taxes, called peshkash , and zamindars continued to look to local soukars as financial intermediaries, subrenters, and brokers for agrarian commodities produced on their lands.
               Faced by ever-mounting expenses and tributary obligations to the East India Company, zamindars relied as never before on large-scale loans from any available source of financial credit. To secure these loans, they frequently leased their income-earning villages to Nakarattar creditors, assigning the revenue of villages or sometimes entire districts as security against a loan. Pleading inability to pay out of their own resources, zamindars would then have their Nakarattar and other creditors pay their peshkash dues to the appropriate authority in the form of hundis  (bills of exchange). East India Company officials often had little choice but to accept this payment and hope for the eventual cashing of these bills.
          Such procedures solved the zamindars ' immediate cash-flow problems. But at the same time it increased their difficulties in subsequent years since, whatever original understanding had been reached with their creditors—and, needless to say, the system was rife with opportunities for fraud—the leased land never seemed to produce an income sufficient to pay off the principal plus the interest on the original loan. In addition, the zamindar was still faced with peshkash demands on his entire estate, but much of the estate's produce now went to its moneylender lessees. Perhaps the most insidious effect, however, at least from the zamindars ' point of view, was the consequences of this technique for the East India Company's policies regarding revenue collection. Ultimately, the Company—and, after 1856, the colonial government—erected a British-based legal system as the basis for deciding and enforcing decisions on all revenue and most civil disputes. In the process, zamindars lost their independent jural, administrative, and military-police powers, while moneylenders, including Nakarattar moneylenders, gained considerable leverage through the exercise of legal suits in the court system.

                   As the world economy changed and Crown government replaced Company rule, Nakarattar investments typical of late eighteenth-and early nineteenth-century, Madras became increasingly risky or unprofitable. The East India Company restricted and, in the end, all but abolished a system of government loans to agriculturalists (takkavi loans) that had secured many credit transactions during the first half of the century . Simultaneously, land also became more risky as collateral . It was seldom alienable in an unrestricted fashion, and "landowning" peasants generally did not own any land outright. Instead, they possessed a legally ambiguous and hence conflict-generating share in their joint-family estate. Under changes in the evolving legal system, the time required to settle legal disputes over ownership and enforce a mortgage foreclosure lengthened. Thus, only local residents, who had extralegal sanctions available to them, could safely accept land as security. 

                  In Tirunelveli, the cotton trade was becoming increasingly competitive as Nadar traders developed an edge through their connection with Nadar cotton cultivators —an edge not duplicable by the more highly specialized Nakarattars. Meanwhile, for reasons that are not clear, Marwaris came to dominate the credit needs of cotton traders in Coimbatore. All opportunities for Indian participation in shipping were outlawed by the colonial government; at the same time, Europeans were moving to develop and monopolize new arenas of investment: notably, railroads, military supplies, and sugar; Finally, beginning in 1843 with the founding of the Presidency Bank of Madras, Europeans established their own exchange banks, thereby excluding Nakarattars and other indigenous moneylenders from the market in mercantile finance and currency exchange for private European firms and the market for quasi-governmental treasury functions for the East India Company. 

             These dramatic changes in opportunities for investment had major ramifications for Nakarattar business practice. In the Madras Presidency itself, they ruled out virtually every area of investment. As a consequence, almost the only possibility for profitable investment remaining was, ironically, to invest in or convert bad debts into land ownership. The irony lies in a reversal of the agricultural commodities market in Madras. The agricultural depression that had contributed to the credit hunger of the first half of the nineteenth century at last began to relinquish its hold on the South Indian economy. Between 1823 and 1853 the value of wet land in Tanjavur District had risen from Rs. 12 to Rs. 39 per acre. Then between 1853 and 1868 it rose dramatically, to Rs. 151 per acre. Between 1878 and 1903 the value of land throughout Madras rose from Rs. 245 per acre to Rs. 458 per acre. Moreover, this rise in land value was fueled and surpassed by rises in the prices of grain. For example, prices of dry grains between 1880–87 and 1918–20 rose between 50 percent and 70 percent, and went even higher during the shortages of 1918–20. Meanwhile, Fort St. George raised its tax assessments on dry land only from 7 percent to 12 percent . 

It is not clear that these rising prices increased the profitability of investment in land and agriculture to the extent that they compensated for investment opportunities foreclosed by British interests. Moreover, as noted above, serious legal obstacles often lay in the path of anyone seeking to wrest a clear title away from members of a landowning joint family. Nevertheless, land was sufficiently attractive so that wealthy Nakarattar families, with sufficient economic leverage over their zamindar clients, used this leverage, along with extensive litigation, to acquire considerable lands.

One of the most notable cases is described by Pamela Price (1979). In her account, the story begins with a transaction in which the Setupati of Ramnad leased twenty-four villages in the vicinity of Devakottai to a Devakottai Nakarattar named Al. Arunachalam. The date on which this lease occurred is not clear. But from at least the 1860s on, these villages were not to escape control of Arunachalam's family until the Zamindari Abolition Act of 1947.

The loans that secured these leases for Arunachalam—or, more accurately, the loans for which these leases stood as security—were not sufficient to solve the setupati 's long-term financial problems. During the 1860s and 1870s, he found it necessary to mortgage additional villages, almost on a wholesale basis, to Arunachalam's family and to two other Nakarattar families as well. Other, unspecified portions of Ramnad were leased to Arunachalam's son, Ramasami, and to his nephew, Pethuperumal. Two additional villages went to two brothers from a separate lineage, Chidambaram and Subramaniam. The villages from an entire two and a quarter "divisions" (taluks ?) were leased to their father's brother Ramanadhan. And another three divisions went to two cousins from a third lineage, Me. Ar. Narayan and Me. Ct. Vairavan. 

In the 1870s the setupati was unable to meet the interest payments on loans obtained from these three families, even after the income from their leased lands was taken into account, and the entire gang of Nakarattar creditors took him to court. According to Price, only his early death saved the zamin from being completely divided. Instead, it was placed in the hands of a court-appointed manager until his son Baskara reached his majority in 1889. It is not clear how the Court of Wards satisfied the Nakarattars. But whatever solution was reached, it was only temporary. 

 In the 1880s, Baskara's mother borrowed Rs. 80,000 from Ramasami to arrange a second and secret wedding for Baskara. In 1889, Baskara assumed the title of setupati . His estate was solvent, with a revenue of Rs. 900,000 and a cash balance, at that time, of Rs. 300,000. Three days after his "rendition," Baskara gave or leased two additional "mahanams " (divisions of land: mahanadus ) containing twenty-four villages to Ramasami. It is not clear what he received in return. Ten weeks later, L. Ar. Rm. Ramanadhan (by his initials, a different Ramanadhan Chettiar than the previously mentioned Nakarattar) induced Baskara's younger brother to sue for partition of the zamin and extended Rs. 127,000 to cover legal costs. Ultimately, the court ruled that Ramnad, as a traditional kingdom, had a special status and was not subject to division under laws concerning the Hindu joint family. However, Baskara was forced to pay his younger brother an allowance of Rs. 2,000 per month plus a lump sum payment of Rs. 250,000 to cover back allowance. 

Price describes many different kinds of expenses incurred by the young setupati . But for our purposes, it is perhaps enough to note that by 1890 Baskara had borrowed Rs. 486,000 from Ramasami. In 1891, in return for a lease on most of Hanamanthagudy Taluk, he borrowed Rs. 800,000 from V.A.R.V. Arunachalam and S. Rm. M. Rm. Muthia (grandfather of Raja Sir Annamalai Chettiar). In the same year, he also borrowed an additional Rs. 750,000 from the British-owned Commercial and Land Bank of Madurai. By 1892, Ramasami, still Baskara's chief creditor, had permanent or term leases on 255 villages (at one time he had held title to 500, and his relatives to another 80). In 1893 Baskara's total deficits were Rs. 763,000. By 1894, he owed Ramasami alone Rs. 837,035, against which Ramasami secured a mortgage deed on the entire zamin of Ramnad. In that same year, Ramasami's lease to 24 villages near Devakottai was made permanent. By July of 1895, Baskara had given his various creditors 306 villages on permanent leases and 294 villages on term leases. The villages still paying revenues to Baskara's estate had diminished from 1,011 to 439. His total debt was estimated at Rs. 2 million. In 1896 Al. Ar. Ramasami was officially installed as the Zamindar of Devakottai with a domain fissioned out of Ramnad consisting of the 24 Devakottai villages and containing forty thousand acres of wet land and sixty thousand acres of dry land.  In 1901, Baskara was removed from the managership of Ramnad and replaced by Ramasami. In 1903, Baskara died at the age of thirty-five. 

The case of the Setupati of Ramnad and the Zamindar of Devakottai illustrates events that occurred many times and with many different zamindars and Nakarattar creditors. It was unusual in its scale and in that only one other Nakarattar besides Al. Ar. Ramasami ever had the title zamindar conferred on him by the British, namely, S. Rm. M. Chidambaram, Zamindar of Andipatti. But several other Nakarattars acquired permanent leases or foreclosed on mortgages secured by zamins and assumed the title . In addition, other Nakarattars acquired similar, but generally smaller, inam holdings. It was estimated  that perhaps two hundred Nakarattars in all were able to obtain such minor titles.
                     In spite of such elite Nakarattar land acquisition, the number of Nakarattar families attaining land titles remained a very small proportion of their total numbers. Taking an 1890s estimate of the population as approximately ten thousand people,these two hundred relatively large-scale, landholding Nakarattars could have represented at most one-fifth and more likely represented one-tenth or even one-twentieth of the joint-family units (valavus ) whose heads might have sought to receive title. Moreover, many of the zamins were actually quite unproductive and, according to a Nakarattar caste historian, were acquired as speculative investments in the hope that the government would eventually irrigate the land or build an adjacent rail line. For the majority of Nakarattars, then, and for elite Nakarattars who were not satisfied with the acquisition of land and titles in Madras, the constricting climate for financial investment in India must have been a considerable stimulus to search for new ways of putting their money to use.

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Table 1. Nakarattar Acquisition of Zamins in Nineteenth-Century Madras
Name of Proprietor
Taluk (revenue zone)
Village(s) or Zamindari(s)
1. V. A. R. Arunachalam Chettiar
Okkur and Peravali
2. Al. Ar. Rm. Arunachalam Chettiar
Devakottai Zamindari
3. P. Chidambaram Chettiar
4. P. L. S. A. Annamalai Chettiar
5. S. Rm. M. Chidambaram Chettiar
6. S. A. Nagappa Chettiar
Velavadipatti and Verayadipatti (portion)
7. Rm. Ar. Rm. Arunachalam




8. Ramanathan Chettiar
Padirankottai Tenpatti
Arunachalam Chettiar

Anandagopalapuram Tenpatti
Palaniappa Chettiar

Alivalam Palattali Vathatikottai
9. Muttukkaruppan Chettiar
Olagappa Chettiar

Ramaswamy Chettiar

Anandagopalapuram Vadapadi
Lakshmana Chettiar

Kollukkadu Yenadi
Source : Mahadevan (1976: 47); based on Asylum Press Almanack and Directory of Madras and Southern India (1909: 1693, 1699, 1706); and Raghavaiynagar (1892: cxiv).
               Their opportunity came with the growth of the plantation economy in Ceylon, the emergence of the Burmese rice market, and the development of Malaya's rubber and tin industries. From the mid-nineteenth century onward, British banks largely monopolized the servicing of British credit needs in these countries, and with a few notable exceptions they remained aloof from servicing the credit needs of the non-British. Unlike in Madras, however, the provincial governments of Southeast Asia adopted policies that initially encouraged rather than restricted investment by Nakarattar moneylenders.
 Displaced from the credit markets of Madras, and displaced from British investment and exchange markets throughout greater British India, the Nakarattars found a new niche in servicing the credit needs of the indigenous Southeast Asians and migrant Indians who fought with each other and with the British in a race to produce agrarian commodities for the European export market. Nakarattars were not the sole source of credit.

Particularly in mainland Southeast Asia, they faced competition from the Chinese, who also maintained a formidable network of money-lenders. But the Nakarattars were in a particularly advantageous position. In addition to their own financial and organizational resources, Nakarattars—especially elite Nakarattars—retained ties to British banks and firms and used these ties as a further and substantial source of investment capital. In many ways, this practice merely represented a continuation of practices established during the eighteenth and early nineteenth centuries in Madras and Ceylon. In expanding this general role of financial intermediary, however, they effectively excluded any competing group from the specific niche of intermediary between the British and indigenous Southeast Asians within the overall financial system of British India. 

                    It is difficult to arrive at a reliable quantitative estimate for the scale of Nakarattar commerce during the late colonial period. The earliest figure offered by a knowledgeable source suggests that, in 1896, their total assets amounted to Rs. 100 million , but it is not clear how this estimate was formed. The difficulties in ascertaining any accurate estimate of Nakarattar finances are reflected by the multiple and inconsistent estimates of their assets, ranging from Rs. 536 million to Rs. 1.3 billion, contained in the 1930 reports of the Provincial Banking Enquiry Committees of Madras and Burma and the 1934 report of the Ceylon Banking Enquiry Committee.

                   In the depressed economic environment of that time and in the atmosphere of emergent nationalism and populist politics that characterized public debate in the 1930s, most of the evidence obtained in a public "enquiry" on any topic was highly biased and prejudicial. Enquiries into money lending and banking, agricultural indebtedness, and commercial or industrial finance were no exception. On one hand, the vast majority of relevant testimony was collected from Nakarattar debtors, who painted a predictably black picture of their creditors. On the other hand, testimony by Nakarattar bankers can hardly be accepted as an unbiased alternative. Such as it is, however, Nakarattar evidence provides the only picture we have of the extent of Nakarattar business operations.  

               Of the various estimates of Chettiar capital, those provided by A. Savaranatha Pillai (1930) are particularly interesting in view of the qualifications that he attaches to them. Pillai was the Assistant Commissioner for Income Tax for Madras. His figures were prepared from tax returns compiled by tax officers for "circles" in which Nakarattars had their principal place of business. As a consequence, they are unlikely to reflect any additional bias beyond the distortions built into procedures for recording Nakarattar income.

Pillai describes the kinds of distortions these figures are likely to represent. First, the information they contain is derived from faulty self-reporting of Nakarattar assets in Madras. Pillai notes that Nakarattars frequently underreported their earnings, showing accounts for selected branches of their firms rather than total earnings. Moreover, many Nakarattar firms (including all of the largest firms, according to one informant) maintained their legal headquarters in the principality of Pudukottai—a tax-exempt, "princely state"—and did not report their assets and earnings at all. Secondly, Nakarattars did not report all of their business capital, even inaccurately. By Pillai's estimate, they left out the capital of at least 1,600 Nakarattars whose principal business was located in Burma, and of 193 Nakarattars whose business lay in Madras but outside the areas reported in those tax returns on which his account was based . Consequently, Pillai's subordinates were able to provide only undocumented estimates of these assets. Finally—and this is a major point of misinterpretation that Pillai does not mention —the division between the Nakarattars' "own capital" and "borrowed capital" refers to aggregate measures of all Nakarattar capital in each specific locale, not individual loans and deposits between the Nakarattar firms within locales. Such interfirm transactions would cancel each other out in any aggregate analysis—a point that is frequently overlooked. As a result, many analysts apparently take Pillai's characterization of the ratio of "own to borrowed capital" and similar characterizations of their own business by Nakarattars as applying to individual firms or agencies in a locale, rather than as applying to their aggregation.

With these considerations in mind, the properties that stand out most prominently in the various estimates of Nakarattar business are the Nakarattar investments outside of India and especially in Burma. The following discussion summarizes well-documented conclusions from half a dozen studies of the processes by which the Nakarattar caste expanded its role in colonial Southeast Asia
CEYLON :   Throughout the nineteenth century and into the 1920s, Nakarattars continued to dominate the rice market in Ceylon. From the mid-nineteenth century onwards, however, their commercial activities were strongly affected by two changes in the Ceylonese economy. One of these changes was the arrival of British exchange banks to fund the Ceylon coffee boom of 1840 to 1870. The second change was the overall growth in Ceylon's export market, triggered by the opening of the Suez Canal in 1869 and further altered by the destruction of Ceylon's coffee industry in the 1870s and the growth of its tea and rubber industries. The Suez Canal provided the means for much swifter transit time in Asian-European trade generally and, consequently, reduced transportation costs and increased profits in the shipment of all kinds of commodities. Initially, this change provided little scope for Nakarattar investment, for the most profitable investment and the one which dominated the Ceylonese economy between 1840 and 1880 was coffee, and most coffee plantations were in the hands of the British planters and were financed by British banks. In the late 1870s, however, a coffee-leaf fungus (hemeleia vastatrix ) destroyed the coffee industry. In the five years between 1881 and 1886, production of coffee dropped from its peak, when the area under cultivation was approximately 322,000 acres, to virtually no acreage under cultivation at all.
            In the aftermath of the blight, Ceylon plantation owners looked for alternatives to coffee. In the process, native Ceylonese found opportunities to increase their share as producers in the (slightly) more diversified economy of Ceylon. The new export crops included cinchona (from which quinine is produced), coconut, cocoa, and the two crops that were to become Ceylon's major exports: tea and, after 1900, rubber. By the end of British rule, the Ceylonese controlled perhaps 20 percent of the production of tea and 35 percent of the production of rubber, which together accounted for 90 percent of Ceylon's export. In addition, the Ceylonese controlled 100 percent of the production of coconut , which continued as the major Ceylonese export product even during the coffee boom.

Ceylonese growers and planters entering the growing plantation industries faced one serious problem, however: no British bank would lend them the funds necessary to purchase land, seed, or fertilizer. Similarly, Ceylonese importers and exporters, coconut millers, arrack renters, and "country boutiques" (rural moneylenders who provided credit to small-scale farmers and farm laborers) were faced with the same problem: where to get credit. The Nakarattars were happy to offer a solution and, according to the Ceylon Banking Commission, provided almost all of the investment capital employed to finance indigenous Ceylonese ventures.

It is difficult to gauge exactly how much capital Nakarattars channeled into the production of different crops in Ceylon for the same reasons it is difficult to gauge overall Nakarattar investment. But their involvement was substantial. Between 1870 and 1916, the number of Nakarattar firms in Ceylon increased from 150 to 700. By 1929, at the peak of their business, the total volume of business conducted by Nakarattar businessmen was estimated at Rs. 150 million .

It seems likely that the proportion of Nakarattar investment in money lending expanded relative to their investment in trade and other business ventures after the 1850s. The major difference in Nakarattar business operations after this time lay in additional sources of short-term funds available to them with the establishment of the British exchange banks. These banks were faced with the problem of investing the considerable funds deposited with them by their British clients. Although the British would not extend credit to Ceylonese, they would make short-term loans to reputable Nakarattar bankers (adathis ) secured only by the cosignature of a second Nakarattar. Nakarattars, in turn, loaned these funds to Ceylonese at a higher rate . 

This is not to say that the British banks provided unlimited credit to every Nakarattar. On the contrary, they attempted to build safeguards into their Nakarattar loan operations by excluding small Nakarattar firms from consideration. Loans would be made only if the recipient or cosignatory was on an approved adathi list  prepared by the head office of the Imperial Bank of India, which was supposed to keep track of credit worthiness and indicate the maximum amount of loans for which each firm was eligible. But the safeguards never really worked. 

Nakarattars financed not only short-term loans from their own short-term borrowings, but also risky short-term loans and even long-term loans. If their clients could not repay or if their own short-term borrowings came due before the repayment by a client, Nakarattars could simply repay the British banks,  by borrowing from a fellow Nakarattar. The second Nakarattar, in turn, might have borrowed from the very bank being repaid! Since no security was required on the short-term loans that Nakarattars borrowed from British banks, and since Nakarattars found it easy to circumvent the kinds of limits that British banks placed on loans to them, virtually the only constraint on Nakarattar borrowing was their own sense of caution. In the face of a highly expansive export economy, however, there was little need to exercise caution.

The bubble burst in the "Chetty Crisis" of 1925 with the failure of the A. R. A. R. S. M. firm. In the ensuing bankruptcy hearings, the High Court of Madras estimated the firm's Indian assets at Rs. 800 thousand and Indian liabilities at Rs. 3.7 million; its Ceylon assets at Rs. 150 thousand and its Ceylon liabilities at Rs. 1.7 million

British banks abrupt cessation of all loans to Nakarattars required the Nakarattars, in turn, to call in their loans to Ceylonese clients. The result, as reported by the Colombo Nakarattar association, was a decline in their business volume from Rs. 150 million to Rs. 100 million between 1929 and 1934 .
This was only the start of a series of events that rendered Ceylon inhospitable for continued Nakarattar investment. In addition, and dramatically amplifying every event, the worldwide depression sent prices for agricultural commodities plummeting—including those for tea, rubber, and coconut. What had once seemed safe and profitable loans to Ceylonese made on the basis of projections about expanding markets rapidly became losses. As these loans came due, Nakarattars (faced with their own credit difficulties) refused to grant extensions. Where no other solution was possible, Nakarattars took possession of lands or moveable property securing roughly half the outstanding debts. These actions, in turn, stimulated Ceylonese resentment of the Tamil moneylenders and led to a series of legislative acts and legal proceedings that ultimately drove the Nakarattars out of Ceylon.

Burma, 1870–1930

Nakarattar commercial activities in Burma followed a very similar pattern to those in Ceylon. They were different in that Burma's economic environment provided even greater incentives for money-lending activities (in contrast to investment in trade or fixed capital) than did the environment of Ceylon.  

Nakarattars arrived in Burma with the British conquest of Arakan and part of Tenasserim in 1826. The rest of Lower Burma fell in 1852. Upper Burma was not taken until 1886. But by then the Nakarattar-financed development of Lower Burma was already well underway. Nakarattars began to move into Burma in greater numbers following the conquest of Lower Burma. The first major agency houses are reported in Moulmein by 1852 and in Rangoon in 1854. But it was not until the opening of the Suez Canal in 1869 that Nakarattars were really attracted to Burma in a major way. 

The canal dramatically reduced the transit time of trade with Europe and, in one fell swoop, opened up the European market for Burmese rice. Lower Burma had been troubled by decades of war and was extremely underdeveloped and underpopulated. In what has become the standard interpretation, Burma was a frontier waiting to be developed. Hoping to encourage that development (and the attendant increase in revenue), colonial authorities enacted the Lower Burma Land and Revenue Act of 1876, which established important changes in Burma's land tenure laws . The intended purpose of the act was to provide settlers with a clear title of ownership to land that they occupied and on which they paid taxes for a period of twelve years. An additional, unintended (but, from the colonial point of view, beneficial) consequence of the act was that it provided settlers with land to mortgage as security for loans to buy seed and fertilizer, and to meet other expenses. 

          As in Ceylon, a major reason for the Nakarattars' success in Burma is that they incurred relatively low costs in acquiring loanable funds from each other, from the British banks, or from the Imperial Bank of India; low costs, that is, relative to the cost of credit faced by Burmese or Chinese lenders who lacked access to these institutions. Consequently, Nakarattars could charge lower rates of interest than their competitors did and still make a healthy profit.

Although Nakarattar interest charges were relatively low, their rates (and the concomitant profits) exceeded the profits that could be obtained by rice cultivation. This was particularly the case when, as a condition of his loan, a cultivator was required to sell his crop or repay the loan by giving the moneylender title to his crop at a predetermined, submarket price. The issue raises the interesting question of whether the Land and Revenue Act of 1876 had any consequences other than providing security for Nakarattar agricultural investment and enticing agricultural labor from Upper Burma and Madras with misleading promises of land ownership. In other words, the Act of 1876 seems to have accomplished little more than to provide new clothing for precolonial forms of agricultural tenancy and landless labor.

               In any case, the situation was ideal for Nakarattar operations. The rice-frontier economy of Lower Burma was even more expansive than Ceylon's, and a broader spectrum of agriculturalists could offer good security for loans. The consequences are not surprising.

           The bulk of Nakarattar investment went directly to loans for agriculturalists. Reports for 1929 indicate that in Lower Burma (where Nakarattars invested the bulk of their money) about Rs. 110–120 million was advanced in short-term loans to agriculturalists. Another Rs. 32–33 million was advanced in intermediate and long-term loans. In addition, Nakarattar investment in rice trading was also substantial. Nakarattars provided roughly two-thirds of all agricultural credit, and in many of Burma's provinces Nakarattars provided nearly 100 percent of loans to rice cultivators. These loans frequently took the form of forward contracts which entitled the moneylender to receive the crop in repayment. It is not clear whether taking possession of such crops should be regarded as a return of interest on Nakarattar money-lending activities rather than as a profit from their investments in rice trading. But in any case, Nakarattars used their advantageous position as both moneylenders and rice traders to control as much as 50 percent of Burma's rice crop. From this point, their choices broadened. They could sell the rice to British traders, or they could compete with the British, either sending it directly to Madras and Ceylon or, from at least 1916 on, by first milling it in Nakarattar-owned mills in Burma . Besides these investments, a few elite Nakarattars were also involved in Burma timber and oil  

Examination of the assets and liabilities for 1929 immediately indicates the highly liquid quality of Nakarattar assets prior to the depression: Tun Wai estimates that 100 percent of Nakarattar assets were in cash, hundis , or loans. After the depression, slightly less than 17 percent of Nakarattar assets were liquid; the balance was tied up in land and houses. 

 Nakarattars provided a considerable amount of their working capital from interfirm loans, including their sontha thavanai panam deposits from relatives. These were further complemented by loans from British exchange banks and the Imperial bank. They used very little of their own capital in carrying out their banking business. To place the issue in comparative perspective, the Nakarattars used what is known in Western financial circles as "leverage." 

Driven by the world demand for rice and financed by Nakarattar banking operations, Burmese agriculture proved itself the most lucrative Nakarattar investment in British India. By 1929, the number of Nakarattar firms operating in Burma had reached 1,498. By 1930, they had channeled from 60 to 80 percent of their total assets into Burmese business: by some estimates, Rs. 750 million .Their role was perhaps even greater than in Ceylon. As they were the primary financiers of Burma's rice industry, their impact is directly visible in statistical measures of the growth of paddy acreage, of expanding rice and paddy exports, and of the wholesale price of paddy in Rangoon markets . The consequences of the world depression were no less remarkable. As commodities dropped and Nakarattar clients were no longer able to meet their interest payments on loans, Nakarattars foreclosed on mortgages and wound up owning over three million acres, roughly 30 percent of all Burmese rice-producing land.


A similar process of British pacification and integration into the world economy occurred in Malaya. Again, Nakarattar capital followed the British flag. Arriving at the newly opened British ports of Malacca, Penang, and Singapore in the first third of the nineteenth century, Nakarattars quickly moved to dominate the Asian opium market by extending credit to Chinese traders. By the 1870s and 1880s, they financed most of the opium trade in Singapore and Penang and monopolized a position as intermediaries between British exchange banks and Chinese traders. According to Compton Mackenzie's study of the Chartered Bank of India, Australia, and China, most of that British bank's business with local non-Europeans consisted in the discount of Chinese promissory notes made over to Nakarattar bankers . In fact, Nakarattars obtained most of their Malayan revenue in this way: discounting (i.e., cashing) Chinese promissory notes and bills of exchange and rediscounting them at European banks . The European banks were not willing to extend discounting services directly to Chinese traders themselves, but they were quite happy to deal with agents for the largest Nakarattar firms. Nakarattar profits were generated by the difference between their discount rate and the British discount rate. 

When, beginning in 1914, the British moved in a major way to dig mines and build plantations in Malaya, the Nakarattars were positioned to provide their customary financial services. The opening up of the Malayan interior to commodity production for international trade followed the same "developing frontier" pattern as in Burma. In 1900, in Malayan territory there were perhaps 5,000 acres devoted to rubber cultivation; in 1911, there were 543,000 acres; in 1938, there were 3,272,000 acres. Malayan production of rubber to meet the growing world demand is also measured by her exports of rubber .

The biggest beneficiaries were undoubtedly European firms such as Dunlop or Guthries. But Nakarattars, who secured loans with mortgages to rubber gardens and plantations and who—at least in the case of the largest firms—invested money directly in the purchase of rubber estates, wound up in 1938 with most of the 87,795 acres owned by Indians in Malaya . Malaya's tin industry developed simultaneously with her rubber industry. As recently as 1910, the Chinese controlled more than three-quarters of the tin industry. But shortly after this, the Europeans moved in and, by 1930, controlled more than three-fifths of Malaya's tin export . Meanwhile, tin exports rose from 40,000 tons in 1895 to 67,000 tons in 1929 . Like the owners of rubber gardens and plantations, tin mine owners (especially Chinese and Malayan owners) found difficulty in obtaining credit from European bankers and frequently turned to Nakarattars. This situation, in turn, introduced the Nakarattars to direct investment in mining, both through foreclosure on defaulted loans and through direct purchase.

The depression of the 1930s hit Malaya's export-oriented colonial economy just as it had Burma's. Prices on tin and rubber plummeted. The immediate effects were witnessed in widespread default and foreclosure on loans and the consequent transfer of property to Nakarattar banking firms. The government attempted to stop this transfer in 1931 by introducing the "Small Holding (Restriction of Sale) Bill" under which no sale of land in excess of twenty-five acres could be sold without the consent of the State. Many small Nakarattar firms went bankrupt, (including our great grand  father Nerkuppai Kuthagaikaara lactumanan chettiar’s firm in Penang Business vilasam S.RM.RM )  as did some medium- and large-size firms. But in general the effects were not catastrophic to the degree that they were in Burma, and many Nakarattars remained and continued to invest and profit in various sectors of Malaya's economy.

                             Nakarattar businessmen boasted a remarkably successful commercial record during the colonial period. They outcompeted other groups for an important slot in the Southeast Asian credit market. They doubled their assets every ten years for the thirty-year period for which figures are available . Even the brief overview of their investment activities given above reveals their impact in financing much of Burma's rice industry, much of Malaya's tin and rubber trade, the Southeast Asian opium trade, and an important part of Ceylon's plantation economy. I have not described the similar role they played in Indochina. But for the period from 1870 to 1930, the pattern of their specialization as a merchant-banking caste with a uniquely important role in Southeast Asian society is beyond question.

                Nakarattar success was clearly linked to their ability to master the changing institutional framework of British colonial government and to act as middlemen between the colonial government and colonial society at large. The dramatic economic expansion of the caste as a whole can only be understood as a consequence of the effectiveness of the system of Nakarattar social organization for carrying out activities of financial intermediation, capital accumulation, and investment.
In the Nakarattar system, banking firms as well as other communal institutions were all tied together by relationships of territory, descent, marriage, and common cult membership . In other words, the Nakarattar banking system was a caste-based banking system. Nevertheless, Nakarattar and Western-style banking systems shared two fundamental properties: (1) they maintained networks of individual banks which directly or indirectly invested and deposited funds in one another; and (2) these networks supported special institutions for accumulating and distributing reserves of capital that affected rates of interest and the cost and supply of credit and money.
Nakarattar bankers accepted two kinds of current deposits into kadai kanakkus ("shop" accounts). These comprised demand deposits and a uniquely Nakarattar transaction called a nadappu or "walking" deposit . Nakarattars also accepted fixed-term (two-, three-, or six-month) deposits from fellow Nakarattars into thavanai kanakkus ("resting" accounts) and fixed-term deposits from non-Nakarattars into vayan vatti kanakkus (fixed-interest accounts). The interest rate for nadappu deposits served as a benchmark for rates paid on other deposits and in this respect was similar to the prime lending rate set by the central bank of a modern nation-state. The nadappu rate represented the interest that Nakarattars paid each other for deposits made into their kadai kanakku accounts. The rate was established on the sixteenth day of every month at meetings of Nakarattar bankers in major business centers—notably, Devakottai, Madras, Colombo, Penang, and Rangoon.

Kadai kanakku deposits paid simple interest at the nadappu rate calculated for the period during which a deposit was maintained. By contrast, thavanai deposits paid compound interest calculated by adding the appropriate increment to the principal at intervals of two, three, or six months, depending on the terms of the deposit. Vayan vatti deposits paid interest at a rate calculated by the addition of a few annas per month over the nadappu rate (1 anna = 1/16 rupee). But, like kadai kanakku deposits, they paid only simple interest. 

These Nakarattar interest-setting practices established a staggered system of interest rates, which had two consequences. First, it allowed bankers to attract relatively cheap nadappu deposits from fellow Nakarattars for use in current accounts, subject to unpredictable demand. Second, it allowed them to attract more expensive, but more predictable, fixed-term thavanai deposits from fellow Nakarattars with no immediate cash-flow crisis. In both cases, Nakarattars assured themselves of access to deposit capital at a cost that was cheaper than the vayan vatti rate paid to non-Nakarattars, and far cheaper than the interest charges incurred by borrowing money in secured or unsecured loans. 

One aspect of Nakarattar techniques for establishing and standardizing interest rates deserves comment in the present context. The procedure is described in the Report of the Burma Provincial Banking Enquiry Committee:

[The nadappu rate] is fixed in the evening of the 16th of every Tamil month at a meeting held at 9 p.m. in the Nakarattar temple at Rangoon, and it holds good for all the current Nakarattar month including the sixteen days already passed.... The meeting discusses the general financial situation, and fixes the current [nadappu ] rate for the current month with this, taking into account the current pitch and tendency of the thavanai rate, the rates current amongst the Marwaris, Multanis, and Gujeratis [other Indian banking castes] and the rates for advances by the joint-stock banks to Nakarattars. As every firm has both income and expenses determined largely by this rate, great care is taken to fix the rate according to the needs of the situation. But for the first sixteen days of the month before the rate is fixed, there is a general consensus of opinion as to the rate that will be fixed, the weekly adjustment of thavanai rate and the discussions incidental to that adjustment being sufficient guide.

The significance of this procedure in the present context is the light it casts on the Nakarattar understanding of banking. For Nakarattars, the primary consideration in setting interest rates was to attract fixed-term thavanai deposits and thereby maintain a predictable reserve of capital to underwrite the full range of their credit-extending activities. Without this ability, each individual banker would have had to depend on his own personal capital to finance money lending and commodities trading. But, by working together in a reliable and systematic way, by setting interest rates, and by ensuring each other inexpensive access to deposit capital, Nakarattars were able to draw upon the collective assets of the entire caste. 

This is not to say that each Nakarattar attracted deposits from all Nakarattars. The system as a whole was divided into local segments, based on residential and kinship groupings as well as on the location of agency houses. Membership in these different segments was not exclusive, and Nakarattars maintained crosscutting ties in various differently constituted segments. But segmentation did not eliminate the flow of deposit capital. Rather, it created the channels through which capital flowed, by defining social and financial distances between bankers. Finally, the largest Nakarattar bankers, called adathis or parent bankers, functioned as linchpins for the entire system by acting as clearinghouses for the transfer of financial instruments from firms who might have no dealings with each other but who shared a common relationship with an adathi
The major Nakarattar financial instrument for all transactions was the hundi , a kind of bill of exchange or written order for payment that its drawers used much in the way that Americans use checks drawn on their checking accounts. In order to draw a hundi , a client had to open an account and maintain a correspondence relationship with a banker.   Hundies were sometimes used just to transfer funds from one location to another (a service employed primarily by Nakarattars among themselves), but they were more typically employed in financing trade transactions by Nakarattars and non-Nakarattars alike.

                             Before 1930, perhaps 75 percent of Nakarattar hundis in Burma were trade hundis . In such cases, a paddy merchant, for example, bought a shipment of paddy at a local market in Burma with cash that he transferred to the seller by drawing a hundi on his account in a local Nakarattar banking office. The Nakarattar banker cashed the hundi , receiving a discounting fee of 1 to 3 percent, and took custody of the railroad receipt for the paddy shipment, even though the transaction was not a loan and did not incur rates of interest charged on loans. The banker sent the hundi and the receipt to his firm's main office in Rangoon along with instructions to debit the merchant's account. If the banker had no office in Rangoon, he sent the hundi and receipt to another banker (perhaps, but not necessarily, an adathi ) with whom he maintained an account. The first banker could thus rediscount the hundi with the second banker, who normally extended the service without charging a further discounting fee. In order to regain the railway receipt and take possession of his paddy from either banker, the merchant had to maintain a deposit account with the Rangoon banker in a satisfactory manner. 

The report of the Burma Provincial Banking Enquiry Committee (1930 ) provides the highest estimate of the proportion of borrowed capital in Nakarattar operations, noting that "out of total Nakarattar working capital of over 75 crores [Rs. 750 million], over 2/3rds, i.e., 53.5 crores [Rs. 535 million], was the capital of the proprietors or partners of the firm; 11.5 crores [Rs. 115 million] were deposits from Nakarattars, and Rs. 10 crores [Rs. 100 million] was the sum borrowed from the European banks and non-Nakarattars."
                   Unlike many other castes, the Nakarattars emphasized decision making by the pulli , rather than by joint families, which resulted in an individualistic, Western-like motivation structure for Nakarattar businessmen rather than a structure of group-oriented motivations directed toward the needs of larger kinship units or of the caste as a whole . These associations promoted the individualism of their members.

The pulli was the basic reproductive and daily consumptive unit of the Nakarattar caste. It normally comprised a married man, his wife, their children, and other dependents. A pulli was formed by registration of a marriage in a Nakarattar clan temple  and remained in existence as long as any of its members retained the potential for having children. Hence, both widowers and unmarried children were considered as representing the original pulli formed by the widower and his wife at the time of their marriage; both widower and children were capable of adding new members to the pulli . By contrast, a widow with or without married children (but having no unmarried children) was considered only a "half-pulli ." A widow was viewed as incapable of adding any further members to her pulli . 

The literal meaning of the term pulli is "dot," from a trading practice in which dots were employed for reckoning or counting a quantity of some trade good. In a similar fashion, pullis were the units employed by Nakarattars to enumerate their own population. Nakarattars spoke of the number of pullis belonging to a village or to a variety of larger kin units

 The term valavu literally denotes the architectural portion of a Nakarattar house, consisting of a central courtyard and the surrounding ring of rooms housing each of the resident pullis . This usage was extended to apply to the undivided, extended joint family, usually containing several pullis and sometimes covering three or four generations.Valavu members were traditionally coresidential, an enormously sensible practice, especially during the period when Nakarattars carried out the bulk of their business abroad. At that time, a young man commonly left his wife and children in the care of his father and brothers and worked abroad for a period of three years as an agent, either for his own family's banking firm or for another family's firm. Later, after he had established his own business, he might occasionally go on a short tour of his branch offices. 

Within a Nakarattar valavu , it was the oldest adult male who presided over major decisions affecting its members. Respect for his leadership was marked. Even men of forty or fifty years, with a record of successful business enterprise in their own right, deferred to the decisions of the eldest male until he voluntarily stepped down. In many families, they would neither speak nor sit in his presence. Nor would they undertake any major private undertaking without his permission.

This is not to deny the tremendous pressures operating upon married males of the family to claim their panku (share) of the family estate and establish their own separate family unit. In some cases, these pressures were expressed by the rapid partition of the family soon after the death of the male head. Occasionally, friction between brothers was so great that one or all of them demanded their shares when their father was still alive. In the family of a contemporary Nakarattar industrialist, tension erupted when the youngest son (a man in his late thirties) sought independence from his father and his oldest brother, who had already assumed most of the decision-making activities for the joint estate. The tension escalated to the point where the brothers engaged in public brawls, and the youngest brother was even rumored to have hit his father. Ultimately, the estate was partitioned. The brothers received ownership of separate industrial companies that had been part of the common estate. Both brothers continued to live in houses constructed in the compound of their father's residence in an urban center outside of Chettinad. But they refused to speak to each other or attend the marriages of each other's children. 

Nevertheless, this extreme tension represents an exceptional case. It was far more common for a valavu to approach the Nakarattar ideal and remain together as a three- or four-generation unit under the leadership of its eldest male.

The Nakarattar valavu was a purely productive unit in which brothers replaced each other in order of seniority. Both kinds of developmental cycles are influenced by the biological facts of birth, maturation, old age, and death. But the Nakarattar cycle involved a larger unit of organization and a longer period for the full cycle. In addition, the cycle of partition was affected by the death of the eldest male in a way that differed markedly from developmental cycles in kin groups based on the conjugal unit.
Before the 1930s, most Nakarattar bankers received a specialized training for their profession from an early age. As young boys, they learned multiplication tables and memorized formulas for computing compound interest in a traditional Tamil style on the verandas of their Chettinad homes, probably from a member of their family. From about the age of ten, they learned how to make ledger entries in a business ledger/journal (peredu ) with information received periodically from the family's business office(s ) overseas. Before reaching his teens, a boy left his Chettinad home and was apprenticed for three years as an errand boy (pettiyadi paiyan ) to his family's business agent in a business office abroad. He returned home wearing gold rings, diamond earrings, a gold chain, and a gold belt. And he carried with him all the talismans of his trade: gold coins, diamonds, gems, pearls, rubies, and topaz.
After a short period of reunion with his family and friends, a young Nakarattar man was considered ready to undertake direction of a banking agency on his own. But, on his first time out, he seldom would be put in a charge of a business office belonging to his own family's firm. Occasionally, he might find employment as agent for the branch office of a family in a segment of the patrilineal descent group (kuttikkira pankali ), which consisted of his own joint family plus close collateral families, usually headed by the brothers of his father or paternal grandfather. Sometimes, however, animosity left over from divisive family partitions prevented this form of cooperation between collateral families. 

 Accordingly, in much the way that Nakarattar parents sought families with which to establish a marriage alliance for their daughters, they sought families who would employ their sons and thereby establish a business alliance. In fact, the two quests were intimately related. In-laws—especially maternal in-laws (tayatis )—were often approached as potential employers. Their firms were well known. They could be counted on to feel some responsibility toward their daughter's husband. And they were, themselves, in a good position to evaluate the trustworthiness of their son-in-law. Often, the connection between ties of interfamilial employment and those of marriage alliance served both functions simultaneously, since successful agents were frequently approached as possible grooms for the proprietor's  daughters even where no previous alliance had existed. Both quests were the topics of discussion among Nakarattars gathered together for weddings, funerals, and village ceremonies. And young men in search of their first business agency were evaluated on the basis of their potential business acumen and their potential for linking two families in a mutually beneficial marriage alliance. 

Agents were not always young boys. More experienced men were often hired, particularly in the case of important agencies. Such men normally had run agencies before or had owned their own businesses but, for whatever reason, during the time in question had insufficient funds to operate their own businesses. Alternatively, but rarely, such men might be acting as their own agents and in this situation found themselves in positions to act as agents for other firms as well. In some cases, especially trusted non-Nakarattars would be hired, but this was rare. 

An agent was usually appointed for a three-year tour of duty called a kanakku (an "account"). Salaries were negotiated by the proprietor through intermediaries and, in the 1930s, ranged from 800 to 6000 varakans (one varakan = Rs. 3.5) depending upon the turnover of the firm and the experience of the agent. Fifty percent of the estimated salary for the three-year period was remitted to the agent's family immediately upon his departure for the business station. The remainder was paid to the agent in the form of living expenses during his period of employment and, at the end of the kanakku , as a bonus in the form of a share of the profits. In Malaya, for example, the agent's share was 4 percent on plantation income, 4 percent on rental income, and 6–10 percent on income derived from banking business. In some instances, it was possible for an agent to negotiate shares of up to 12.5 percent of the business.

Just before his departure, the agent visited the proprietor at his residence in Chettinad. There, he signed a contract of appointment (basically, an indemnity bond) and received power of attorney to act as the proprietor's agent in the field. As in contemporary America, there was some flexibility in specification of the agent's powers, the precise terms varying from case to case. But in general he was given the powers to buy and sell property, to discharge mortgages, to draw loans, and to engage or discharge employees. 

The agent and the proprietor then proceeded to the proprietor's family deity and together worshipped the deity and asked for blessings. Afterwards, the proprietor gave the agent oral instructions concerning the conduct of business, the handling of finances, relations with competing firms, and dealing with the Nakarattar adathis who acted as clearinghouses for the majority of Nakarattar transactions. Collecting expenses for travel in advance, the agent proceeded to his port of embarkation, perhaps taking with him a letter of introduction to an adathi —an elite Nakarattar banker with vast financial resources—who maintained among his many branch offices a local office at the agent's port of departure. Agents leaving for Burma usually left from Madras; for Malaya, from Nagapattinam or Madras; and for Ceylon, from Tuticorin or, after 1914, from Dhanuskodi.

On arrival at his destination port, the agent worshipped at the local Nakarattar temple and dispatched telegrams to his family, to the proprietor, and to the agent he was to replace at his firm's business office. He then proceeded on the next leg of his journey to reach the business office, normally located at a railway station or river port in the interior of the foreign country in which he was to spend his next three years. On arriving at his office, he was welcomed by all the resident Nakarattars, eager for news from Chettinad. His arrival was celebrated by a short commensal meal and was followed by a collective visit to the local temple for worship. 

On the first day determined by horoscope to be auspicious, the new agent formally took charge of the business office from the retiring agent. He was presented with  the firm's "general ledger" (peredu ) as well as the agency's other books of account, and he was introduced to the firm's clients on their business premises. The retiring agent would call in as many loans as possible to give the new agent the maximum freedom to invest at his own discretion. He then reviewed the outstanding loans with the new agent. Debts from sound clients were listed in one ledger (pekki pustakam ) and considered as secured loans and good investments. Debts felt to be bad risks were listed in a separate ledger for collection by the new agent, but the old agent was held liable for them. Both agents checked the balances outstanding with the firm's clients and issued new receipts to the clients signed by the new agent. 

When all this was accomplished—a process that could take up to six months—the retiring agent was ready to depart. The new agent certified the retiring agent's bonus calculated at the agreed-upon percentage of the firm's profits over the three-year period of his appointment. If the new agent was not prepared to accept a debt as a good risk, the matter might be settled by intervention of agents from other firms who would agree to take on the debt. If this was not possible, the matter was left for three years until the new agent himself returned to Chettinad. 

On reaching India, the retiring agent went straight to the proprietor's residence with all of his baggage. The proprietor had the right to confiscate any of the agent's belongings. The agent then gave the proprietor all of the

letters written to him by the proprietor while he was in the field. Afterwards, he proceeded to his own village. For the next few weeks and during the next marriage season, he would be the center of village gossip, especially about his improved financial status and the benefits of a marriage alliance with his family. 

If an agent's tenure was successful, he would be called upon by the proprietor to help bring duplicate ledgers up to date, and to advise the proprietor on the best course of action to take during the upcoming three years. If a retiring agent was not in a position to start his own firm, the proprietor might make arrangements to engage him again as agent at the same business office or at another location. As a measure of trust, the agent's power was generally increased by removing any restrictions that might have been placed on the power of attorney granted him during his first appointment. In addition, his bonus would most likely be increased by agreeing that he should receive a larger share of the profits from his agency.

The Nakarattar Agency

Nakarattar agents conducted their business out of modest offices called kitangi or arai normally located in a communal building housing both the offices of other Nakarattar bankers and also a communal temple (kovil ) or rest house (vituti, chattiram , or choultry ). The offices were quite small—perhaps eight feet by four feet of floor space—and contained a wooden box or low desk which held cash, jewels, business papers, correspondence, account books, and a pair of scales. The agent's responsibilities consisted in making daily visits to the local Nakarattar temple; keeping track of cash positions and requirements by reviewing the day book (kurippu ); corresponding with the firm's proprietor; keeping track of exchange rates, commodity prices, and local governmental laws and policies; representing the proprietor at community meetings; and upholding the reputation of the firm by entertaining guests in as lavish a manner as possible. 

The bulk of work in running an agency, however, was actually carried out by a staff (kattu kanakkupillai ) consisting of a first assistant (mudalal ), subordinate staff (aduthal ), a cook (samaiyalkaran ), and an errand boy (pettiyadi paiyan ). Large firms also frequently retained a court clerk (kirani ) and a cashier. None of these employees needed to be Nakarattars. The first assistant was responsible for initiating choice of clientele. In many cases, he did practically everything else as well, and even checked the cash locked in wooden chests before handing over to the agent the key to the kitangi and closing up shop for the day. Field staff were the only employees necessarily fluent in the local language.  

In Burma, they visited clients in their own houses, inspected lands owned by the firm and leased to clients, maintained good relations with village officers, and saw to it that land records were kept in good order. In Malaya they visited tin mines and rubber estates owned by the firm and oversaw salary advances and loans to laborers and other employees. In urban areas, where the agency made unsecured loans to retail shopkeepers and small-scale traders on a kandu kisti basis, the field staff made daily rounds to collect repayment on these loans. The subordinate staff were generally clerks who kept ledgers, made copies of weekly statements, kept petty cash accounts relating to staff meals, and attended to simple registration work required by notary publics, income taxes, and other bureaucratic duties. They also drafted documents, agreements, and contracts with solicitors and insurance companies. Large agencies were often massively involved in litigation and employed separate court clerks for this purpose. The court clerk was responsible for all of the paperwork transacted in the various subcourts, district courts, and high courts of the country of business. Suits were filed mostly against Burmese, Malayan, and Chinese clients. Occasionally there were suits against other Nakarattar firms, suits for the dissolution of a partnership between a proprietor and his son, and appeals against orders brought by civil or revenue authorities. Large banking houses also kept full-time cashiers. 

 All agents employed cooks to provide meals for themselves and their staff. The cooks were normally recruited from the Mukkulatar castes of Chettinad. Finally, Nakarattar agencies also employed an errand boy, or "bearer boy," who kept cash at the counter and ran personal errands for the rest of the staff. An errand boy was entrusted with considerable financial responsibility. He might be sent to other business houses to borrow, loan, or pay back tens of thousands of rupees without any documentation. This money was called kaimattu panam (hand money). The errand boy held the lowest position in the agency. He received almost no salary beyond room and board and a small bonus at the end of his appointment. But he did receive an excellent training, and most Nakarattars started their banking careers as errand boys. Moreover, an appointment as errand boy provided a young man with an important opportunity to make business contacts that would serve him well during his first tour of business as an agent in his own right.

It is difficult to judge the percentage of total Nakarattar firms that constituted adathi firms. On one hand, it was estimated their numbers at between 5 percent and 10 percent. This seems consistent with the number of Nakarattars who obtained title to zamindari lands in Madras . On the other hand, this estimate seems somewhat high measured against indices of the internal stratification of Nakarattars doing business in Burma (their primary place of business) . A corroborating index of stratification is provided by the numbers of branch offices or agencies held by different Nakarattar firms . 

 If adathis are defined by their ability to transmit funds between regions, then it is not inappropriate to extend the set to include the twenty or so firms that maintain at least half a dozen offices in Burma. They maintained multiple branch offices throughout Burma. The twelve largest landholders all served as Nakarattar representatives on the Indian Chamber of Commerce in Burma.  They or members of their families frequently held political office in Burma, India, or Ceylon. Finally, all members of this group of notables were likely to have been major contributors and to have served on boards of trustees for temples and for charitable or educational institutions. In other words, this small group of Nakarattar notables formed an elite group of interlocking connections and influence among the business, governmental, social, and religious institutions of Asian society. 

Adathis operated with a large working capital of their own. In addition, they had access to deposits, loans, overdraft privileges, and other sources of credit from the Imperial Bank of India, from European commercial banks, from recognized banking houses owned by members of non-Nakarattar castes such as Marwaris, from religious and charitable endowments, and from other Nakarattar bankers. The importance of these resources was considerable-especially the importance of loans made available to adathis by the European banks. According to A. Savaranatha Pillai, Assistant Commissioner for Income Tax of Madras in 1930,

Besides deposits that Chettis receive from members of their own community and from the public and the loans taken from the Imperial Bank, they also borrow money from other banks—the National Bank, Mercantile Bank, Hongkong and Shanghai Bank, the Chartered Bank, the P. and O. Bank, Yokohama Specie Bank, the Lloyds Bank. The total amount so borrowed is not known. The extent to which each individual Chetti borrows depends on his personal capacity, the favor he finds in the eyes of bank authorities. There are instances in which some Chettis have managed to get a borrowed capital ten times as great as their own capital. There are many cases in which borrowed capital is up to 2 1/2 times of their own capital. Taking Chettinad as a whole the borrowed capital comes to about 50% of their own capital with reference to the estimates made by the [Income Tax] officers having jurisdiction over the area.  

Pillai was apparently unaware of the correlation between adathi status among Nakarattars and creditworthiness of individual Nakarattars among Europeans. But ,only major, adathi houses were favored with access to loans from European banks. Thus, the huge amount of funds that Pillai describes as available to Nakarattar bankers was actually channeled through an extremely small cadre of very powerful men.

Besides these advantages, adathis also had access to other sources of funds denied smaller-scale Nakarattars. While all Nakarattars transacted hundis (bills of exchange), adathi firms acted as clearinghouses: if a non adathi or even a non-Nakarattar wished to remit money from his overseas business operations, he could draw up a hundi , much the way Americans write checks, and have it cashed by an adathi with whom he maintained an account. Nakarattar hundis could be used much as bills of exchange are used in commodities transactions and also—uniquely—as interest-bearing certificates of deposit. In either case, hundis drawn on adathis had special value relative to those drawn on non-adathi firms. They were widely negotiable and liquid at almost any time—more so than hundis drawn by non-adathis . Accordingly, they would frequently be kept uncashed as insurance against a time when cash was needed on short notice. One consequence of this was to provide still further resources to adathis , who could count at any time on high demand but low turnover for bills drawn on themselves. Moreover, because hundis drawn on adathis were such a good risk, they provided for quick and easy remittance of funds from Southeast Asian business operations to India. Adathis maintained offices all over Chettinad and in the major ports where Nakarattars did business: Madras, Nagapattinam, Tuticorin, Calcutta, Colombo, Rangoon, Penang, and Singapore. The smaller Nakarattar firms maintained accounts with adathis who kept offices in their primary places of business as well as offices in Madras and, perhaps, offices close to their native villages in Chettinad. According to Pillai, the efficiency of hundi remittance through the adathi system contributed to the large proportion of Nakarattar capital maintained overseas: "When funds are required for local requirements [in India] the Chettis draw upon their adathis in Madras. A telegram before 3 o'clock brings them money by next post."  As a consequence, Nakarattars were freed from the necessity of maintaining liquid capital in India, where it was highly taxed, and could deploy their investments in the far more profitable arenas of Southeast Asia.

Finally, Nakarattar adathis also served as political leaders on municipal and district boards, as mayors of cities that served as provincial capitals, as members of legislative councils, and as chairmen and members of the boards of trustees for temples and other charitable institutions in local communities wherever they did business. Such forms of public and religious service made their own distinctive contributions to an adathi 's overall ability to control wealth, although the available data do not allow one to judge the incremental advantages to adathi resources beyond those extended directly or indirectly to nonelite Nakarattars.

In other words, although all Nakarattar firms acted like commercial banks—making loans, taking deposits and so forth—Nakarattar adathis acted like reserve banks for the Nakarattar banking system as a whole. By gaining and controlling access to financial resources outside the system

adathis directly affected money supply. As influential voices in regional interest-setting meetings , adathis not only affected the cost of regional systems of credit, but also helped to standardize interest rates across the multiple regions in which they did business. Adathis served as clearinghouses for bills of exchange transacted across the entire sphere of Nakarattar enterprise. Finally, consciously or unconsciously, adathis created a major impact on local and regional credit markets by using the massive capital resources at their disposal—an impact similar to that created by a central bank's open-market operations.


Nakaravitutis (vitutis belonging to Nakarattars) were ostensibly community-supported lodging houses located in the same building as or adjacent to Nakarattar-supported temples. They were frequently referred to as Nakarattar matams . On the first floor, they contained private rooms, dormitories, storage rooms, meeting rooms, dining halls, and (for those open to women) private kitchens. On the second floor each vituti contained a shrine or temple. The vituti was directed by a board of trustees and employed a manager and staff to provide services for traveling Nakarattars. These services included, in addition to provision of lodging and meals, provision of mailing facilities, making travel arrangements, clearing baggage at local customs houses, and arranging for absentee prayers at local temples. In short, vitutis were extremely useful in the mobile world of the Nakarattar. 

Vitutis were normally financed primarily by large gifts or endowments (kattalais ) from wealthy Nakarattar adathis , although less-prominent Nakarattars with local interests frequently contributed to the endowment fund. Operating costs were also subscribed through endowment. Thus, many of the redistributive functions performed by endowment of temples and temple festivals  were also performed by endowment of the closely associated nakaravituti . In addition, every guest paid what amounted to a nominal rent (called makamai ) fixed by the manager of each vituti and subject to revision according to need. Where the vituti was associated with a pilgrimage site, women made additional payments to cover the cost of specific offerings to the deity (e.g., pal kattalai , "milk endowments"). Even when visiting Nakarattars chose not to stay at a local vituti , and stayed instead in the home of a friend or in an expensive hotel, they paid makamai . 

Vitutis located in the villages of Chettinad were basically extensions of the major Nakarattar village temples and were used to conduct local community meetings or hold village-wide religious ceremonies. Such ceremonial pilgrim houses were generally not used as lodging houses. There was no need. They were paid for by all the Nakarattar families in the village, although the major cost would normally have been born by the dominant, wealthy family or families.

Nakarattar clan temples (nakarakkovil ) all had their own vitutis paid for by clan members; there were separate vitutis for men and women and, in some cases, additional vitutis for subclans. These vitutis were used as lodging houses by Nakarattars visiting the temple on business, such as to register a forthcoming marriage in the family or to pay arrears of temple dues. They were also used for general assemblies for clan meetings. 

Nakarattars also built vitutis wherever they did business. After the opening of Madras harbor in the 1880s, one finds separate Madras vitutis built by Nakarattars of Devakottai and Karaikudi: the former to serve Nakarattars engaged in internal trade, the latter to house traveling women. The Nakarattar Association of Tiruchirapalli also built a community lodging house in Madras, and Nakarattars who did business in Burma constructed the Rangoon nakaravituti there. Nakarattars who did business in Ceylon built a vituti in Tuticorin. The Nakarattar Association of Malaya built a vituti at Nagapattinam. And the Nakarattars of Singapore built a vituti at Penang. The cities and countries where all of these vitutis were located served as major markets for the groups who built the vitutis . Similarly Nakarattar businessmen constructed vitutis in every major place of business throughout Southeast Asia: in Colombo, Rangoon, Penang, Singapore, and so on. 

Nakaravitutis were more than lodging houses. They were social institutions in which Nakarattars came together, exchanged information, and made interdependent decisions. As such, vitutis constituted corporate bodies whose officers represented the interests of local Nakarattar communities. Vitutis at major pilgrimage centers received contributions from Nakarattars and oversaw temple festivals funded by these donations—both annual festivals, such as those carried out since the seventeenth century at Palani , and special festivals, such as Nakarattar-funded temple renewals (kumpapisekams ). Vitutis also undertook the feeding of large numbers of holy men and mendicants on such occasions, and of a fixed number of such people throughout the year. Unlike the private temples of Chettinad, however, nakaravitutis shared these honors with representatives from other communities who also participated in the ritual cycle of major Hindu pilgrimage centers. 

At vituti -sponsored festivals and at more mundane convocations (such as weekly or monthly meetings to set interest rates), vitutis maintained a constant schedule of collective events in which their members came together and exchanged notes on business. As clearinghouses for information about each other and about business opportunities generally, these collective events effected investment decisions, including decisions about the optimum allocation of investment funds and the amount of credit to extend to a fellow Nakarattar. In other words, vitutis provided Nakarattars with access to information about each other's business. They provided opportunities to scout out investment opportunities and arrange for loans by fellow Nakarattars looking for investments. At the same time, the information they provided served as checks against incautious business behavior and unreasonable requests for credit.

Nakarattar Panchayats

Access to public information about each other's business also served to limit situations in which disputes might arise between Nakarattars due to private misunderstandings. When such disputes arose (as they inevitably did), nakaravitutis , along with temples and (at one time) Saivite monasteries (matams ), provided venues for extraordinary meetings of the community to resolve disputes. These meetings were held under the jurisdiction of a respected elder or elders in the concerned community and were called panchayats —on the pan-Indian model—although disputes were typically mediated or arbitrated by a single person. 

But the basis for many of the disputes reportedly brought to panchayats seems to have remained constant. Among coparceners, for example, differences might arise over the provision for a widowed mother or unmarried sisters. Related disputes might arise regarding the payment of seasonal prestations (murais ) to married sisters. In both of these cases, the underlying basis for the argument would be strain between two or more brothers who maintained the traditional joint family for business purposes, but who were unable to arrive at a mutually satisfactory allocation of decision-making powers. In some cases the strain might become intolerable, especially to the younger brother, who would then press for partition of the family estate. If the disputes could not be resolved within the family, the matter might be taken to the village temple panchayat . Disputes between in-laws about dowry payments or treatment of the daughter and wife might be appealed to a clan temple panchayat if the families came from different villages. Other disputes between families from the same clan might also be resolved at a clan temple panchayat . 

It is not clear whether there was a pattern in the choice of venue. But, at least until the 1920s, if there was a dispute between Nakarattars from Devakottai over the honoring of a hundi , the matter was raised in Devakottai rather than in those places where the transaction had been carried out . 

Nakarattar communal organization remained strong and effective until the twentieth century, when changes in the apparatus of colonial government began to offer alternatives to and protection from collective caste action. But until incremental colonial governmental reforms took effect during the 1920s and 1930s, individual Nakarattars ensured themselves of access to the collective pool of Nakarattar capital by maintaining moral norms and institutional sanctions for business cooperation and caste organization.


In kinship, as in finance, trust was the essential ingredient. Its presence was required for transactions to take place; its absence was enough to sever a kin relationship.

Nakarattar terms for kin groups segmented the caste into contrasting categories that provided an index to three levels of social distance: (a) structured kinship (including relations between in-laws), (b) diffuse kinship, and (c) common membership in the Nakarattar caste, but no kinship ties.

Kin included all of one's agnatic relations, collectively referred to as pankali: that is, members of a person's clan (kovil pankali ) as well as members of one's lineage (kuttikkira pankali ) Kin also included members of a one's spouse's lineage, all of whom were referred to as sampantippuram ("in-laws").
Nakarattars employed the terms thayapillai and tayati (plurals thayappillaikal and tayatikal ), in both a broad and a narrow sense. In the broad sense the terms referred to members of descent groups with whom Nakarattars had once established a marriage alliance, even if they no longer maintained the alliance as such.
Nakarattars viewed all of the husband's agnatic relatives as the basic unit of reference for the wife as well as the husband. They constituted an enormously extended family into which the wife had married and were referred to by the focal couple and its offspring simply as "our pankali ." Active sampantippuram members who belonged to the wife's uterine descent groups, however, were marked by a narrow use of the term tayati , signaled in discussion by reference to specific moral obligations

Nagarathar Kinship map

Exactly what was a Nakarattar marriage alliance? Minimally, it was a negotiated agreement between two sets of descent groups related to the husband and wife of a married couple. The primary groups involved were the joint family (valavu )and the encompassing lineage segment (kuttikkira pankali ) of each individual.

                       A share of the bride's natal family's estate was set aside for her and her descendants (especially her daughters) through the mechanism of the dowry, it is accurate to view the formation of these trusts as reflecting a secondary line of inheritance through the female line. If the bride died before bearing any children, all monies deposited as accimar panam trusts traditionally reverted to the bride's natal family.

         A considerable length of time could pass before the bride's children were old enough to benefit from or control their mother's accimar panam in any direct way. Normally, it was not spent until they incurred educational or marriage expenses. In some cases, the fund or some portion of it even remained indefinitely as a kind of communal property under control of the husband's joint family.

   The status of a married person's respective descent groups varied according to the rights, duties, and privileges each spouse possessed with respect to his or her hearthhold (pulli ), joint family (valavu ), or lineage (kuttikkira pankali ). These claims varied widely according to the individual circumstances of the family group involved. In principle, as already noted, the resources in question belonged to the bride. The major part was given by her father (amman, mamakkarar ) or brother (attan, maittunan ) in the form of Siri Danam ("dowry") and in related gifts. However, since she was largely subject to control by her husband, and he was normally subject to control by the senior male in his joint family , her rights were largely nominal. On the other hand, the lack of direct control over decisions allocating the use of funds in the trust did not eliminate all privilege of access for the wife's natal joint family or other joint family among the couple's tayatis . In some cases, the long process of negotiation leading up to the marriage could result in an agreement that some portion of the fund be deposited in the business enterprises of the tayatis .

In general, Nakarattar families felt some aversion to investing an affinal trust in businesses owned by either family in a marriage alliance. sometimes, such funds were never invested in family business since "it was risky to put all the eggs in one basket." Accordingly, affinal gifts were frequently deposited in the business of third parties, either in interest-bearing accounts or in the form of special, interest-bearing hundis . Although these hundis were technically discountable on sight, they were used as long-term certificates of deposit and were rarely cashed without considerable advance warning . In some situations, an independent banking business might be established in the bride's name.

                 Siri danam consisted of a large sum of money which technically remained the property of the bride. In practice, it was deposited in the business belonging to the groom's valavu or was used to open up a long-term, interest-paying deposit account (accimar panam ) in another Nakarattar family's business. In either case, the groom's valavu exercised considerable control over its use. However, if the bride died without giving birth to any children, the sum was returned to her family.


 In fact, until 1947, Hindu women had no rights of inheritance, and there was no way to test in advance the potential contribution a wife's council might eventually make to her family's decision making. Nevertheless, a bride generally did make a substantial contribution to her husband's family business. The bride's counterpart to a groom's inheritance was her dowry along with other affinal prestations that resulted from a marriage alliance between two families.

The size of a dowry was determined by delicate negotiations between families. If the groom's family was seen as too greedy or the bride's as too stingy, a wedding could be called off, although blame would be placed else-

where—for example, on the sudden discovery of a previously unnoticed misalignment of horoscopes or a previously unknown "parallel cousin" common to both families. Other affinal prestations were not subject to explicit agreement, but a general understanding and set of expectations would be generated and generally followed.

The bride's and the groom's families both maintained lists of the bridal gifts, called kalyanattukku saman vaitta vivaram . If the bride died without any issue, the gifts were returned to the bride's family. Prestations of sir varisai (varisai = "row on row") were quite similar to prestations of sir among the groups described by Dumont. They constituted a variety of items, including those for use by the bride, items for use by future children (including items reserved for the sir varisai of any daughters that might be born), and items for use by the groom (which would not be returned to the bride's family in the event of the childless death of the bride). The difference was that among the Nakarattar, sir varisai was given all at once on the occasion of the wedding itself

Story of chettinad:

. The story of Nakarattar settlement in Chettinad has it that a Pandyan king invited 502 Nakarattars, belonging to seven families, to migrate to his own kingdom in order to carry out trading activities vital to the health of his realm. As an inducement and, it is implied in the histories, as their right, he gave them collectively the land of Chettinad, and he gave each of nine subgroups derived from the seven families a centrally located temple.The descendants of these nine groups are said to form the exogamous dispersed clans of the Nakarattar jati that can be documented from the seventeenth century to the present.

By asserting that the Pandyan king gave them the temples and lands of Chettinad, the Nakarattars claim that they should be regarded as the king's surrogate protectors and rulers in Chettinad—or, simply, as local kings of Chettinad. Paraphrasing Neale's (1969) formulation, "To be given ownership is to rule." And indeed Nakarattars wielded authority and justified political action in Chettinad by reference to their historical charter. They acted as kings by seeking and attaining political authority as trustees for the kingdomlike territories that colonial authorities designated as zamins , by obtaining title to zamins in their own right, and, as the colonial system evolved, by gaining seats on governmental bodies such as municipal and district boards. In these capacities, they conducted themselves as kings by overseeing the majority of endowment and managerial tasks for temples, roads, markets, and other public facilities.

There were qualitative and quantitative differences in the kinds of worship that occurred in clan and village temples. Clan temples celebrated one or two collective festivals each year and played a ceremonial role in the marriages of their members. But they were not the primary focus of worship for rites concerning the welfare of the village, as was the village Siva temple. Consequently, they were not a frequent focus of worship for their members. In contrast, village temples staged six or seven seasonal festivals that also served as occasions for celebrating their members' life-cycle ceremonies. In other words, village temples were more intimately bound up in the lives of their members than were clan temples.

Ancient  History of Nagarathaar


Before History (till 2898 BC.)

Initially the Vaishyas lived in Sandhyapuri of the Sambu Islands in Naganadu. This borders the present state of Andhra Pradesh and Tamil Nadu. They were of Chandrakula Gothiram. Later they embraced Saivism. There is actually a question over when the Nagarathars joined Saivismand when they would renounce Saivism? "When the sun and the moon were born on this earththe Nagarathars became Saivaites and when they are no more they would renounce Saivism." According to Pandit Kathiresan Chettiar. At that time they were saivaites, praying to Maragatha Vinayagar, doing trade in precious stones and having the equal respect like the king. Naganadu is near Andhra. Later, an earthquake, according to DR. V.SP.Manickanar destroyedthis Naganadu.


Leather Age (from 2897 BC to 790 BC)

During the Kaliyuga year 204 (2897 BC) the Vaishyas could not bear the harassment of the Naga king and they came down to Thondaimandalam, namely Kanchipuram. At Kanchipuramthe king welcomed them with a warm heart and royalty. He gave them land to build templesand mutts, They continued their devotion towards Maragatha Vinayagar and continued their trade with gems till the Kaliyuga year 2311 (790 BC) and lived happily


Old years (789 BC to 706 AD)

During the Kaliyuga year 2312 (789 BC), Prathaparasa the king who ruled Kanchipuramim posed unjustified severe fines and punishments. Hence, the Vaishyas from there went to Cholanadu. They settled along the banks of River Cauvery at Kaveripoompattinam.Manuneedhicholan, the king of that time requested the Vaishyas to live in three streets, East,West and South streets. He gave the Vaishyas three honourable rights. One was the coronation of the king, the second was to have an independent lion flag of their own and the third was to have golden kalasams in the bungalows they lived in. When they got these rights the Nagarathars were called " Rathina Maguda Thanavaisyar". They continued their prayers towards Maragatha Vinayagar.

In the Kaliyuga year 3775 (674 BC) Poovanthicholan who was ruling at that time harassed and  all the women folk. Hence, the 8000 Vaishyas leaving behind all their assets, 502 boys and the Maragatha Vinayagar under the custody of their guru Atmananda Sastri to do pooja and look after, they all committed suicide. The guru Atmananda Sastri taught them the five-letter panchatara mantra for upadesam, till to this date they remember it with the help of the Patharakkudi Madam.

In the Kaliyuga year 3784 (683 BC) the old aged Poovanthicholan requested the Vaishya youngsters to do the coronation ceremony for his son Rajaboosana cholan. The youngsters said that they were incapable of doing the coronation since they were all bachelors and there were no eligible girls in the community to get married to. The king consulted with Esana sivachariar and pronounced that Vaishyas can marry Vellala caste girls. The Vaishya youngsters said that they would marry the girls from the Vellala caste, but they would not give their girls by birth to the Vellala caste. The king requested the Vellala community to accept this. The Vellala community accepted on the condition that their community guru would perform the dhikshai for their girls and the girls born to them. The East Street, which was divided into seven branches, had 502 Vaishya youngsters married to Solliya Vellala girls. For these girls their guru was Alagiya Gurukkal from Srivanjiyam.


4.Middle Age (707 AD to 1565 AD)

During the Kaliyuga year of 3808 (707AD) Soundarapandian the Pandya king went to Chola kingdom and met Rajabooshanacholan. He stated that during Keerthibooshanapandian's period the sea came inside till Thirubhuvanam and washed away the whole area. After that, 18successions of Pandya kings have ruled but there were no good families living there. He saidthat he his inviting some good families to set up a living. He requested for some good families and some Vaishya traders. The Chola king called for the Rathanamaguda Vaishyars and requested a few to go. At that time they stated that wherever they go the three streets would go together and live, and not live separately. On hearing this, the Chola king asked everyone to goto the Pandya kingdom. The Pandya king assured the Vaishyas, that he would give them a place to live, land to build temples and mutts, and took them along with him.

Soundarapandian gave land demarcated, West of the sea, East of Pranmalai, North of River Vaigai and South of River Vellar (present Chettinadu), to live, build temples and mutts. The Pandya king gave Ariyur town and Pranmalai temple, Sundarapatinam and its temple and Ellayatrankudi and its temple.The three streets Vaishya youngsters could not live together for long because of difference of opinion created since they married Vellala girls of different - different groups. Hence therefore,those who lived in the West street in six branches at Kaveripoompatinam were given Ariyur and Pranmalai temple, South street in four branches were given Sundarapattinam and itstemple, East street by seven branches were given Ellayatrankudi and its temple. The MaragathaVinayagar was under the custody of Ariyur. They agreed upon the rituals and prayers to becommon. After this the six branched were called Ariyurar, four branched as Sundarathar and the seven branched as Ellayatrankudi Nagarathar also Nattukottai Nagarathar.

As the days went by there was difference opinion amongst the Ellayatrankudiyars' and they   separated branch wise and met Soundarapandian and requested for different temples. Pandian agreed, the temples given were Mathur, Vairavanpatti (712 AD) Iraniyur, Pillaiyarpatti, Nemankovil, Ellupakkudi (714 AD) and Soorakkudi, Velangudi (718 AD). Henceforth the creation of the nine temples took place. When the population increased there were many branches with in the temples. This is the only community in the world to be divided on the basis of Sivan temples.

During the Kaliyuga year 4262 (1161 AD) Nemankovil's Arunachalam son of Ellanalamudaiyan Muthuveerappa Chetty of Manickam Street, Velangudi at Poongkondrai's five year old daughter, Muthumeenal was taken to the capital by Karunyapandian in the chariot when he as hunting over there. The Nagarathars on knowing this grouped together and decided that the girl should get justice according to the caste practise and the met the Pandya king and asked him to release the girl. The Pandya king said that if had known it was their girl he wouldnot have brought the girl over to the capital. He said that, he had heard that if he handed over the girl, the girl would be killed. He also said that if at all he heard that the girl was killed, they would have to pay eight heads and eight hundred sovereigns of gold and he handed the girl.The Nagarathars took leave of the king and killed the girl on the way according to the caste regulations. Then they prepared themselves for the punishment ordered by the king.

 For the seven branches seven heads were ready and there was a question mark over the one remaining head. At that time among the seven branches, Ellayatrankudi, Eraniyur and Pillaiyarpatti wereas one branch though they had different temples, it was decided that this branch give an extra head. Henceforth Okkurudayar a branch of Ellayatrankudi came forward to give the extra head.The condition put was that they get the first honour in the temples and mutts including the Viputhi. The Nagarathars accepted. Later they went to the king and stated that they have brought the eight heads and eight hundred sovereigns of gold. The king was so depressed and said, the sin of killing one girl itself is enough, you don't have to give anything and you can go.The Nagarathar's returned back.

During the Kaliyuga year 4389 (1288 AD) there was trouble and Ariyurpattinam was demolished. The sixty-four Vaishya families that stayed there escaped to the Malayala kingdom(Kerela) and started living near the River Korattar. They built a temple for MaragathaVinayagar and continued the prayers.During Kaliyuga year 4644 (1543 AD) there was trouble at Nattarasankottai due to robbers and they raped some Nagarathar women. Nagarathars met their Gurus' and requested them to give permission according to their custom to kill them. The gurus did not accept. On the insistence of the Nagarathars the gurus accepted and went to Kasi to have a holy dip in the Ganges.

Nirambia Alagiya Gurukkal alone returned to Thulavur after three years. The Kala mutt guru did not even return after twelve years. Hence some of the Nagarathars went to Ramanathasamy of Thirupunavayil to get upadesam. After twenty-one years during the kaliyuga year 4665(1564 AD), the guru of Kala mutt came and joined. The Nagarathars met him and explained the happenings. The guru said that those who got dhikshai from Ramanathasamy belonged to Vamisa, henceforth they and their generation have got to get dhikshai from Vamisa generationsand gave a mutt at Patharakudi, which is also known as Ellanjeripattinam at Kanakapuram.From then on Nagarathar men had Kala mutt and Patharakudi mutt; the women had Thulavur mutt, which were the three Gurukalams.

5.Later History

In 1278 AD, Eranikovil and Pillaiyarpatti the two branches of Ellayatrankudi separatedcompletely and decided to live as separate Pangaligals. Till date the two branches have nomarriage alliance among themselves.As the days went by Kala mutt and Patharakudi mutt merged together and now Patharkudimutt alone is for Nagarathar men as the Gurupeedam.As days passed by the Nagarathar families which lived around the places of the temple spread to various places. It is described that they lived in ninety-six places and now they live only in seventy-five places.The Vaishyas were basically traders. One of the groups of traders was called the Chetty. Later this word changed to Chettiar. One who does business is a Chetty is often referred to as a stingy person. There is no population boom for the community. They are very selfish in thinking and they think of themselves and their community.

Silapathikaram, a book written by Elango Adigal, states that the main character in the book Kovalan is a Chettiar. Salt trade was famous during the Pandya regime. After going to many places to do business finally they would converge at Palani during the festival of Thaipoosam and write "Magamai". Magamai is an annual tax paid to the god. According to the capital invested or profit got a percentage is calculated and the magamai is derived. Here they set right their accounts and look at there profits and accordingly write their magamai. Later they give free food to all called "Annadhanam". This can be seen in Palani on a stone engraving, where itstates that Kuppan Chetty's son Kumarappa Chetty of Nemam Kovil was the first to do salttrade at Palani with the help of Deivanayaga Pandaram. Usually all Saivaites strictly follow thetwo beneath

 1.Pray to Lord Ganesha, Lord Siva and Lord Muruga.

 2.No one should do anything during the stars of Karthigai and Thiruvathirai according tothe Sastras.

                     But the Nagarathars being ardent devotees of Lord Muruga and Lord Shiva they performed the Karthigai Padumai for their sons and Nataraja's Thiruvathirai for their daughters. The above went against all sastras. No other Saivaite community do these functions,hence these solely belongs to the Nagarathars.

 3.The Nagarathars consider the viputhi as a sacred and holy item whereas others consider it just the opposite, since it is got from burning and as ash.

                      The womenfolk of the Nagarathar community put viputhi and the manjal kungumam on their forehead, while the others put  manjal kungumam only. The viputhi is considered so sacred that during marriages the oldest lady of the house, even though she is a widower, holds a lamp on the left hand and puts viputhion the groom and bride. When the Nagarathars travel anywhere they make it a point that theycarry viputhi in a special bag called the "viputhi pai". During death also the Nagarathars placeviputhi considering it to be a sacred item. No other Saivaite gives so much importance toviputhi unlike the Nagarathars.

4.The Nagarathar community also have people ordained as Nayanmars among the 63 Nayanmars.

 Karaikal Ammaiyar a lady was ordained as a Nayanmar and was the first person tosing "Thirupathigams". Her Thirupathigams were called "Mootha Thirupathigam". BeforeSaint Appar Swamigal and Saint Thirugnanasambandhar Swamigal could sing thirupathigamsthe womenfolk of the Nagarathar community sang thirupathigams. Another person to be ordained as a Nayanmar is Eyarkai Nayanar.

The Nagarathar society is divided into Koil Vazhi Nagarthar consisting of Nine Koil (Temple). This division in the society is for the purpose of chosing their alliance and nothing else. Bride and the Bridegroom cannot be from the same Koil as they are considered to belong to the same family and treated as Annan-Thangai (Brother-Sister ).

The Nine Koil are as follows :

·        Illaiyathangudi

·        Mathur

·        Vairavankoil

·        Nemamkoil

·        Illupaikudi

·        Surakuddi

·        Velangudi

·        Iranikoil

·        Pillaiyarpatti