Fiery Dragons, and Other Names for Moneylenders

June 5, 2009

The Chettiars were moneylenders from Chettinad, in Tamil Nadu, India. In the 18th and 19th centuries they spread with British dominion into Ceylon (now Sri Lanka) and Burma (Myanmar). They played a major role in financing the “reclamation” of the swamps and jungles of southern Burma, which turned the Irrawaddy Delta into the rice bowl of the British Empire. Chettiars lent mostly on collateral, including the land being reclaimed. When the Great Depression hit, world rice prices plunged, Burmese farmers defaulted, and the Chettiars foreclosed. By 1938, they owned a quarter of the land in Burma’s main rice-growing districts. But not for long. Anger about British rule and the Depression found an easy target in these foreign moneylenders who had alienated native Burmese from their own soil. After the Japanese invaded, the Chettiars were forcibly expelled.

I know all that because I just read the first two chapters of Sean Turnell’s new and vigorously written Fiery Dragons: Banks, Moneylenders and Microfinance in Burma. (A chunk of the book is free through Google.) Alas, I learned too late that he was to present it here in Washington in April.

I perused (and ordered) the book because I wanted to learn about what I thought could be a powerful exhibit in a court trial of history’s moneylenders, an illustration of how credit inevitably sucks wealth toward the already wealthy. Turns out Turnell’s text would be a powerful exhibit—for the defense. He convinced me that the Chettiars’ rates were not so high, that they generally faced competition from each other and more informal moneylenders, and that they would much rather have had their loans paid back than repossess people’s land.

Chapter 3 chronicles the even more dismal story of the credit cooperative model in Burma, which the British brought in from Germany. You can read Sean’s paper about it too.

I like these dueling quotes:

The vitriolic quote has precedents. Here’s Henry Wolff in 1893:

Henry William Wolff, People’s Banks: A Record of Social and Economic Success

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1. Sean Turnell Says:
   June 6th, 2009 at 7:50 am

   David – Thank you for this generous (and if I may say so, insightful!) review.

   I think the story of the Chettiars is one that goes beyond Burma in its importance, and in underlining the possibilities of the application of finance and rights to property for economic development.

   Over the last few years I’ve got to know many Chettiars. It’s a very small community (about 100,000 people) – and is now relatively poor. They more or less lost everything in Burma – which is yet another reason why the hatred directed towards them (not least by the current military regime ruling Burma) is more than a little unjust. In the end the Chettiars are probably the greatest bestowers of financial ‘aid’ (even if unintentionally) that Burma has ever had.

   And, of course, as is also true of some other moneylender groups, the Chettiars applied a number of methodologies in their range of financial services that are not without lessons for microfinance and the like today.

   Warmest regards,

   Sean Turnell

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