Following on comments he posted on the blog here and here, I had a good e-mail conversation with Asif Dowla last night. Dowla is not just some guy who kibitzes on obscure microfinance blogs. With Dipal Barua, the longtime second-in-command at the Grameen Bank, Dowla wrote The Poor Always Pay Back: The Grameen II Story. He was present at the birth of Bangladeshi microcredit: he studied under Muhammad Yunus, then served as the Grameen project's accountant in its early days.One thing we discussed: the lack of non-Western examples in chapter 3's history of financial services for the masses (a lack I bemoan in the chapter 3 post). Dowla pointed me to the Mughal empire system of takavi lending.From the Banglapedia:
Takavi an advance made to a raiyat by his superior tenureholder to enable him to recover the agricultural losses caused by natural calamities. The term takavi is the combination of sanskrit 'taka' (money) and Arabic 'kavi', which means strength or strengthening....Takavi was an important agricultural institution during Mughal times. When agriculture was affected by any natural calamities such as flood, drought, and epidemics the Mughal government used to suspend or minimise revenue collections and furthermore, made takavi advance towards reviving the farming strength of the peasantry. Its distributing agents were the zamindars and talukdars who were advised to lend takavi to raiyats and make its necessary adjustment on account of public revenue. The takavi advanced during the seasons of distress was collected during seasons of affluence. Such loan was always free from any surcharge like modern interest.
I'll think about how to fit this interesting example into chapter 3. I have not been able to find more about it online beyond this source, which Dowla sent me.The dominance of the West in my historical narrative is probably inevitable. It is not an accident that credit cooperatives and savings banks originated in England at the dawn of the industrial revolution. As I write in the chapter:
That the same region, in the same period, was unleashing the greatest economic transformation since the advent of agriculture was not a coincidence. The industrial revolution at once created new needs and new possibilities. On the one hand, the need for financial services for the masses grew. Mechanization depressed the prices of goods such as cloth, throwing traditional artisans out of work. There arose a new class of factory workers who earned pittances next to their capitalist-employers’ fortunes. Enclosure of once-common lands accelerated the flight to towns and cities of erstwhile subsistence farmers. In the early 19th century, advances in sanitation and hygiene lowered the death rate and unleashed the population explosion that so worried Thomas Malthus. In England, the billowing of the ranks of the poor led the government to expand an Elizabethan welfare program called the Poor Laws, whose rising cost—along with fear of unrest among the “lower orders”—spurred a search among the elite for more constructive and long-lasting responses to poverty. On the other hand, good things coming out of this turbulent time fertilized an array of experiments in meeting these great needs: the more widespread use of money, increasingly sophisticated financial institutions, and the egalitarian ideals of the American and French revolutions.
Still, just as modern microcredit is not as new as is often thought, I'm sure that some financial innovations of the 19th century England were not as novel, globally, as it might appear.
