The fate of an anti-crony capitalist

The brief glory of Swadeshi Steam Navigation Co, founded by V O Chidambaram Pillai, offers a case study from the past

VO Chidambaram Pillai and the fate of an anti-crony capitalist

VO Chidambaram Pillai is not a household name. He comes up rarely in any list of the heroes of India’s freedom movement. He deserves better. From Tuticorin, a coastal town in southern Tamil Nadu, he promoted, raised funds for, and ran, Swadeshi Steam Navigation Company (SSNCo), to take on the might of the British India Steam Navigation Company, and of the British empire itself. And failed. And that failure illustrates what happens if you are the antithesis of the much-reviled crony capitalist.

Crony capitalists are held in bad odour. This, of course, is at variance with the historical evolution of large companies. The East India Company had a state-sanctioned, state-supported monopoly for doing business with India, in whatever manner required. The giant companies that built America’s rail network worked on the state. One of President Abraham Lincoln’s many preoccupations during the American civil war had been to make land grants to the Pacific Railroad.

Stanford University was founded by one of the bosses of Pacific Rail, in memory of his son. Its faculty and alumni essentially built Silicon Valley, out of orders placed by the US Army for innovative solutions to its defence needs.

The Japanese Zaibatsu were actively supported by the imperial state, and, after World War 2, by the ministry for international trade and industry, to grow into giant conglomerates like Mitsui, Mitsubishi and Sumitomo. The Korean chaebol grew big from running grocery stores (Samsung) and making face cream (Lucky Chemicals-Lucky Goldstar — LG), with active state support. Thyssen and Krupp waxed big on arms order from the Third Reich, and never waned, even after Germany’s defeat in World War 2.

They were all honourable men, sure. The British colonial government sup pressed Indian businesses, not always by policy. Tuticorin saw busy traffic to and from Colombo, carrying merchandise and people, most of them tea garden labour toiling in Ceylon, sourced from various parts of the Madras Presidency. Early attempts by a group of local merchants in Tuticorin to hire steamships to get the service that the incumbent monopoly, British India Steam Navigation Company, denied them, was foiled by inimical actions of the assistant district collector, customs officer and doctor — the labourers had to go through quarantine, before they could leave the port.

The year was 1906. The partition of Bengal the previous year had set many parts of the country seething in nationalist fervour. The foremost Tamil poet of the time, Subramania Bharati, gave fiery, yet elegant, voice to the sentiment, and amplified it. Nationalist leaders and monks from the Ramakrishna Mission addressed audiences in the Madras Presidency, articulating collective angst against the colonial administration’s surgical move to divide and rule.

A recent book by A R Venkatachalapathy, Swadeshi Steam, vividly describes the story of SSNCo and its founder. The merchants, who were not just denied service but also insulted by officials of the British steamship service that monopolised the traffic between Tuticorin and Colombo, decided to set up a shipping service of their own. They needed more than mercantile experience to do this, and took the help of an English-speaking pleader, Tamil enthusiast and nationalist, V O Chidambaram Pillai.

The idea of setting up an Indian shipping company, to challenge the British, gripped VOC’s imagination. It blended with his nationalist mission and work. While he himself did not possess the capital or business experience to start a shipping company, he more than made up for that lack with his chutzpah, zeal, energy and commitment.

Prominent members of the initial group of merchants, who had approached him with the task of starting up a rival to the British India Steam Navigation Company, developed cold feet. VOC did not lose faith in his mission. He persuaded a group of merchants to promote the shipping company, constituted as a private limited company, with an authorised capital of ₹10 lakh (two steamships were expected to cost ₹5 lakh), drew up and issued a prospectus inviting the public to subscribe to the capital, went around the land mobilising investment and started operating.

Initially with leased/chartered ships, and later with its own vessels, SSNCo operated from mid-1906 to 1910, and it was liquidated the following year.

The company was undercapitalised, lacked professional management and its directors clashed with VOC, its driving spirit, on continuing to mix up political activism and his role at the company. For VOC, the shipping business was part of his nationalist enterprise, as part of which he supported strikes, gave fiery speeches and defied government orders.

VOC was charged with sedition, tried and sentenced to two terms of life imprisonment, but was released in 1912. He died in debt and litigation.

Would SSNCo have succeeded, if VOC had been a crony capitalist? Without active hostility from the state, the company could, in all probability, have gained experience and expertise, and flourished.

The book, Swadeshi Steam, would primarily be read as a masterly piece of history writing. But it deserves to be read as a business case study, to understand how the state can make, or mar, a business.