Dec 23, 2008

Mumbai and American Civil War Connection

American Civil War is connected to the growth of Mumbai. Here's how.

Before the 1850s, India used to export cotton to Briton and import textile. However, the the cost of importing textiles ballooned to Rs. 20 millions by 1860. This led Mumbai entrepreneurs to create a cotton mill industry in Mumbai. By 1870, there were 13 cotton mills in Mumbai.

Cotton supplies from the US were interrupted during the American Civil War. Before the Civil War, cotton mills in England used to import only about 20% of their needs for cotton from India. However, with the blockade of the Confederate ports, Indian cotton prices rose. By the time, General Lee's army was defeated (1865), traders in Bombay had earned 70 million Pound Sterling in cotton trade. So much was the haste to make money in cotton that farmers in Gujarat were cutting down grain crop ready to mature to free up land for cotton.

Ambitious projects such as Backbay Reclamation were launched around that time. Dock Yards building also had attracted a lot of money. Premchand Roychand - one of the wealthiest cotton trader made fortune during this time. He donated money to build Rajabai Tower. He also lost considerable fortune in the reclamation projects.

The cotton bubble deflated as soon as the American Civil War ended. Large number of speculators were bankrupt. However, Bombay had launched itself towards industrial growth. Migration of workers from the rest of Maharashtra to Bombay was on and it was the place where fortunes were to be made. It was only a matter of time.