History of moneylending during British era: A case study of Chettiars as the major money lenders

This paper aims to study history of moneylending during the British era by focusing on Chettiars as the professional moneylenders. Money lending is synonym with the name of Chettiars or ‘Chetty’ in Malaysia.Notably, Chettiars were the major moneylenders during the era of British from late nineteenth century until Independence of Federation of Malaya in 1957. Chettiars, a Tamil speaking business caste from South India migrated to Straits Settlements during nineteenth century to make fortune in trade.Gradually, their long tradition and experiences as indigenous banking caste and trade on open market created opportunities for them to involve in the money transactions in the Straits Settlements.Lack of credit and bank facilities made the local and foreign traders at the the Straits Settlements to rely on the Chettiar agents. Role of Chettiars became more prominent after the late nineteenth century on wards due to development of commercial economy such as rubber and tin under British laissez faire policy in the Malay states.Yet, neither banking nor British credit facilities could cater/accommodate the fast growing commercial economy in Malay states.Thus, the local and Asian capitalists relied on loans from Chettiar for their investments to open up thick virgin jungles for rubber cultivation and tin mining.Large capital and liberal lending methods resulted Chettiars to be known as leading money lenders in the Malay States.Through moneylending activities, Chettiars also played other roles in the socioeconomy development of Malaya.However, borrowing became rife especially among the small capitalists (farmers, tin miners and petty traders) and low income civil servants during the recession period and reached alarming stage whereby British realized the need to curb money lending activities of Chettiars.Thus, British implemented laws and administrative regulations which were later on proof to be unsuccessful until World War II. After the Japanese occupation, British became more tactful towards Chettiars until more stringent law was enforced to control money lending activities in Malaya. Apparently, The Moneylenders Bill, 1951 was the first of its kind/legislation and created greater dis-satisfactions among the Chettiar moneylenders which they foresee as the end for their money lending activities in Malaya.Within this context, this paper reveals on the history of money lending activities during the British era from glorious period of the Chettiars’ role as the leading money lenders until end of their moneylending activitie