Been successful for 100yrs? Doesn't mean that sun will always shine bright. The doomsday for the prosperity of Chettiars in Burma was not very far since 1930s.
History repeats itself! Millenials would definitely remember the shut down of Lehman Brothers in 2008-09. That was the Depression of known times which impacted the legendary Lehman brothers.
The Great Depression (1929 - 1939)
Great Depression in the early 1930s caused a steep fall in the price of paddy. The basic business model of Chettiars was based 100% on the price of the produce. Chettiars were typical fine with getting their Principle+Interest post harvest, which means there were no EMIs during the year.
Burma was the 'Rice Bowl of South East Asia'. The paddy based economy witnessed a boom in the pre-Great Depression period. The paddy price tables below would give you an exact indication of the boom and the fall.
The peak price of Paddy in 1926 was 202, a steep increase from 1900 to 1926. Until 1930, Chettiars were able to manage and sustain, 1931-33 saw the price drop by more than 50%. The demand for the produce in the market declined. This led to the Burmese cultivators not being able to pay back their loans in the following year. This cycled into Chettiars not being able to lend money for the next cycle.
While liquidity was a major concern, one unsustainable decision that Chettiars took was to execute & take over the collateral which was mortgaged. In most cases, the mortgage was typically the land. The early adopters who took ownership of the collateral for debt default encouraged all other Chettiars to follow the suit. (The community building has its cons too - 'herd mindedness') The impact was significant - 25% of all cultivable land and 50% of the non-cultivable land belonged to Chettiars. Killer right?
Trust me - this was fine until 1940s. British raj ensured that every fume was suppressed. 20 - 25 yrs from Great Depression, Chettiars occupied lands of Burmese and it was just fine.
Phase of humiliation & discredit
4th January 1948 - Myanmar was liberated. The dormant volcano started fuming again. Alongside British, Chettiars were also looked at as aliens who came to conquer the land. While British ruled the country (which isnt direct land grab), Chettiars owned the title documents to the lands, in black and white. Liberation from Chettiars was the next big thing. Parliamentarians were discussing bills to get the land back from Chettiars, but Military took it in their hands to liberate the country from foreigner's domination.
1962 - the year Myanmar turned from being a democratic to a military dictatorship. My Great grandfather was a financier in Burma. Around late 1950s, my grandfather joined his dad in Burma, spent 8 years schooling in IES (Indian Educational Society) central school, Yangoon. My grandfather remembers his days where school textbooks called Chettiars as
which means "dogs" in Burmese. Military dictatorship ruled out Parliamentarian discussions. Chettiars were mistreated to an extent that it could never be undone. Ramanathan aiya and my aiya together started explaining the humiliation their fellow Chettiars underwent and how they had to walk back all the way to India. Hitting, Spitting, Stamping, Snatching of money held and public harassment were immense. The wealth that Chettiars had, was nationalized. Harassment went to the extent that the Government gave 175 kyat per Chettiar for him to find his way back home. Paltry sum isnt it?
Within 1968, there were almost no Chettiars in Burma. They fled into Indian territory leaving behind their investments/principle.
I took a minute to reconcile - If Chettiars today in Malaysia and Singapore claim themselves to be rich and self-sufficient, what should Chettiars in Burma claim? Back of the envelope calculations, Burma was 70%+ of total Chettiar investments. Just that Chettiars in Burma werent treated the same way Malaya or Singai treated their counterparts.
Now that most part of history & business lessons are done, Ramanathan Aiya brought out an interesting perspective of the current reality in Burma. Stay tuned for the next!
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