Responses in South Africa to the outbreak of WWI: The Impact of the War on Indian Trade

The Natal economy, like the rest of South Africa, received a major growth stimulus as a result of the outbreak of the war. The shortage of imported goods stimulated local manufacturing, while the influx of foreign troops created boom conditions for local traders. Indian merchants dominated the wholesale and retail trade in Durban, Pietermaritzburg, and the country districts of Ladysmith and Newcastle (Hiralal: 2001: 430). Just before the war, anti-Indian sentiment reached a peak amongst white farmers, magistrates, Chambers of Commerce, white small-scale traders because of the monopolisation of the wholesale and retail trade by Indian traders and merchants. More importantly many Indian traders captured the African market, which threatened the supplementary livelihoods of white farmers, who often depended on income from their farm stores while waiting for their crops to mature. A contemporary report (1911) of the Umlazi district summed up the situation as follows:

(E) very village in that district has its European storekeeper struggling hard against Asiatic competition. The Asiatic stores are numerous, and the whole of the native trade is in their hands. The competition is now extending to blacksmith shops, butchers, carters and carriers. It is only a matter of time ”¦ when there will be no commerce for Europeans, the reason being that it costs the Asiatic practically nothing to live; they have the benefit of cheap Asiatic labour ”¦ they are encouraged by some well-to-do merchants, who give them long credits which they refuse to Europeans, and notwithstanding the fact that the Asiatic is constantly going insolvent (Kalpana; 2001: 436).

Many town councils in Natal responded to the ‘ubiquitous growth’ of the small Indian famer and trader by restricting the number of licences granted to them. Despite attempts to curtail their growth, the First World War led to boom conditions for Indian traders. Their prosperity in turn encouraged banking institutions to grant unlimited credit to Indian traders. Several banks competed with one another to capture major accounts of wealthy Indian traders. The boom conditions led to a steep rise in basic food prices as many Indian traders exploited the shortage of goods as a result of the war.  The government appointed a Cost of Living Commission in November 1917 to investigate the rise in food prices. The inquiry revealed that a number of Indian firms made excessive profits on basic goods during the war. In some cases the profits of Indian firms increased threefold during the war while their expenses remained constant.

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Last updated : 24-Feb-2014

This article was produced for South African History Online on 24-Feb-2014