Building of an Empire

BSE (The Stock Exchange, Mumbai) has its roots deeply embedded into honesty and trust, a value that helped manoeuvre the Share Bazaar to the size and magnitude that it has attained, by a small group of just six brokers. That was way back in the year 1840. The six enterprising people saw good potential in the business of Stocks & Shares and were recognised by banks and merchants. There was limited business available at that time in the shares of Banks & Presses. Until 1855, the business was conducted under the shade of two or three huge fig trees at Cotton Green and also the veranda of Mercantile Bank in Meadow Street. The chief among them was Seth Premchand Roychund, known as the Napoleon of Finance. He was the first broker who could speak and write in English. The tender origin of the Share Bazaar in Bombay thus began.

Inspired by these few, the number of brokers increased to 60 by the year 1860. For a time, the brokers met between the Old Fort walls and the Old Mercantile Bank. Finally, they found in Dalal Street a place where they could conveniently assemble. Seth Premchand Roychund was still their leader and he gave to the Share Brokers of Bombay knowledge about the business and a standing and importance not achieved until then.

Digging further into the very foundations of the Share Bazaar revealed to us much more than this tender beginning. A poignant note resounded as we traced the first boom period to the result of wars in the western world.

Excavating deeper into the reasons for the Share Bazaar's first boom phase we found that it was Mars the great God of War and the mighty King Cotton who worked together and brought about the existence of the Share Bazaar in Bombay. Yes! the soft-white blossoms, the very colour symbolising peace and comfort, is what brought in the money for India.

Even though the real rise in the economic and financial history of Bombay started from 1834, yet the greatest events took place between 1861 and 1865 when fortunes were made and marred in a twinkling of an eye. A civil war broke out in America between 1861 and 1865. There was a colossal influx of wealth at this time into India, estimated at about Rs 85 crores. The supply of cotton to Europe from the United States was completely stopped, due to the war. At a time when people used meters & meters of cloth to dress themselves the shortage was acute. Europe turned to India and specifically Bombay where cotton was farmed in abundance. Lancashire had almost wholly to depend on India for its full annual supply. Bombay began exporting two thirds of its cotton produce and this could still not meet the needs of Europe.

A speculative mania, the first in the history of the city sprung up among all classes of the community. This huge inflow of capital coupled with the want of legitimate means of investment, came to be invested at this time in an unprecedentedly large number of all sorts of joint stock companies, mostly banks, financial corporations, trading institutions, great land reclamation companies and the like. This led to a feverish and unhealthy speculation. The brokers were looked upon as sure guides to fortune. They were the ones who showed the way turning the opportunity into huge gains for all investors. Quickly their numbers increased to about 200 to 250. This was its tender origin, for as money poured in, with it came the establishments and the rise in industry in India, new companies, banks etc. were formed and thus came the evolution of shares of all kinds.

In 1877 there were 318 members and an average of 300 has been ever since maintained. According to the first ever report printed in Gujarati in the year 1883, an association was unofficially formed, by some brokers, on Friday the 9th of July, 1875. Seth Chunilal Motilal Patari was the first official Honorary President of the Association for 20 years. The Honorary Secretary was Mr. Cawasjee Nusserwanjee Kanga and the bankers were the National Bank of India. Almost 12 years later, by an indenture dated 3rd December 1887, The Native Share & Stock Brokers Association of Bombay was formally constituted.

Nearly a quarter of a century after they had first assembled in Dalal Street the brokers were able to acquire the first building for their use. This building was called Broker's Hall.

Sir Shapurji Broacha succeeded Seth Chunilal Motilal Patari as the second Honorary President and held office for more than 20 years. On his death in 1920, he was succeeded by Mr. Kikabhai Premchand, son of Late Seth Premchand Roychund. Mr. K.R.P. Shroff succeeded him.

The admission fee, which is the price of the card for the right of membership, was an incredible Rs 15 originally. In 1887 it was raised to Rs 20 and later to Rs 51 in 1886. Subsequently it was raised to Rs 1000 and the Association sold the cards for Rs 2500 in 1909, Rs 7000 in 1917 and for as much as Rs 40,000 in 1920. This reflects upon the fast progress made in the field of Stocks & Shares.

Today the Share Bazaar stands tall on the foundation of trust and confidence laid by these sincere few who years ago had the foresight to see the immense potential in a field that was hitherto unexplored.