Comparative Studies of South Asia, Africa and the Middle East

Speculation Illicit and Complicit

Contract, Uncertainty, and Governmentality

Ritu Birla

T
he question of the regulation of futures markets, their contractual performatives and institutional
forms, has a long history going back to global financialization under colonialism at the turn of
the twentieth century. In 1911 the Indian Jute Mills Association, the premier organization of Brit-
ish interests in that industry, wrote to the government of Bengal to complain about vernacular Marwari
traders who, the IJMA claimed, had launched a fictitious system of what were called “pink and white con-
tracts” in speculative jute futures. The association asserted that these so-­called contracts mimicked the
formality of law, all the while manipulating the market and disrupting British managing agencies’ supply-­
and-­demand predictions. According to the IJMA’s counsel, “A section of the Marwari community . . .
[had] invented a means of satisfying their craving for the gains of chance in a system of contracts pur-
porting to evidence the purchase and sale of jute . . . but we believe in no single instance has jute ever
been delivered under them.”1
Exposing the contentious ground of speculation, such archival episodes call for studying market en-
gagements with uncertainty and their political-­economic institutionalization. Debates over the legitimacy
of speculative practices are central to the history of that modern abstraction called the economy. As the
failed vernacular deployment of written contracts betrays here, speculation can at once be condemned
as a dangerous addiction to chance, and so staged as the illicit outside of the market, even as law and its
administrative rituals legitimize speculation as market rationality, enabling some economic agents while
prohibiting others. The dense colonial discourse on vernacular capitalism’s customary speculative mar-
kets and criminal “gambling” inclinations in the late nineteenth and early twentieth centuries throws
the problem of speculation and uncertainty into relief as a question of governing, asking us especially to
consider the influence of financial imaginaries and derivative markets on ideas and practices of govern-
ment, law, and administration.2
India’s colonial market governance foregrounds the problem of the legal-­governmental legibility

This article is dedicated to the memory of Sri Radhakrishna Birla, who
asked “Satta: Jua Ya Vyapar?” (“Speculation: Gambling or Business?”) in
his autobiography many years ago. Radhakrishna Birla, Bhuli Bathein Yad
Karun (Amritsar, 1968).
1. IJMA to the Bengal Chamber of Commerce, October 25, 1911, in Bengal
Chamber of Commerce, Report, 2:168 – 70.
2. Derivatives refer at their most basic to “a transmission of some value
from a source to something else” and so encompass all forms of wager-
ing on the future (Martin, “After Economy?,” 85). Financial speculation
cultivates multiple possible futures in order to profit from and reproduce
the circulation of capital and so may be subject to reinterpretation as
“not so much an exchange of equivalents as the universal transmutabil-
ity of fluctuation” (Cooper, “Turbulent Worlds,” 167).

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Vol. 35, No. 3, 2015 • doi 10.1215/1089201x-3426253 • © 2015 by Duke University Press

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 Comparative Studies of South Asia, Africa and the Middle East

Ritu Birla • Speculation Illicit and Complicit 393

of speculation in processes of economization — in
the subcontinent and also more broadly.3 Colonial
anxieties about vernacular capitalism’s differences
refracted and magnified anxieties present in areas
where, unlike in British India, common law and the
generalized operation of written contract acknowl-
edged the default existence of private mercantile
exchanges, as in the UK and the United States.4
The colonial arena calls for making visible tech-
niques by which vernacular practices came to be
recognized as economic, a project that illuminates
on-­t he- ­g round dynamics and extends the analy-
sis of governmentality and finance, enabling new
readings of institutions such as private exchanges
in the metropole.5 Moreover, as a spectacular scene
of (mis)translation, colonialism draws attention to
different framings of uncertainty itself.
This essay delves into the Indian colonial
context to detail a shift in the governing of vernac-
ular speculation from policing to administrative
procedure in formal exchanges from about 1925
to 1947. This transformation, a governmentalization
of speculation grounded in contract law, evinces
three interrelated processes to be highlighted
here. First, deeply localized, embedded practices
fueled global financialization and were variously
translated by both colonial authorities and ver-
nacular actors. Second, the jurisprudential travels
of common law on wagering and its relationship
to the futures contract reflected new attention to
uncertainty in governmental rationality, manifest
densely in the discourse on speculation in this pe-
riod of financialization and unstable imperial po-
litical economy. Third, the ongoing production of
the distinction between formal and informal mar-
kets structures this speculative governance.
In India, vernacular merchants cultivated fu-
tures markets in much the same ways as merchants
around the world at the turn of the twentieth cen-
tury, trading in key commodities such as jute, cot-
ton, grain, and silver, as well as stocks. At its most
basic, futures trading referred to forward trad-
ing, which allowed for payment of current market
prices (“spot prices”) for commodities for future
delivery. The renegotiation of agreements with
the ongoing deferral of delivery, and the settling
of agreements without delivery across networks
of multiple buyers and sellers, fueled specula-
tive activity that bet on the rise and fall in mar-
ket prices.6 These practices reflected the growing
global integration of markets through new space-­
time proximities produced by the telegraphic quo-
tation of spot prices and, more broadly, new legal
frameworks and institutions for the circulation
of financial capital. In the colonial context, how-
ever, the worldwide anxiety produced by the nov-
elty and ubiquity of speculative market practices,
which sought to distinguish between gambling and
market rationality, was manifest in the mapping of
distinct spatial and temporal stages: the anachro-
nistic, customary, and informal kinship-­based op-
erations of the bazaar, and the formal legalities of
modern economy.
Colonial authorities confronted speculative
practices that profited from uncertainty and a mul-
tiplicity of future outcomes by aggressively distin-
guishing between the spurious, informal nature of
vernacular conventions, which were governed as a
realm of native “culture,” and the formal, modern
market inscribed by contract. As I have argued,
from about 1880 to 1925, the bazaar was rendered
highly suspect as an arena for immoral betting and
gambling.7 But from about 1925 to 1947, this gov-
ernmental framing of formal and informal worlds

3. Economization refers to processes by which
activities and arenas are understood and insti-
tutionalized as economic. See Çalişkan and Cal-
lon, “Economization Part 1.”
4. On similar anxieties in the United States and
the UK, see Preda, Framing Finance, and Levy,
Freaks of Fortune. On the common law recog-
nition of on-­the-­ground speculative practices
in private mercantile exchanges in the United
States, despite antibucketshop legislation,
see Stout, “Why the Law Hates Speculators,”
721 – 22.
5. Michel Foucault’s mapping of liberal govern-
mentality comes from attention to classical
political economy, from Adam Smith to Jeremy
Bentham especially; attending to the political
economy of finance elaborates Foucault’s in-
sights on neoliberal political economy.
6. Buyers could deploy such trades to offset
anticipated rises in market price, and sellers
could offset anticipated price falls. Futures
came also to include other forms of “time-­
bargains” such as options, in which traders
fixed a price for sale against market fluctua-
tion. There has been long debate as to whether
futures trading enables hedging in service of
minimizing risk or risk-­t aking speculation in
service of maximizing profit. John Maynard
Keynes affirmed the risk-­minimizing thesis in
his General Theory of Employment, Interest, and
Money in 1936, while the economist Holbrook
Working in 1954 argued that all futures trades
anticipate profit and therefore should be un-
derstood as speculative ventures. For a sum-
mary of the debate, see Meyer, “Futures Mar-
kets as Hedging Markets.” The analysis here, in
contrast, turns to Frank Knight to step outside
the debates around risk and into the question
of uncertainty.
7. On colonial market governance and the pro-
duction of the bazaar as a site of gambling, see
Birla, Stages of Capital.

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394 Comparative Studies of South Asia, Africa and the Middle East • 35:3 • 2015

came to be deployed not toward a moral hygien-
ist eradication of speculative activity in the bazaar
but toward a selective integration of it into legality
as risk management.8 Supplementing my earlier
research, I detail these tactics here. Rather than
reproduce the logic of colonial governmentality
to fine-­t une a master distinction between gam-
bling and proper market practices, this analysis
addresses the folding of speculative engagements
with uncertainty into formal domains of economy
and governance; it thus moves from a focus on the
illicit to an analysis of the complicit.
To do so, I highlight tensions between the
legal concept of contract as a guarantee for the
future that requires and polices the delivery of
goods, and contract as a speculative medium,
which enables settlement on the price differences
of goods ordered, without delivery.9 After a brief
discussion of the theoretical ground for an analysis
of the folding of speculation into logics of risk, I
turn to the legal discussions and transformations
in case law spawned by global speculative circuits.
I draw attention to significant precedents in Brit-
ish jurisprudence that focus on the distinction
between the wager and the futures contract. This
distinction was made first via an emphasis on the
intention (rather than the actual fact) of delivery,
and second through a fine-­t uning of the roles of
client and broker, or the contract’s principal and
agent. Elaborating on both, I map basic trajecto-
ries of UK case law that validate brokers’ specula-
tive activities and the authority of exchanges. Next,
I chart major Indian jurisprudential trends that
deploy these precedents and that are representa-
tive of that legal system’s grappling with the prob-
lem of vernacular financial speculation from about
1925 to 1947. The implications of these shifts — the
selective coding of speculation as legitimate risk-­
taking and risk-­m inimizing — w ill then be illus-
trated through an especially dense site in the legal
archive, a case in the Bombay High Court of 1928,
Emperor v. Thavarmal Rupchand (1929), 31 BOMLR
158. This case is an exemplary condensation of legal
discourse, for it details shifts in the transition from
colonial policing to formal association and admin-
istration and reflects the political conditions — 
the consolidation of a capitalist class — t hat in-
form them.10 It tells a rich ethnographic story of
the criminalizing of an association of bazaar mer-
chants alongside the affirmation of a more influ-
ential one. As such, it exposes techniques by which
customary speculative practices are both distin-
guished from and folded into formal market or-
ganization, ultimately highlighting the mistransla-
tion of vernacular vocabularies of uncertainty and
contingency.
The story of speculation and governance in
the Indian colonial context is presented here as a
terrain on which questions in the social studies of
finance, most especially those attentive to the dis-
tinction between risk and uncertainty, may mingle
with historical studies of governmentality. Colonial
governmental rationality — or perhaps more ap-
propriately governmental imagination11 — began
a robust play with uncertainty in the 1920s; it was
informed by the political economy of the inter-
war period. From the escalation of nationalist
demands to the expansion of the financial influ-
ence of London (the City), to imperial currency
manipulations and the decreasing profitability of
empire after World War I, the interwar context
demands attention to speculative modalities of
governing and genealogies across imperial liberal-
ism and neoliberalism.12 Before turning to global

8. The attention to speculation here supple-
ments established literature on discourses of
risk and governmentality; see O’Malley, “Un-
certain Subjects” and “Governmentality and
Risk.” Under colonial economic liberalism, the
production of informality is central to the map-
ping of the formal market terrain; this is inten-
sified in the case of speculation. These colo-
nial processes resonate with discussions of
contemporary neoliberal globality. Hernando
de Soto’s influential work on harnessing the
“dead capital” of the Latin American agrarian
underclass celebrates informality and its role in
global markets. For contrasting critical stances
that highlight the reproduction of informality
as precarity, see Roy, “Subjects of Risk” (on mi-
crocredit and “bottom billion capitalism”), and
Chatterjee, Lineages (on corporate and noncor-
porate capital).
9. In the case of shares in company stock, “de-
livery” refers to the completion of the sale and
taking of ownership.
10. I read this “condensation” in the spirit of
Gayatri Chakravorty Spivak’s approach to the
colonial archive, elaborated in the now-­classic
“Rani of Sirmur.”
11. On the politics of uncertainty, imagination,
and futurity, see Appadurai, Future as Cultural
Fact.
12. For a reading of contemporary speculative
governing, see Cooper, “Turbulent Worlds.”
The classic history of London finance in high
imperialism is Cain and Hopkins, “Gentlemanly
Capitalism II.” For an excellent analysis of the
imperial political economy of the period, see
Balanchandran, “Reappraisal.”

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 Comparative Studies of South Asia, Africa and the Middle East

Ritu Birla • Speculation Illicit and Complicit 395

circuits and transformations in contract and case
law, I briefly elaborate on recent approaches to
risk, uncertainty, and marketization that inform
the analysis here.
Framing Speculation: Risk, Uncertainty, and Contract
Bringing Timothy Mitchell’s postcolonial analyt-
ics of economic “enframing,” which exposes the
politics of infrastructure (legal, technological,
governmental), to Çalişkan and Callon’s attention
to marketization, we may think of colonial India
as a scene of market framing.13 Framing, the de-
lineation of the market domain, always maps an
exterior to the frame. It also evinces “moments
of overflow” that “mark the emergence of [the]
frame’s shortcomings.”14 Colonial governmentality
maps the subcontinental bazaar as an anachronis-
tic outside to the market and its rationalities. Spec-
ulation, the engagement with uncertainty, exists in
the bazaar and inside the official market; it marks
an overflow. Contract, the tool for assigning own-
ership in futures transactions and for enforcing
the delivery of commodities, operates at the bor-
der between this inside and outside. Contract po-
lices the boundaries between the market and the
bazaar. But contract also opens this border, for it
translates play with uncertainty into discourses of
risk.15 As I elaborate, the common law category of
the wagering contract especially enables such com-
plicities, for it renders wagering and betting void,
but not illegal.
To pursue these different incarnations of
contract and the governmental techniques that
fold uncertainty into logics of risk-­t aking and risk-­
minimizing, it is important to take note of recent
research attentive to this folding. Work in law and
finance studies shows, for example, that specula-
tion itself has become an elastic term with many
meanings that define it as exactly what it is not,
that is, as a practice motivated by a probabilistic,
risk-­measuring ethos, one that even calculates
risks against risks. In this vein, the world of finance
speaks of “risk-­hedging,” or profiting from those
“who are willing to trade at unfavorable terms in
order to offload risk.”16 As research in the anthro-
pology and social studies of finance argues, terms
like these seek to tame speculation’s play with un-
certainty and locate it within logics of economic
rationality.17 Against this tendency, recent work
in these fields has deployed and clarified the dis-
tinction between risk and uncertainty, especially
via the early twentieth-­century economist Frank
Knight, a founder of the Chicago school of eco-
nomics, whose Risk, Uncertainty, and Profit, pub-
lished in 1921, first laid out the distinction.18 For
Knight, because there is “much question to how
far the world is intelligible at all,” uncertainty in-
forms all economic transactions (209). Placing un-
certainty at the heart of all human exchange, he
defines risk as “measurable uncertainty” (231 – 33).
Risk is known only by measuring ex ante probabil-
ity: practices of risk-­t aking or risk-­avoiding occur
when the probabilities of various future outcomes
can be determined beforehand. On the other
hand, uncertainty is “not susceptible to measure-
ment and hence to elimination,” so here “the
probabilities of future outcomes cannot be known
beforehand” (232). Uncertainty channels luck and
the aleatory, whereas risk management deploys
prediction — mathematical, statistical, and social
(as judgment and “estimation”) (236, 197 – 233).19
It is also important to emphasize that while

13. Mitchell, Rule of Experts, especially section
3; Çalişkan and Callon, “Economization Part 1”;
and Çalişkan and Callon, “Economization Part
2,” 8.
14. Çalişkan and Callon, “Economization Part
2,” 8.
15. Contract is a medium for what Alex Preda
calls “the enclosure of the stock exchange”
and similar institutions for speculation. It is a
medium for the differentiation between the
market and its outside that “cannot be under-
stood as just another modernization story,” for
the “boundary work implied by such differen-
tiation is irreducible to distinctions between
markets, on the one hand, and legal and politi-
cal institutions on the other” (Framing Finance,
19). This calls for attention to the governmen-
talization of speculation.
16. Similarly, the recent concept of informa-
tion arbitrage codes speculators as exactly not
gamblers but “savvy researchers who invest
in . . . costly information” to produce the best
probability estimates (Stout, “Uncertainty,”
1186 – 87).
17. See, for example, Appadurai, “Ghost in the
Financial Machine”; Mizayaki, “Between Arbi-
trage and Speculation”; Riles, “Collateral Ex-
pertise”; and Zaloom, “Productive Life of Risk.”
18. Knight, Risk, Uncertainty, and Profit, espe-
cially chaps. 7 – 8. Knight’s text was published
the same year as Keynes’s Treatise on Probabil-
ity, but Keynes later also elaborated the distinc-
tion between risk and uncertainty. See Keynes,
“General Theory of Employment,” 161 – 63. See
also Dow and Dow, “Animal Spirits Revisited.”
19. Following Knight, speculation is thus not
some anachronistic leftover of a premodern
enchantment; it exists in the deep texture of
modern capitalism. See Bear, “Antinomies of
Audit.”

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speculation is not the primary object of Knight’s Speculation as a Global Phenomenon:

study, it does play a significant role in what he evoc-
atively calls the “methods for meeting” or “deal-
ing with” uncertainty (238 – 39). As the rhetoric
of dealing evokes, dealing with uncertainty is not
the same as seeking to measure or control the fu-
ture. Knight proposes two fundamental methods
to “meet” and “deal”: first, “consolidation,” that is,
reducing uncertainty by grouping, since “uncer-
tainties are less in groups of cases than in single
instances,” and second, “specialization,” or select-
ing certain groups to “bear uncertainty” (255).20
For Knight, “the most important instrument in
modern economic society for the specialization of
uncertainty, after the institution of free enterprise
itself, is Speculation” (255). Significantly, the best
example of this, he argues, is the hedging contract,
or futures contract, for through it, the industrial
producer, facing unpredictable shifts in the value
of materials in his operations between the time of
the acquisition of raw materials and the selling of
finished goods, can “shift” this uncertainty onto
the specialized speculator: “Where a single flour
miller or cotton spinner would be in the market
once, the speculator can enter it hundreds or thou-
sands of times, and his errors in judgment must
show a correspondingly stronger tendency to can-
cel out and leave him a constant and predictable
return on his operations” (255 – 56).21 For Knight,
then, the engagement with uncertainty that is
speculation fuels producers’ attention to risk in
the management of enterprise. Knight promotes
the intimacies of uncertainty and risk even as he
distinguishes them. His analysis demands that we
resist taking governmental-­legal media such as
contract, the very guarantee for the future, and
administrative proceduralism, which subjects the
future to rationalization and prediction, on their
own terms, instead investigating them as specula-
tive media and technologies.22
Crime, Common Law, and the Wagering Contract
At the turn of the twentieth century, vernacular
practices in India were de facto at one with those
of emergent futures exchanges globally: specula-
tion (the broad Hindustani term for which was
satta) included forward trading in commodities for
delivery at a given time (sowda, fatka), options or
the settling on a price for a given time (badni), and
betting on price differences in commodities and
securities (teji- ­mundi).23 Multiple forward trades
among groups of traders would be renegotiated,
resulting in profit or loss as spot prices rose or fell,
and often these trades would be resolved without
delivery of the actual commodity. This global burst
of speculative practices required working out the
relationship between formal legal mechanisms
and customary mercantile arrangements. While
British case law had already begun grappling with
the distinction between the wager and the futures
contract by the 1880s, conflicting case law along-
side the global expansion of speculative finance
capital fueled by imperial conquest saw British
Parliamentary Select Committees in 1895 and 1898
conduct inquiries about futures trading. Soliciting
assessments from British representatives in Berlin,
Vienna, Saint Petersburg, Washington, DC, Brus-
sels, Athens, Stockholm, Berne, Buenos Aires, and
Budapest on “time-­bargains,” they called for “leg-
islative measures respecting gambling in ‘option’
and ‘future’ contracts.”24 The inquiries elaborated
on the vast range of customary practices, matched
by diverse governmental strategies, from calls to
protect the autonomy of merchant exchanges in
Germany to plans for taxing speculative profits in
the United States.25 But perhaps most striking was
exactly the question of gambling in options and fu-
tures contracts. This issue captured the fundamental
legal problem at play: Was the explosion of settling
in price differences without delivery of commodities

20. Consolidation for Knight is best illustrated
by the actuarial sciences of insurance, since
while a single individual’s relationship to death
is utterly uncertain, insurance consolidates
thousands of instances of death, rendering it
predictable. On consolidation and insurance,
see Knight, Risk, Uncertainty, and Profit, 245 – 51.
21. For a rich discussion of Knight on specula-
tion and consolidation in the US context, see
Kreitner, “Speculations.”
22. Colonial market governance offers a ripe
context for such analysis. Such postcolonial de-
ployments of Knight may contribute to recent
work on the neoliberal coding of swashbuck-
ling risk as “the premier device for combining
a supposed instrumentally rational approach
to action with a post-­hoc moralization of any
market outcome whatsoever” (Mirowski, Never
Let a Serious Crisis Go to Waste, 120 – 21).
23. For a detailed discussion of these and other
forms of vernacular speculative activity such
as barsat ka satta (speculating on rainfall), see
Birla, Stages of Capital, chap. 4.
24. House of Commons, Reports.
25. Ibid., 232 – 65.

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Ritu Birla • Speculation Illicit and Complicit 397

a problem of wagering and betting? Were option
and future contracts to be understood as “wager-
ing contracts,” understood for centuries as void by
common law, and if so, should they be legislated
against?
The legal dilemma posed by the worldwide
burgeoning of speculative markets — t he question
of whether to follow the customary lex mercatoria
or to regulate via direct legislation — had been a
question in Britain since the 1844 Select Commit-
tee on Gaming, and subsequent gaming and bet-
ting legislation in the 1840s and 1850s.26 But these
regulations had been specifically directed at rec-
reational games and lotteries conducted in what
were called “public gaming” houses; they reflected
a mid-­nineteenth-­century moral paternalism to-
ward the working classes alongside the expansion
of policing and concepts of public order. These
gaming regulations were transported to India
in the 1860s, but here, unlike in the UK, “public
gaming” was applied to speculative mercantile ex-
changes in the bazaar. Thus by the 1920s, two bills
were put forward by native members of the Bengal
assembly to establish what were called native baras,
or trading exchanges, to legitimize vernacular or-
ganizations of traders as economically beneficial
and rational.27 Significantly, these proposals cited
the common law affirmation of private exchanges
and customary mercantile practice in the UK, but
they failed.
Because Indian policy subjected informal
exchanges and practices to criminal investigation
from the 1880s to the 1920s, it differed substan-
tially from Britain (and the United States), where
common law was crucial in managing new forms
of speculative activity. In the UK, elastic jurispru-
dence affirmed the crucial common law defini-
tion of the wagering contract as void, but not ille-
gal, while also affirming the authority of private
mercantile exchanges. Case law tells a fascinating
tale in which the authority of exchanges ultimately
trumped the classification of speculative activities
as betting and wagering. This UK story (with simi-
lar trends in the United States) occurs in the long
period from 1870 to 1930 and informs Indian pol-
icy at an accelerated pace between about 1925 and
1947. As such, it is worth briefly charting key turns
in UK case law that inform the Indian context.
In Britain, jurisprudence on market specu-
lation focused on established common law. The
courts and statutes thus dealt with speculative com-
mercial transactions not by criminalizing them but
by deeming them invalid and not actionable. Sec-
tion 18 of the Gaming Act of 1845 codified com-
mon law, clearly articulating that no legal action
could be taken to recover any money or thing lost
or allegedly staked or won in a wager.28 Case law
after the 1880s transformed the terms of the dis-
course on wagering by fixing on intentionality, the
fundamental criterion for adjudicating contracts.
Key precedents deployed intentionality in two op-
posing ways: first to distinguish futures contracts
performed in exchanges from wagers, and sec-
ond to call for evidence and read them as wagers.
These dialectics then opened up a new interpreta-
tion of the relationship between the broker conduct-
ing futures trades in an exchange and the client
(or principal) for whom the broker is an agent.29 In
1878 Thacker v. Hardy, a case about a stockbroker
and his client, established that contracts for the
settlement of prices — t hose regularly conducted
in exchanges — were legitimate contracts, as long
as there was an intention to deliver what was sold.30
Intention to deliver here distinguished the futures
contract from the mere wager, and this decision
thus supported practices in exchanges, whose reg-
ularized procedures and rules were understood to
evince such intention.31 However, in 1886, Univer-
sal Stock Exchange v. Strachan, another precedent-­
setting case do with “stock-­jobbing,” or betting on

26. On gaming law, see Munting, Economic and
Social History of Gambling. On the relationship
of gambling legislation to mercantile norms,
see Cranston, “Law through Practice.”
27. Birla, Stages of Capital, 193 – 98.
28. For key cases in the 1820s that affirm com-
mon law, see Cranston, “Law through Practice,”
30 – 31, and Dos Passos, Treatise on the Law, es-
pecially chap. 7.
29. This case law is wrapped up in another, on
agency. See Wright, Law of Principal and Agent.
30. For a summary, see Bennett, “High Court.”
See also Cranston, “Law through Practice,”
31 – 32.
31. Many UK and US decisions evince this trend,
and it is perhaps most significantly manifest
in 1905 in Board of Trade of Chicago v. Chris-
tie, in which the US Supreme Court, speaking
through Justice Oliver Wendell Holmes, de-
clared that the intent of brokers to close out
their contracts by “setting-­off” — that is, to set-
tle contracts via counter-­transactions without
delivery — did not invalidate their transactions.
See “Legislation Affecting Commodity and
Stock-­Exchanges,” Harvard Law Review 45, no.
5 (1932): 912 – 25, and Board of Trade of Chicago
v. Christie, 116 Fed. 944.

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398 Comparative Studies of South Asia, Africa and the Middle East • 35:3 • 2015

the rise and fall of stock prices, deployed the crite-
rion of intention very differently. Here, the court
argued that even if a futures transaction appeared
to be a legitimate contract, evidence for such in-
tention must be actively investigated. If such inves-
tigation revealed that the intention of both parties
was to profit on stock-­jobbing and simply settle dif-
ferences without delivery, then the transaction was
indeed a wager and void.32 This case thus fortified
the criterion of intentionality in order to expand
the application of the common law on wagers to
futures contracts.33
But equally as influential was the broader
context and ramifications of the Thacker v. Hardy
case, in which a stockbroker had sued his client
for commission and indemnity for carrying out
speculative transactions in which the broker had
become personally liable. The case thus directly
addressed the broker-­client relationship. To avoid
payment, the defendant/client claimed that all
the broker’s transactions were wagering and gam-
bling, and therefore void in law. But the court held
against the defendant, declaring that the broker
was entitled to recover what was owed him, even
though both broker and client had clearly articu-
lated their intentions to transact settlements in
price differences without any delivery. The broker’s
transactions for the client could not be understood
as wagers, for wagers required the commitment of
both parties to win or lose on a future uncertain
event. But a broker cannot win or lose, as he oper-
ates simply as the agent for the client.34
Thacker v. Hardy informed pursuant inter-
pretations of transactions between brokers as legit-
imate. In the 1920s the English Court of Appeal
turned to the validity of dealings in futures mar-
kets in the context not of gaming but of taxation.
In this circumstance, speculative dealings were ul-
timately validated as “real” commercial contracts
to be taxed. At this time, cases concerning the Liv-
erpool Cotton Exchange and the London Metal
Exchange confirmed that speculative transactions
conducted by a broker were not wagers. By the
1930s exchange-­t raded transactions were deemed
enforceable, as long as parties intended “to enter
into a legal contract, which gave legal rights and
imposed legal obligations.”35 This was so even if
their intention was speculative, that is, for settle-
ment of prices without delivery. Case law elabo-
rated Thacker v. Hardy as a clear precedent that
“contracts between brokers are valid.”36 By about
1930 brokers were not to be understood as gam-
blers but as commercial agents operating within a
system of rules laid out by commodities exchanges.
Indeed, by this time the expansion of the Roman
law category of the “aleatory contract,” which cov-
ered contracts dependent on future contingency,
also aligned contract doctrine with the customary
authority of merchant exchanges and practices, or
the lex mercatoria.37 Definitive US federal regulation
in this period settled the distinction between the
wager and speculative market futures through the
concept of the “anticipatory breach” of contract.38
Indian Case Law after 1925:
Intentionality, Delivery, and Derivative Value
The jurisprudential developments in Britain were
actively taken up in Indian courts beginning in the
1920s, when the focus on the intention of futures
trades, rather than the criminalization of gam-
bling, informed juridical logic. In India the proac-
tive investigation and interpretation of intention

32. Cranston, “Law through Practice,” 32; Uni-
versal Stock Exchange Ltd. v. Strachan, AC 166
(1896), summarized in Shewkissen Mohata and
Ors. v. Mangalchand Maloo and Ors.
33. By 1892 one of the most cited cases in mod-
ern tort law clarified that the wager was not
part of a fixed game; rather, it was entered into
by two persons, “touching the issue of a future
uncertain event.” UK case law thus began to
distinguish wagering and gaming, which again
pushed the courts to assess speculation not
through the lens of legislation on gaming but
through the common law on wagering (Carlill
v. Carbolic Smoke Ball Co., cited in Pannalall Kis-
hanlal v. Lal Chand Sohanlal, AIR 1960 Cal 261).
34. The reasoning of Justice L. J. Cotton in
Thacker v. Hardy is summarized clearly in the
decision of Chimanlal Purshottamdas Shah v.
Nyamatrai Madhavlal. Hereafter cited as Pur-
shottamdas v. Madhavlal.
35. On Cooper (Inspector of Taxes) v. Stubbs
(1925), 2 KB 783, and Barnett v. Sanker (1925), 41
TLR 660, see Cranston, “Law through Practice,”
32 – 33. See also “Notes on Recent Cases: Barnett
v. Sanker.”
36. “Legislation Affecting Commodity Ex-
changes and Stock-­Exchanges,” 913.
37. The authority of private exchanges bur-
geoning since the 1870s in the UK and the
United States had been growing slowly. In the
United States, the state resisted directly reg-
ulating private exchanges of merchants, like
the Chicago Board of Trade. See Stout, “Uncer-
tainty,” 1199 – 204.
38. Kreitner, “Speculations,” 1103 – 4 . In this im-
portant development, anticipation, rather than
inclination to security or guarantee of any spe-
cific future, produced a wholly new category of
contractual relations directed at multiple pos-
sible outcomes.

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 Comparative Studies of South Asia, Africa and the Middle East

Ritu Birla • Speculation Illicit and Complicit 399

that had been launched by Universal Stock Exchange
v. Strachan produced new challenges of translating
vernacular practices and forms of contract. While
British precedent informed foundational princi-
ples of adjudication, the “voluminous” case law on
speculation (to cite one Bombay High Court judge
in Emperor v. Thavarmal) produced a dizzying
array of stories, exactly because the hermeneutics
of “discovering” intention, alongside the very his-
tory of adjudicating customary practice in India,
emphasized attention to the specificity of context,
moderating deployments of precedent from In-
dian courts. Still, a basic outline of trends can be
mapped with select cases that draw from the key
UK precedents, as well as the active deployment
of Section 30 of the Indian Contract Act (1872),
which had codified the UK common law rule of
the wager as void, in cases that had been previously
assessed under the gaming acts.
In markets where competition between
Indian and British firms was strong, such as the
jute trade in Calcutta, the long history of police
raids on native godowns (warehouses), searches
of account books, and accusations of gaming
continued as late as the 1930s. Thus a 1930 Calcutta
High Court case concerning futures trading in a
vernacular exchange, the Bengal Jute Association,
rendered it a “common gaming house” through
an extensive investigation of delivery orders that
the chief magistrate had called “blind” for merely
intending to “conceal the fact that delivery was
not intended at all” (Thakurdas Mundra and Ors.
v. Emperor, 1930 AIR 1930 Cal 637). Still, shortly
thereafter, in 1933, amid global depression and
the growing anxiety among British interests
about the fatka bazaar in jute, a case concerning
one member of the politically inf luential East
India Jute Association, also an association of
Indian interests, delivered a different message.
Its judgment cited Thacker v. Hardy to determine
that in the futures contracts under investigation,
this member was acting not as a broker but as a
principal in the speculative contracts. Because of
this, this member’s “fatka business” was deemed
wagering. However, and significantly, the bench
qualified that nothing in the decision “should be
regarded as a finding against the East India Jute
Association, Ltd., or [its] transactions. On the
contrary, it appears . . . that its system is admirably
adapted to various classes of business, substantial
trade, speculative trade, and wagering.”39
Representative bookends for the range of
governmental responses to vernacular futures
trading, from criminalization for nondelivery to
the affirmation of influential “native” exchanges
and their intentions to deliver, these two jute specu-
lation cases alone highlight the novel and selective
validation of vernacular speculative practices, a
process that occurs through a detailed sifting of
bazaar practices and the meanings of their docu-
mentary media. A case that richly details the slip-
periness of legal interpretation on vernacular
documentation occurs in 1925 in the Madras High
Court, which delves into the workings of patta patti
futures delivery orders/contracts concerning two
firms and their transactions in bales of “Japan
twist” yarn. Patta patti was a Gujarati term that had
been introduced by Gujarati traders into Madras
Presidency, and it literally meant “adjustment or
settlement.”40 Patta patti transactions, like many
in futures exchanges, were often circular; sellers
would, after a round of speculative transactions
and countertransactions, buy back the goods that
they had sold and settle without delivery. Indeed,
the lower court in this case had validated these
speculative circulations as market transactions,
decreeing that there was no proof that they were
wagering. But the Madras High Court overturned
this decision, focusing on the fact that “patta pat-
ties or delivery orders . . . passed through several
hands and in the short space of seven days all the
100 bales which passed through various hands
came back to the plaintiff” without delivery. This
accelerated circulation required investigation, as
per Universal Stock Exchange v. Strachan, as to the
intention of delivery.41 Evoking contagion while

39. Justice Ameer Ali’s judgment on behalf of
the bench in Karunakumar Datta Gupta v. Lan-
karan Patwari, AIR 1933 Cal 759.
40. (Diwan Bahadur) Govindoss v. Sukdevadoss
Ramprasad. Hereafter cited as Govindoss v.
Ramprasad.
41. The case cites Universal Stock Exchange v.
Strachan and another much-­cited precedent
from the Queen’s Bench, In re Gieve (1899), 1
Q.B. 794, on the roles of principal and agent in
a contract.

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 Comparative Studies of South Asia, Africa and the Middle East

400 Comparative Studies of South Asia, Africa and the Middle East • 35:3 • 2015

speaking market rationality, the court mapped the
various travels of the patta patties, and the various
hands they passed through, without endorsement
and without being stamped as hundis (vernacular
negotiable instruments). It stated that no evidence
could be found for even intention of delivery. In-
deed, the decision emphasized that the patta pat-
ties, and other “havala chits,”42 were deployed to
keep up appearances of proper trade, but were
simply wagering contracts, and so void. Still, it is
important to note that despite the evidence, the
transactions were not criminalized and made sub-
ject to gaming law; instead, they were now ren-
dered void as wagers.
This 1925 case had deployed British prec-
edent to “discover” lack of intention to deliver. It
can be contrasted with a later one in the Bombay
High Court from 1937, Chimanlal Purshottamdas
Shah v. Nyamatrai Madhavlal, which used Thacker v.
Hardy to overturn a lower court case and validate
speculation in a bazaar exchange as legitimate
business. In this case, a broker, Mr. Shah, appealed
a lower court decision made in favor of his client,
in which Shah had sued his client for remuneration
of his commission (Chimanlal Purshottamdas Shah v.
Nyamatrai Madhavlal (1937), 39 BOMLR 1083; also
173 Ind Cas 205). The client, Madhavlal, had taken
out a mortgage bond for security on losses in the
Ahmedabad Share Bazaar (stock exchange) and so
had the resources to make the payment. The client
had argued that the bazaar transactions were all
wagers, therefore null and void, and so he owed
nothing, and the lower court had agreed. At the
High Court level, however, a detailed accounting
of the evidence that demonstrated the court’s fa-
miliarity with vernacular procedures resulted in a
reversal of the decision in favor of the broker. Sig-
nificantly, the judgment took time to elaborate on
delivery rituals and time frames, describing them
in their Hindu year format.43 At the lower court
level, the client had alleged that “he had lost all his
property and that the plaintiff [the broker], who
was the son of a friend of his, tempted him to spec-
ulate on the Stock Exchange, agreeing not to hold
him responsible for giving or taking delivery . . .
and promising that he would so manage the busi-
ness that no loss would fall on the defendant.” But
in the High Court, the bench demanded a reading
of the full context of the evidence, for “to ascertain
the real intention of the parties the Court must look
at all the surrounding circumstances and can even go
behind a written contract” that appears to evince
intention of delivery. Thus deploying Universal
Stock Exchange v. Strachan, it then cited Thacker v.
Hardy to consider whether both parties to the con-
tract sought to win or lose, as in a wager, and then
elaborated on Bombay High Court precedents on
speculative transactions made by brokers. These
supported the interpretation of speculative trans-
actions conducted in exchanges as legitimate busi-
ness.44 Emphasizing the context of the Share Ba-
zaar, the court asserted the role of broker as agent,
with a fixed commission, whose transactions could
be subject neither to the definition of wagering
nor to Bombay gambling legislation (Bombay Act
III of 1865 [Purshottomdas v. Madhavlal]).
These juridical trends after about 1925 mark
a shift in the enforcement of contracts and the as-
sessment of intentionality: a shift from an empha-
sis on the material realization of the contract’s
promise (the policing of delivery) to procedural
rituals for formal association. Said differently, a
trader who settled without delivery came to be as-
sessed based on his status as member in a formally rec-
ognized association. As I mentioned, through to the
1930s, raids on godowns and businesses continued;

42. Havala or hawala is well known as a term
for informal funds transfer in Islamic con-
texts. In the subcontinent, it referred to a
variety of informal transactions; here it re-
ferred to slips/“chits” that were not officially
stamped. As such, the court declared that “the
havala chits which are supposed to represent
the amount of the actual cash payable under
these contracts are not even stamped as hun-
dies when passed” (Govindoss v. Ramprasad).
43. Justice Rangenekar, the author of the judg-
ment, thus states: “It appears from the evi-
dence that in Samvat year 1989 the appellant
was working as a sub-­broker of . . . a sharebro-
ker and a member of the Stock Exchange of
Ahmedabad, and as such . . . he put through
various transactions . . . from Jeth delivery to
Aso delivery 1985. . . . The dealings between the
parties continued until Maha delivery in Sam-
vat 1986” (Purshottamdas v. Madhavlal).
44. These cases included J. H. Tod v. Lakhmidas
Purshotamdas (1892), ILR. 16 Bom. 441; Pero-
sha Cursetji v. Manekji Dossabhoy (1898), ILR.
22 Bom. 899, on the dealings in government
paper and shares of a mill; and Sassoon v. Tok-
ersey (1904), ILR 28 Bom. 616, in which the deal-
ings were in American futures. The court also
cited Forget v. Ostigny, a Privy Council judg-
ment of 1895 of the Queen’s Bench of Lower
Canada, which defined financial speculation as
“a legitimate commercial transaction” and an
“everyday occurrence” (Forget v. Ostigny, cited
in Preda, Framing Finance, 109).

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 Comparative Studies of South Asia, Africa and the Middle East
for example, the Indian Chamber of Commerce,
the foundation of the Federation of Indian Cham-
bers of Commerce and Industry (FICCI, founded
in 1926), petitioned the Bengal government in 1928
about numerous occasions of police harassment in
the jute trade, complaining of police raids on what
they called “bona fide” speculative markets and the
unjustified confiscation of account books (Indian
Chamber of Commerce, Annual Report, 477). The
formalization of vernacular trade in organizations
such as FICCI, which reflected the expansion of
municipal governance after the 1919 Government
of India Act as much as India’s greater integration
into global markets in the interwar period, also
evinced the consolidation of a capitalist class, one
that had benefited from speculation in and access
to key commodities during wartime. This period
thus also witnessed new gaps between vernacular
actors and their more established national repre-
sentatives. The translation of certain vernacular
practices into the market frame reflected a new
governmentalization of speculation. These processes
emerged in the speculative political economy of
the 1920s and 1930s, amid currency manipulation,
wartime fiscal burdens, and depression. As the
Duke Memorandum, which established dyarchy in
India, provocatively stated, the “business of Indian
budget-­making” was not “inaptly called ‘a gamble
on rain,’ ” a play with chance akin to the popular
and extensively reproached popular native prac-
tice of betting on the monsoon (25).
Governmentalization, Speculation, and Translation:
Emperor v. Thavarmal
Emperor v. Thavarmal Rupchand, a 1928 Bombay
High Court case with an exceptionally detailed
judgment, captures micro movements in this mo-
ment of transformation from policing gambling
to procedure for speculation, enabled by the dis-
tinction between informal and formal worlds
produced about and by sectors of vernacular capi-
talism. Dealing with key questions in case law at
the time, it offers a thick description of the legal
transformations of the period that evinced anxiety
about the fluidity of vernacular conventions as they
45. Thakurdas et al., Brief Memorandum.
46. The term mahajan is a Hindi word for well-­
established merchant.
Published by Duke University Press
Ritu Birla • Speculation Illicit and Complicit 401
invested in the formal scripts of legitimate associa-
tion. It also stands out especially as a tale of the
criminalization of one vernacular merchant, Tha-
varmal, in the face of another more established
and politically influential one, Sir Purshottamdas
Thakurdas, the prominent Indian National Con-
gress leader and lead author-­to-­b e of the famed
1944 Bombay Plan, the articulation of the new
capitalist elite’s claims to manage the economic
development of the emergent nation.45 Equally as
significant, it was the Bombay government that
launched the case to support Thakurdas.
Thavarmal was a member of the Mahajan
Association, a cotton-­brokering business that had
been formed in June 1925 and registered with the
Registrar of Companies at that time.46 According
to one justice’s summary, the “formation of this as-
sociation was viewed with disfavor by the East India
Cotton Association, which had been recognized by
the Government as the official body controlling
the cotton trade.” Thakurdas, chairman of the
East India Cotton Association, had informed the
government that the Mahajan Association “was
merely an association for gambling in cotton.” Its
building, in a series of chawls (balconied tenement
structures) in the heart of the bazaar in “New Satta
Gully, off of Satta Gully, in Sheikh Memon Street,”
was raided by the police on January 21, 1926, under
a special warrant, and 327 persons were arrested
for gambling (Emperor v. Thavarmal, point 32).
After the arrests, the chief presidency magis-
trate of Bombay had actually acquitted Thavarmal
and his associate Dady Mehta, an indication that
the legal registration of the Mahajan Association
helped render it legitimate and that its speculative
practices in cotton futures were familiar territory
to the courts. But the Bombay government, on be-
half of Thakurdas and the East India Cotton Asso-
ciation, then appealed that decision, claiming that
Thavarmal’s business never even contemplated
the delivery of goods (Emperor vs. Thavarmal, point
35). The government deployed evidence from the
seized account books and then provided “expert”
testimony given by Mehta against his former as-
sociate Thavarmal on the Mahajan Association’s
 Comparative Studies of South Asia, Africa and the Middle East
4 02 Comparative Studies of South Asia, Africa and the Middle East
transactions in “American Futures” and in what
was called kacchi khandi.
Considering the statutory prohibition on
gambling, the court initially addressed two related
issues: the legitimacy of the search warrant and
whether the account books found on the prem-
ises could be understood to be “instruments of
gaming.” This required assessment of the police
evidence and whether the speculative activities
happened in public, which would render them
gambling, or within the confines of the associa-
tion. The court delved into an unusually micro-
scopic mapping of public space in the bazaar,
evincing established police surveillance tech-
niques. Simultaneously, it also conveyed a growing
recognition of futures trading as a legitimate busi-
ness activity when conducted by proper organiza-
tions. It focused on police accounts of speculative
transactions in the street, under a tarpaulin, with
one justice asserting “not the slightest doubt that
this open [public] space which is immediately in
front of the premises . . . is used as a market where
cotton business is carried on” (Emperor vs. Tha-
varmal, point 35). Speculation was not the prob-
lem; its context was.
The judgment’s second part reads like a deep
ethnographic description of the kinds of specula-
tive financial transactions that were commonplace
at the time, offering insight into established tech-
niques that distinguished gambling from specula-
tion, on the one hand, and a new governmental
interest in identifying legitimate associations for
futures and securities trading, on the other. Like
other cases, the court sought to assess the inten-
tion to deliver, and the evidence it solicited de-
tailed vernacular documentary practices, scouring
the content of the account books and highlighting
the Mahajan Association’s administrative perfor-
mativity in its memorandum of association, the
convening of a “Parakh,” or surveying committee,
and a defaulting committee, to regulate souda (for-
ward) or satta (speculative) transactions. All this
“would seem to indicate that the intention of the
Mahajan Association was to do genuine business”
(Emperor v. Thavarmal, point 17).
Published by Duke University Press
• 35:3 • 2015
The association’s documentary and admin-
istrative performance — of formal procedure and
associative legal scripts — evinced new strategies
by bazaar merchants to fold their market practices
into law. But these modernization rituals did not
moderate the court’s assessments of the associa-
tion’s account books in what were called “kaccha
American Futures” and “Kachi Khandi” trans­
actions. These were subject to surveillance and
the distinction between pukka and kaccha business,
terms that emerged from the vernacular trading
worlds, both elite and everyday.
Pukka Intentions and Associations,
Kaccha Transmutability
As law and governance came to embrace financial
speculation, and so validate play with uncertainty
as risk management, legal experts were at pains
to articulate differences between what were ubiq-
uitously called pukka (f. pukki, ripe, fully formed,
solid, permanent, and certain) and kaccha (f.
kacchi, raw, malleable, uncooked, without solid
form) transactions.47 The colloquial meanings of
the words are extensive and subtle; in speculative
transactions, the former referred broadly to writ-
ten documents from legal contracts to extensively
negotiable vernacular hundis and chits, while the
latter referred to transactions agreed on verbally,
albeit most often informed by the weight of gen-
erations of symbolic capital. Pukka and kaccha were
also vernacular descriptors for official procedure
and informal convention, but these terms also ex-
tended beyond the flat formal/informal distinc-
tion, for they posed commitment to certainty and
openness to uncertainty as related (as rawness and
ripeness are) rather than simply opposed a priori.
Their generalization in the bazaar, and in govern-
mental imaginaries, speaks to the ongoing force of
customary mercantile practices. Colonial authori-
ties could not simply criminalize the range of kac-
cha practices in futures trading, which evoked en-
trepreneurial engagements with uncertainty found
in globally relevant and recognized exchanges like
the Chicago Board of Trade.
What were these kaccha khandi transactions?
47. The terms pukka and kaccha arhatia, or
commission agent, are still operative in the ag-
ricultural commodities sector.
 Comparative Studies of South Asia, Africa and the Middle East
The term khandi comes from the Sanskrit khand
(noun, m.) for a piece, quantity, a cut, section, or
division. It often refers to an installment.48 This
may have referred to the kinds of payments allowed
on the transactions, payments in installments, like
a mortgage. It was also an appropriate name for
the derivative market that it was — the khandi trans-
action being a share, piece, or cut of the trade in
American cotton futures, generated by commis-
sions. Unwritten and easily open to renegotiation,
kaccha khandi reflected the accelerated pace of the
burgeoning global futures markets of the day. But
the government of Bombay read kaccha transac-
tions as operating at such a frenzied pace that they
could evince only the intention of nondelivery, and
that tied them to an earlier history of gambling.
Law appropriated the vernacular distinction be-
tween kaccha and pukka to distinguish legitimate
speculative contracts (pukka) from kaccha prac-
tices, which were aligned with wagers.
To fortify the issue of nondelivery as a cri-
terion against the Mahajan Association, the
justices also drew key distinctions between the
government-­backed East India Cotton Association
and the Mahajan Association on the grounds of
scale, arguing that the smaller units of sale offered
by the latter were also evidence of an intention to
wager without any commitment to delivery. The ac-
cused had argued that their kachhi khandi transac-
tions were analogous to the “legitimate business”
of the East India Cotton Association’s “forward
contracts commonly known as ‘Hedge’ contracts,”
and the differences reflected only the size of units
sold and the “amount and manner of brokerage”
(Emperor v. Thavarmal, point 16). But the court
emphasized this difference in scale to illustrate
the dangerous speed of forward trading. The East
India Cotton Association’s minimum unit for busi-
ness was one hundred bales, while the Mahajan’s
was only five. This, alongside the former’s maxi-
mum brokerage rate of eight annas based on the
total price of bales realized versus the latter’s maxi-
mum brokerage of two annas per each bale no mat-
ter what the value, allowed for the latter’s contracts
48. I owe this insight to Sri B. L. Sarda, a retired
businessman in Jaipur, via a discussion ar-
ranged by Dr. R. K. Birla (telephone interview
by the author, February 20, 2013).
Ritu Birla • Speculation Illicit and Complicit 403
to be carried forward from week to week, with
“fresh brokerage” for each new carry-­forward (Em-
peror v. Thavarmal, point 16).49 The pace produced
by the smaller units of sale evinced the purpose
of “pay[ing] differences only without contemplat-
ing delivery of cotton under any circumstances,”
for the lower transaction costs (five as opposed to
one hundred bales) “would appeal to a larger class
of individuals, particularly the lower middle and
poorer classes” (Emperor v. Thavarmal, point 18).
Proper financial speculation demanded
scale, social networks, and respectability, as mani-
fest in formal association, which legitimized non-
delivery. Thus even when the East India Cotton
Association’s transactions operated just like the
kaccha transactions of its less-­established competi-
tor, even at times without written contracts, its
speculative transactions were legitimized:
The analogy between the “Hedge” forward con-
tract of the East India Cotton Association and the
Kacha Khandi [sic] transaction . . . [is] illusory.
In a “Hedge” contract . . . sometimes there need
not be a written contract or Kabala; in the Kacha
Khandi transactions, as they were being carried
on, there never  was a written contract or Kabala. . . .
Such a mode of transacting business might be per-
missible when the business is between a broker and a
broker, or as in the case of the East India Cotton As-
sociation’s “Hedge” contracts, . . . as a cover for already
pending business. . . . Under the East India Cotton
Association Rules, . . . in “Hedge” contracts the
liability to give or take delivery is not altogether
eliminated. (Emperor v. Thavarmal, point 18; em-
phasis mine)
“Pending business” — t he always already condi-
tion of formal market association — alongside the
affirmation of the scale and standardized rules of
the exchange enabled the coding of play with un-
certainty as attention to risk. Knight’s speculative
hedge contract here emerges as the medium for
bearing uncertainty, in the context of specializa-
tion and consolidation by large-­scale grouping. In
this vein, the judgment declared that even the East
India Cotton Association’s teji- ­mandi contracts, or
derivative bets on the market price of one’s estab-
49. An anna was a unit of Indian currency
equivalent to one-­sixteenth of a rupee.
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 Comparative Studies of South Asia, Africa and the Middle East

404 Comparative Studies of South Asia, Africa and the Middle East • 35:3 • 2015

lished forward contracts, “although . . . of a highly into a contract of sale or purchase of securities
speculative nature, may, under certain circum- that only difference in prices should be paid, the
stances, be regarded as a legitimate business and transaction, even though speculative, is valid and
not void, for “there is no law against speculation
may act as an insurance against the fluctuations
as there is against gambling.” But, if the parties
of a constantly changing market” (Emperor v. Tha-
do not intend that there should be any delivery of
varmal, point 23).
the shares but only the difference in prices should
Indeed, as the Calcutta High Court declared be accounted for, the contract, being a wager, is
in 1940, futures trading without delivery had be- void. (Madhubhai Amathalal Gandhi v. The Union of
come generally accepted, as cases emphasized es- India, 1961 AIR 21; also 1961 SCR (1) 191)
tablishing the intention of delivery, whether or not
Through the criterion of intention, practices
delivery occurred (Shewkissen Mohata and Ors. v.
of seeking profit from uncertainty were thus slowly
Mangalchand Maloo, AIR 1941 Cal 341). By the time
folded into law, which reproduced the distinction
of the developmentalist nation-­state’s Forward
between informal (or uncertainty-­engaging) and
Contracts and Securities Contracts Regulation
formal (or risk-­managing) practices and mapped
Acts in the 1950s, key statutes of postindependence
it onto the kaccha/pukka distinction. At the same
administrative law, the central government forti-
time, kaccha/pukka continued to overflow the infor-
fied the authority of associative organization as an
mal/formal framing, as vernacular enactments of
arm of governmental administration, closely map-
formal procedures evinced; these conveyed an un-
ping procedures and clearly defining terms such
derstanding of law’s doublespeak — its compulsive
as the “specific delivery contract,” directed at ac-
investment in performatives of certainty, even as
tual delivery as distinct from the more generic for-
it enabled almost obsessive play with uncertainty.
ward contract, “securities,” and provisions for the
Thus among bazaar merchants, pukka contracts
official registration and recognition of stock and
were often ornately performative, almost passive-­
futures exchanges (Forward Contracts Regulation
aggressively enacting contract’s anxieties about
Act [1952] and the Securities Contracts Regula-
contingency: a payment of one hundred rupees
tion Act [1956]). By the 1960s the content of cases
would detail that “one hundred” was “twice of
had shifted completely to the legitimacy of asso-
fifty,” and “one third of one hundred and fifty,”
ciations, grounded in a standard taxonomy of fu-
before being officially stamped.50 The colonial rule
tures trading, to ensure that speculation would not
of law translated and circumscribed pukka, a ver-
perish into gambling. In 1962 the Indian Supreme
nacular term for a certainty that shared in kaccha
Court thus affirmed the status and authority of the
transmutability, into the universal equivalence of
new Bombay Stock Exchange (the formalized in-
contract.
carnation of the Native Share and Stock Brokers
Association) by summarizing over a half-­century of
Uncertainty, Proceduralism,
case law on the wager:
and the Colonial-­Neoliberal Rule of Law
There are three modes of dealing in shares and The Indian story evinces a dynamic between ad-
stores, namely, (1) spot delivery contract . . . (2) ministrative proceduralism and the engagement
ready delivery contract, which means a contract
with uncertainty in market practice. As such, in
for the purchase or sale of securities . . . which is to
closing I would like to briefly link this historical
be performed immediately or within a reasonable
time; (3) forward contracts. . . . If the stock ex-
data to recent themes in the social study of finance
change is in the hands of unscrupulous members, as elaborated by Arjun Appadurai, as well as with
the second and third categories of contracts . . . questions in the genealogy of neoliberal govern-
may degenerate into highly speculative transac- ing.51 Appadurai reads Max Weber’s Protestant Ethic
tions or, what is worse, purely gambling ones. against the grain, linking it to the theories of one
Where the parties do not intend while entering of Weber’s most avid students, Frank Knight, to

50. Sarda interview.

51. Appadurai, “Ghost in the Financial Machine”

and “Spirit of Calculation.”

Published by Duke University Press

 Comparative Studies of South Asia, Africa and the Middle East

Ritu Birla • Speculation Illicit and Complicit 405

foreground uncertainty in discourses of global fi-
nance. Weber’s engagement with the radical uncer-
tainty of Calvinism, the uncertainty of being cho-
sen for salvation, manifests as an argument for the
relationship between Protestant ascetic discipline/
methodicality and capitalism’s calculative spirit.
These are distinguished from the “irrational re-
liance on any sort of technical procedure” that
Weber calls magicality.52 Turning the distinction
between the spirit of calculation and magicality
on its head, Appadurai emphasizes that for Weber,
“magic is a kind of coercive proceduralism.” Link-
ing magicality and capitalist methodicality in the
concept of proceduralism, this reading makes it
“possible to identify a series of . . . coercive and
divinatory performative procedures . . . at the
heart of global capitalism and in particular, of the
financial sectors.”53 While I do not seek to unpack
the magicality of speculative practices (as others
in this section do), it is the link between procedur-
alism and uncertainty beyond probability-­calculation
that is useful here, for Appadurai’s analysis chal-
lenges us to consider how uncertainty may be re-
produced in an obsessive-­compulsive addiction to
procedure. As distinct from risk management and
the calculation of probability, the fetishization of
procedure can mark engagement with, or perhaps
more precisely rule by, uncertainty. As such, Ap-
padurai unpacks Weber’s temporizing of modern
bureaucratic rationalities and traditional, “magi-
cal” irrationality and poses the embeddedness of
the latter in the former.
Understood thus, the colonial shift in the
regulation of speculative markets from the coer-
cive force of police to the administration of policy
and procedures indicates new governmental en-
gagements with uncertainty even as they speak in
languages of security. These developments evoke
Foucault’s reading of neoliberal governmentality,
most especially its juridical framing of the market
as a game with an uncertain outcome, one tied to
fortified concepts of social competition and the
rule of law. Here, Appadurai’s reading of Weber
resonates with Foucault’s analysis of neoliberal
thought as it emerged in the 1930s and 1940s,
which specifically channels Weber’s attention to
the “problem of irrational rationality in capitalist
society.”54
As I have elaborated here, the regulation of
financial speculation and the bazaar in colonial
India presents an important early exercise of a con-
certed, coordinated juridico- ­economic framing of a
market. Foucault emphasizes in his analysis of early
neoliberal thought that neoliberalism seeks exactly
this: a juridico-­economic order built on a tight
bond between law and economy apparent even in
its utilitarian ancestry. Neoliberals, Foucault em-
phasizes, transformed the concept of laissez-­faire
into a project of vigilance. This was tied to their
idea of competition as the very ground for social
vitality and progress, but one that required pro-
tection from monopoly (133 – 3 4). Counteracting
monopoly and sustaining the terrain of competi-
tion required a framework for the ongoing play of
competition (163). Overarching vigilance was thus
not to be understood as heavy interventionist state
control or the authoritarian exercise of direct sov-
ereignty that is police power (132 – 33, 167). Vigi-
lance would be manifest through a new enfram-
ing of market society, the rule of law. As opposed to
panoptical surveillance, the rule of law established
and enforced the rules of the game: “For both the
state and for individuals, the economy must be a
game: a set of regulated activities . . . in which the
rules are not decisions which someone takes for
others. It is a set of rules which determine the way
in which each must play a game whose outcome is not
known by anyone. The economy is a game and the legal
institution which frames the economy should be thought
of as the rules of the game” (173; emphasis mine). Neo-
liberal governmentality relies on the coding of the
market as a game with an unpredictable outcome.
The rule of law, distinguished from authoritarian
sovereignty — a s colonial liberalism sought to dis-
tinguish itself — is a market framing that cultivates
uncertainty, while buttressing administrative pro-
ceduralism, so that this game of chance is never-
theless not simply an irrational gamble. Like the

52. Appadurai, “Ghost in the Financial Ma- 54. Foucault, Birth of Biopolitics, 105, and Lec-
chine,” 527. tures 1 – 5 more generally. For important elab-
orations of Foucault on the relationship of
53. Ibid., 527, 532.
liberalism and neoliberalism, see Brown, “Neo-
liberalism”; Dardot and Laval, “New Way of the
World”; Gane, “Emergence of Neoliberalism”;
and Mirowski and Plehwe, Road from Mont
Pèlerin.

Published by Duke University Press

 Comparative Studies of South Asia, Africa and the Middle East
406 Comparative Studies of South Asia, Africa and the Middle East
futures contract, it channels the full range of spec-
ulation’s meaning, from surveillance to venture.55
Colonial market governance articulated a
liberal project of improvement for “moral and ma-
terial progress” and installed a regime for the free
circulation of capital in the name of the rule of
law. The speculative modalities of colonial market
governance illuminate connections across the im-
perial institutionalization of a public of economic
actors and neoliberal governmental rationalities
promoting the entrepreneurial subject, venture,
and competition. They also ask about how high
imperial financialization might inform the “spec-
ulative methodologies” of contemporary global
governing in today’s “globally integrated financial
regime.”56 The regulation of vernacular futures
markets in India and their coding in law and pol-
icy may inform a genealogy of contemporary neo-
liberal governance as speculative governance, moti-
vated by uncertainty as well as vigilance.
Colonialism, which mapped the globe via
centers and peripheries, has taught us about the in-
timacies of formal and informal economic worlds,
and indeed of the very production of the distinc-
tion between the two through the installation of the
rule of law. This essay has thus been informed by
an interest in the mutual history of the idea of in-
formality, speculative practices, and languages of
global governing, a history that bears the imprint
of imperialism and its market governance. Here I
have addressed a key site for that history: specula-
tive market practices that play with the valuation of
an uncertain future, amid imperial financialization
and territorial conquest at the turn of the twenti-
eth century. If this moment signaled an aggressive
global expansion of finance capital, contemporary
neoliberal globality, which also operates on and
cultivates a distinction between the formal and the
informal as the global and the local, extends and
unearths new territory for financialization and the
proliferation of market values through new govern-
mental (ir)rationalities.
55. The etymology of speculation evokes vigi- 56. These speculative methodologies — environ-
lance and surveillance (see the opening state- mental, military, and financial — evince the ab-
ment for this special section). sence of any “final determination to the value
Published by Duke University Press
• 35:3 • 2015
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