Brown on Turnell, _ Fiery Dragons: Banks, Moneylenders and Microfinance in Burma _

[Book Reviews in Economic and Business History]

Published by EH.NET (November 2009)

Sean Turnell, _ Fiery Dragons: Banks, Moneylenders and Microfinance in Burma _. Copenhagen: NIAS Press, 2009. xxiii + 387 pp. $37 (paperback), ISBN: 978-87-7694-040-9.

Reviewed for EH.NET by Ian Brown, School of Oriental and African Studies, University of London.


Sean Turnell opens this fine study with an arresting contrast: “At the dawn of the twentieth century Burma was the richest country in Southeast Asia.  At the dawn of the twenty-first century it was the poorest.”  Central to that descent, he argues, has been the failure of Burma’s leaders -- not simply the military regime that has been in power since 1962 but the civilian democracy that preceded it and indeed the British colonial administration which came before that -- to fashion the institutions necessary for sustained economic growth.  One of the most important of those institutions is a functioning financial system.  In other words, to understand the failure to create effective financial institutions is to understand Burma’s economic failure across the long twentieth century.

The book proceeds chronologically, from the later decades of colonial rule through to the present day.  But since each sub-period is dominated by a particular issue or institution, the book also has a thematic structure.  Thus it begins with an examination of the Chettiars, a community of Indian moneylenders who provided most of the finance that secured the huge expansion in rice production in Burma under British rule, making Burma the single most important producer on the world market by the beginning of the twentieth century.  This is followed -- chapter-by-chapter but still within the colonial period -- by examinations of the provision of cooperative credit, early discussions on the establishment of a central bank for Burma, and the role and position of colonial Burma’s commercial and exchange banks, including, notably, Chartered Bank, Lloyds, Hongkong and Shanghai, Imperial Bank of India, and the local Dawson’s Bank.  Then into the post-British period, the book examines post-war financial reconstruction, the work of Burma’s Currency Board, and the establishment in 1952 of the Union Bank of Burma, Burma’s first central bank; agricultural and commercial banking in the 1950s; the destruction of Burma’s financial institutions and provision under the military rulers who came to power in 1962; and attempts at reform under the State Law and Order Restoration Council (SLORC) after 1988.  The final two chapters bring the book to the present with first an examination of the severe banking and financial crisis that hit Burma from late 2002, and then an assessment of various microfinance projects that have been established from the late 1990s.

Turnell -- a member of the Economics Department of Macquarie University in Sydney since 1991; prior to which he was a Senior Analyst at the Reserve Bank of Australia -- has been a close “Burma-watcher” for many years.  This book draws on a close reading of a wide range of official sources, of an extensive secondary literature, and of primary documents in the major relevant archives, including the archives of the Bank of England, the National Archives at Kew, the India Office records in the British Library, and the Echols Collection at Cornell.  It is not written specifically for specialists in the history and practice of financial institutions and structures -- though specialists will certainly gain much from it -- but is clearly intended to be accessible to a broader audience, not least to those with an interest in Burma wishing to more fully understand that country’s huge problems.  When necessary, the author provides important context on, for example, the principles of central banking or on the working of currency boards.  But even here, the writing has a light touch.  This is an attractively written, accessible account and analysis.

In covering such a substantial period of time, Turnell is able not only to sustain his central theme -- the failure of Burma’s leaders across the twentieth century to create effective financial institutions -- but also, crucially, to suggest the ways in which the policies pursued and actions taken in one regime were shaped by that regime’s perceptions of the failures of its predecessors.  Thus the determination of the civilian government of the 1950s to establish a state agricultural bank, a state commercial bank, a network of state-controlled pawnshops, and a reconstructed cooperative movement was in large part a reaction against the near-complete domination of Burma’s financial sector by private foreign interests during the decades of British rule -- the failure of the preceding colonial regime.  At one important juncture in his analysis, Turnell might well have made more of such influences and connections, and that concerns his treatment of the destruction of Burma’s financial institutions and provision by its military rulers, particularly but not exclusively in the period from 1962 through to the late 1980s -- chapter 8, “The Road to Ruin.”  Among the most destructive acts was the demonetization of all 100 and 50 denomination notes on 17 May 1964, and subsequent demonetizations in 1985 and 1987.  The author sees the causes and consequences of these “moments of reflexive monetary folly” as not merely tragic but bizarre.  Indeed elsewhere he finds the military regime’s acts simply beyond understanding.  Thus a 1965 directive that the savings, share capital, and profit deposits held by the People’s Bank of the Union of Burma could not be used for lending purposes was “inexplicable ... truly mystifying.”  But while the author appears to despair of explaining the apparently inexplicable, in fact the evidence is here to set the military regime’s actions in the context of its understandings of Burma’s earlier economic and financial failings.  In broad terms, British rule had left Burma with a range of financial inheritances, failures, and problems, which the civilian governments of the 1950s and then the military regime from 1962 sought to correct.  In this way, the nationalization of the banks in the first years of military rule, the introduction of an amnesty to indebted cultivators who were in arrears on their loans, the demonetizations -- each of which had highly destructive consequences and which, therefore, might be regarded as bizarre, mystifying, indeed demented -- should be seen in terms of the military’s grasp of what had gone before.


Ian Brown is Professor in the Economic History of South East Asia and Dean of the Faculty of Arts and Humanities at the School of Oriental and African Studies, London (ib at soas.ac.uk).  His most recent book is _A Colonial Economy in Crisis: Burma’s Rice Cultivators and the World Depression of the 1930s_ (London, 2005).  He is currently working on a history of the prison in colonial Burma.             

Copyright (c) 2009 by EH.Net. All rights reserved. This work may be copied for non-profit educational uses if proper credit is given to the author and the list. For other permission, please contact the EH.Net Administrator (administrator at eh.net). Published by EH.Net (November 2009). All EH.Net reviews are archived at http://www.eh.net/BookReview.