Few things are more characteristic of commercial and capitalist economies than written contracts. In mid-nineteenth century, the economy of Ceylon was just beginning to emerge as a commercial economy with plantations as new economic organizations. Land had to be bought and sold, funds had to be transferred among parties who did not know each other, goods and services had to be delivered over long distance as agreed; all this required written agreements. Disputes about the interpretation of these documents would arise later.
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| F.J.De Saram (Snr), the founder |
They had to be arbitrated upon or settled in courts. All these required laws and lawyers. Later as the economy grew on the early 19th century model and diversified in all manner of ways, new laws came into being and old laws had to be newly interpreted. The fundamental laws governing the country, its Constitution changed twice in a matter of a decade. In the 1950s and the 1960s, there was much change in the ownership of property, both land and commercial. In the late 20th century as multinational firms grew and came to exploit markets here, the law, law courts and lawyers met new challenges.
F.J. & G. de Saram was established in 1841 to meet the first of these challenges and lived through all that was to follow, stronger after meeting each new challenge. It is a fascinating tale well told by the firm itself in ‘160 years practice of a law firm in its historical setting’ (Vijitha Yapa Publications, Year 2001). Yet, second parties need to look at the progress of this firm, which has preserved excellent accounts of its activities, although some of it got lost in many shifts from one address to another.
They relate not merely to the history of the firm and the development of legal organisations in the country but also to its political economic and social history. Its accounts books, clearly written by hand (see page 181 of the publication), give you evidence of prices and wages over a long period of time; its deeds of transactions in land tell who sold and who bought property and who were the ‘nobodys’ who became ‘somebody’; the first deed written by F.J. & G. de Saram in 1845 mentions a loan of 56 pounds and five shillings borrowed at 12 percent interest with a title deed for security; its list of employees tells you who had access to that most lucrative profession of law at various times. In 1871, 21 acres in Ragama was valued at 21 pounds, a pound an acre. If the current value of that land is one million rupee per acre (roughly 6,000 pounds in 2011), there is some idea of what public investment in transport, public health and the development of the economy had done to land values. ‘In 1920, a young assistant at De Sarams’s was paid 150 rupees per month.’
The archives of the firm are a source for writing the history of the enterprise F.J. & G. de Saram to meet new institutional challenges over some 170 years of colonial history and life as a sovereign nation. This is a rich source of information which scholars can exploit for many years. Few enterprises anywhere have such continuity over nearly two centuries.
As Colvin R.de Silva remarked in his monumental work on British rule 1795 to 1833, at end 1934 in Ceylon, ‘a new era had commenced in the administration of justice’. Into that was added, beginning in the 1840’s, extensive coffee cultivation in the island. Transactions in land ownership were a mainstay of the firm in its first 30 years when some 40,000 deeds had been attested. Coffee and tea plantations were established on what were unjustly considered ‘crown land’; they were not privately cultivated but were mostly commons used by the people. When rubber plantations started to grow rapidly at the beginning of the 20th century, De Sarams were confronted with new legal problems.
The lands acquired for rubber cultivation belonged in villages and were held by private persons on various kinds of grants from governments and years of traditional use before the British came to rule them. F.J. & G.de Saram were ‘lawyers to the Plantation Raj’ (they ‘were sought after’ by the builders of the Plantation Raj) and were partners in those processes which deprived these hereditary owners or users of their land.
The technique used by plantation owners and their lawyers was quite simple: continue the case until the plaintiff ran out of money to fight the case. Peasants and small scale landowners ran out of money long before the plantation owners. Presumably, the whole legal fraternity of Ceylon was partners in these processes and there was little redress, if any, until the government appointed the Kandyan Peasantry Commission. A reversal of these policies came in the Land Reform Law No.1 of 1972 and the Land Reform (Amendment) Law No.39 of 1975, the latter placing all large tea and rubber estates managed by Agency Houses in the ownership of the State.
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| F.J. de Saram (Jnr.) in his Daimler at the Hermitage |
Joint Stock Companies with limited liability were an institutional device developed in Britain and established by law under acts passed by Parliament in London from 1844. They were a means of amassing large amounts of capital from a mass of people to be invested in huge capital investment projects.
The immediate need was for investing huge amounts of money in railways with returns coming over a long period of time. Railway beds had to be laid and stations and signalling had to be installed, locomotives, carriages and other rolling stock had to be paid for and working capital provided. The mass was too big to be accumulated by one or a few people and the Joint Stock Company with limited liability was the answer. Soon there followed other inventions all of which required large stocks of capital to be exploited: the telephone, electricity, later steel hulled ships and the internal combustion engine.
Large scale plantation enterprises in Ceylon although not carrying the features of these capitalist enterprises, needed large amounts of working capital and needed to be managed by agents of owners, one separated from the other by long distances from Britain to Ceylon. The Joint Stock Company permitted John Henry from Hampton to invest in a plantation in Hanwella. The Joint Stock Company Ordinance permitted the formation of business enterprises under the institutional form. F.J. & G. de Saram was a principal law firm joining in the formation of these companies. Its association with these companies ended when they were nationalised and compensation paid to them by government.
Along with the emergence of absentee landlords in the form of Joint Stock Companies, there emerged a need for organizations which would manage the plantation enterprises. Agency Houses satisfied that need. And there was F.J. & G. de Saram to provide legal advice and assistance.
In the early 1970s, they lost most of this business when estates were acquired by the State. They lost 127 of their 173 regular customers leaving 46 with them. They had acquired some new custom with State enterprises but the income so gained was not commensurate with what they had lost. The new challenge required them to cut staff and other expenditure drastically. The challenge was to find new custom and new custom came from transnational companies who came on the scene, consequent upon the opening of the economy to the rest of the world in 1978 and later. The firm shifted from its pre-occupation with land up to the 1970s to deal in corporate matters, so much so that it declared ten years ago, ‘All its clients are now corporate bodies’. To handle the related work of these clients , the firm put up subsidiaries owned by them.
The history of the firm also provides a peep into the social structure and its changes over time. However, the changes that took place in the wider society are reflected in the firm with considerable time lag and in attenuated form. The firm was very much in the de Saram family for some 121 years from the inception till 1962, when David Martensz retired, Martensz having married into the de Saram family. A Hindu, a Muslim and a Buddhist joined the firm as partners only after 1950. In the meanwhile, huge changes had taken place in the wider society. The interaction between these slow moving changes in the firm and those fast moving changes in the wider society is a matter of sociological interest.
Some partners of the firm had been active in the political life of the country. Leslie de Saram who headed the firm 1918-1947 and was a munificent philanthropist contested the 1931 general election in the Nuwara Eliya electorate as a member of the Unionist Party and received about 2,000 votes compared to the winner who received 7,000. His successor at the firm J. Aubrey Martensz was nominated to the House of Representatives of the first Parliament of independent Ceylon.
During its remarkably long life of 170 years, F.J. & G.de Saram has been the pre-eminent law firm in the country. As lawyers to business firms, it has had intimate relations with the major enterprises in the country and continues to do so. They have been their counsellors and kept the trust placed in the firm with admirable integrity. Socially they have not marched in step with the wider public. More recently, they have quickened the pace and one expects it not only to be in the forefront in adopting new technology in the conduct of legal practice but also interest itself in several aspects of legal education in the country. |
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