Dadni System Dadni comes from the Persian word dadan or advance. One who made an advance as a mark of any business deal was called dadandar. The Dadni system was a phase of business management of the English east india company in Bengal in the eighteenth century. The company used to engage local merchants to procure goods from the market on its behalf. They were called dadni-merchants, because they received advances from the company for delivering goods under stipulated terms. Money was advanced to them so that they could go into the local market and transfer the advance, if necessary, to the actual manufacturers for delivery of goods according to a stipulated time and specifications. Dadni merchants passed the dadan to actual manufacturers, either directly, or through a second degree intermediary called dalals (agents) or paikars (local stockists).
The dadni merchant did the job for a fixed commission, which he often shared with middlemen. Dadni system was abolished in 1753 on the ground that many dadni merchants failed to deliver goods in time and many even disappeared with company. The company under the circumstances resolved to procure goods through its own factors (chief of kuthi) and gomosthas (native amla). The change did not produce expected results. Manufacturing classes, particularly weavers were exposed to oppression in the hands of gomosthas, paikars and dalals, whose presence in arongs caused panic, according to contemporary reports, among manufacturers.
The East India Company, under the circumstance, reverted to the old dadni system. But as it hit the vested interests of the company servants in mofussil areas, the dadni system was not allowed to function as freely as before. Under the pressure of vested interests, the gomostha system was again introduced in 1775, but with disastrous results. Weavers, salt workers, silk manufacturers and all other manufacturers and dealers complained of corruption and high-handedness of gomosthas. The Cornwallis administration then abandoned the traditional method of procurement through native agencies (banians, dadni-merchants, gomosthas, etc) and instead, engaged the newly emergent agency houses for procuring goods from local markets. [Sirajul Islam]