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 Page 1


ECONOMIC DEVELOPMENT IN
MAHARASHTRA (1861-1920 )
  
In the preceding unit, we surveyed the rising discontent among the
common people of Maharashtra and that the condition of the farmers
throughout the nineteenth century was utterly unsatisfactory and that it
was the primary cause of the so-called “Deccan Decoities.” In this unit,
let us make a survey of developments in the economic front. At the outset,
you have to understand that within a few pages it is not possible to give
a detailed treatment to all aspects of the topic. Therefore, you will do
well to consult some standard works on the economic history of India
and Maharashtra (we have indicated titles of some books in the
bibliography). Nevertheless, we have attempted to present as succinct
a picture of the developments and communication in Maharashtra during
INTRODUCTION :
Page 2


ECONOMIC DEVELOPMENT IN
MAHARASHTRA (1861-1920 )
  
In the preceding unit, we surveyed the rising discontent among the
common people of Maharashtra and that the condition of the farmers
throughout the nineteenth century was utterly unsatisfactory and that it
was the primary cause of the so-called “Deccan Decoities.” In this unit,
let us make a survey of developments in the economic front. At the outset,
you have to understand that within a few pages it is not possible to give
a detailed treatment to all aspects of the topic. Therefore, you will do
well to consult some standard works on the economic history of India
and Maharashtra (we have indicated titles of some books in the
bibliography). Nevertheless, we have attempted to present as succinct
a picture of the developments and communication in Maharashtra during
INTRODUCTION :
the period 1861 - 1920, as possible. A brief review of developments
before 1861 is given to enable you to have clear picture of the economic
development in Maharashtra.
AGRICULTURE :
Until about the middle of the nineteenth century, as noted earlier,
agriculture passed through sustained depression. Prices and output were
low and large tracts of land in several districts of Maharashtra were
deserted by peasants. The Ryotwari system had led, until 1835, to the
weakening of the solidarity of villages and undermined the position of
the headman and other village officials. There was widespread
agreement in the official circles that the Deccan suffered for more than
two decades from over assessment; the people were impoverished
villages dilapidated and land were out of cultivation. The new system
called “Bombay Survey of 1835”, brought some relief, and together with
the growth of cities and improvement of transport, increased the area
under cultivation and widened the markets for food crops. After 1850
for nearly two decades the picture of agriculture in Maharashtra was
bright.
The 1850s and 60s saw a series of good harvests. The reduction
in land revenues in many districts encouraged cultivation. Expansion of
agriculture was greatly facilitated and stimulated by the American Civil
War which began in 1861. Demand for Indian cotton increased, and a
large part of it was supplied by Khandesh. A large part of public works
programme in Western India in railways and irrigation helped exports.
The output of cotton nearly doubled, and the output of foodgrains also
showed a marked increase between 1860 and 1869.
However, the first beneficiaries from the agricultural boom were
traders and money lenders though the prosperity lasted long enough to
help some cultivators also. District after district reported increase in
cultivation, the number of ploughs, carts and livestock increased
appreciably upto 1870. The Gazzettier for Sholapur asserted that ‘‘in
contrast to 1839, bulk of the people were prosperous and independent
of money lenders  in 1871, the only exception being those who paid less
than Rs. 10 Iakhs in land revenue.” (The Cambridge Economic History
of India, Volume II, PP . 194). The total revenue of Bombay Presidency
increased by 37% between 1857 and 1871.
The years after 1870, however. witnessed reversal of the
agricultural prosperity World economic trends also affected Indian
economy. By now, the American Civil War was over and Americans had
recaptured the market for their agricultural products, mainly cotton.
Consequently , prices of agricultural products had fallen to the 1860 level.
Page 3


ECONOMIC DEVELOPMENT IN
MAHARASHTRA (1861-1920 )
  
In the preceding unit, we surveyed the rising discontent among the
common people of Maharashtra and that the condition of the farmers
throughout the nineteenth century was utterly unsatisfactory and that it
was the primary cause of the so-called “Deccan Decoities.” In this unit,
let us make a survey of developments in the economic front. At the outset,
you have to understand that within a few pages it is not possible to give
a detailed treatment to all aspects of the topic. Therefore, you will do
well to consult some standard works on the economic history of India
and Maharashtra (we have indicated titles of some books in the
bibliography). Nevertheless, we have attempted to present as succinct
a picture of the developments and communication in Maharashtra during
INTRODUCTION :
the period 1861 - 1920, as possible. A brief review of developments
before 1861 is given to enable you to have clear picture of the economic
development in Maharashtra.
AGRICULTURE :
Until about the middle of the nineteenth century, as noted earlier,
agriculture passed through sustained depression. Prices and output were
low and large tracts of land in several districts of Maharashtra were
deserted by peasants. The Ryotwari system had led, until 1835, to the
weakening of the solidarity of villages and undermined the position of
the headman and other village officials. There was widespread
agreement in the official circles that the Deccan suffered for more than
two decades from over assessment; the people were impoverished
villages dilapidated and land were out of cultivation. The new system
called “Bombay Survey of 1835”, brought some relief, and together with
the growth of cities and improvement of transport, increased the area
under cultivation and widened the markets for food crops. After 1850
for nearly two decades the picture of agriculture in Maharashtra was
bright.
The 1850s and 60s saw a series of good harvests. The reduction
in land revenues in many districts encouraged cultivation. Expansion of
agriculture was greatly facilitated and stimulated by the American Civil
War which began in 1861. Demand for Indian cotton increased, and a
large part of it was supplied by Khandesh. A large part of public works
programme in Western India in railways and irrigation helped exports.
The output of cotton nearly doubled, and the output of foodgrains also
showed a marked increase between 1860 and 1869.
However, the first beneficiaries from the agricultural boom were
traders and money lenders though the prosperity lasted long enough to
help some cultivators also. District after district reported increase in
cultivation, the number of ploughs, carts and livestock increased
appreciably upto 1870. The Gazzettier for Sholapur asserted that ‘‘in
contrast to 1839, bulk of the people were prosperous and independent
of money lenders  in 1871, the only exception being those who paid less
than Rs. 10 Iakhs in land revenue.” (The Cambridge Economic History
of India, Volume II, PP . 194). The total revenue of Bombay Presidency
increased by 37% between 1857 and 1871.
The years after 1870, however. witnessed reversal of the
agricultural prosperity World economic trends also affected Indian
economy. By now, the American Civil War was over and Americans had
recaptured the market for their agricultural products, mainly cotton.
Consequently , prices of agricultural products had fallen to the 1860 level.
The Government was forced to scale down the assessments but did not
reduce them enough. Once again, the peasants went to the greedy
moneylenders for loans to pay the land revenues (against security of the
crop). But the money lenders, who themselves were hit by the fall in
prices, were not always willing to lend.
As discussed earlier, agrarian distress led to agricultural riots in
the Deccan in 1875, with serious repercussions to the sahukars and
vanis. The Government tried to stop the peasant discontent by introducing
the Deccan Agricultural Relief Act of 1879. The Act, which became two
remedies: in order to protect the legal peasants. restrictions were
imposed on money-lenders, and provisions, were made (though
inadequate) for alternative sources of credit. The Act had some success.
The number of court cases declined sharply and more cases went for
conciliation (though the outcome was not always satisfactory). The
violence against them coupled with the legal restrictions on their
operations made a majority of the money-lenders to move out of the
rural areas to Bombay. But this did not reduce the peasants’ woes; fears
of the burden of agricultural debt were substituted by the opposite fear
of finding enough credit. They were now forced to mortgage and even
sell their lands.
The 1880s saw the second wave of railway building, and this gave
stimulus to agricultural output and agricultural exports. In several district
of Maharashtra, artisans, who otherwise’ would have gone into
agriculture, turned careers out of business, though small artisans, unable
to complete with foreign and domestic manufacturers may have gone
into agriculture. There was an extension of cash cropping not only for
exports but wherever there was sufficient irrigation to provide food for
the cities. For example, sugarcane cultivation in the Deccan, groundnuts
in Satara, cotton in Khandesh and elsewhere in the Deccan, and other
cash crops increasingly found favour with the cultivators. Some cultivators
made large profits and ploughed them back into agriculture. They also
bought carts to take their grains to markets where they could get better
price, instead of giving it to the local sahukar. For instance, when the
southern Maharatta Railway began operating in the 1880s in Satara
and a new settlement arose there in the 1890s, it was found that carts
owned by, peasants (ryots) had increased several fold since the
settlement. This showed that no longer did the moneylenders and vanis
monopolised agricultural commodities market and dictated prices.
In the last two decades of the nineteenth century, the prices of land
shot up, and continued to rise in the first two decades of the twentieth
century. The land was bought by the neo-rich farmers who had been
able to seize the new market opportunities. What is of more interest is
Page 4


ECONOMIC DEVELOPMENT IN
MAHARASHTRA (1861-1920 )
  
In the preceding unit, we surveyed the rising discontent among the
common people of Maharashtra and that the condition of the farmers
throughout the nineteenth century was utterly unsatisfactory and that it
was the primary cause of the so-called “Deccan Decoities.” In this unit,
let us make a survey of developments in the economic front. At the outset,
you have to understand that within a few pages it is not possible to give
a detailed treatment to all aspects of the topic. Therefore, you will do
well to consult some standard works on the economic history of India
and Maharashtra (we have indicated titles of some books in the
bibliography). Nevertheless, we have attempted to present as succinct
a picture of the developments and communication in Maharashtra during
INTRODUCTION :
the period 1861 - 1920, as possible. A brief review of developments
before 1861 is given to enable you to have clear picture of the economic
development in Maharashtra.
AGRICULTURE :
Until about the middle of the nineteenth century, as noted earlier,
agriculture passed through sustained depression. Prices and output were
low and large tracts of land in several districts of Maharashtra were
deserted by peasants. The Ryotwari system had led, until 1835, to the
weakening of the solidarity of villages and undermined the position of
the headman and other village officials. There was widespread
agreement in the official circles that the Deccan suffered for more than
two decades from over assessment; the people were impoverished
villages dilapidated and land were out of cultivation. The new system
called “Bombay Survey of 1835”, brought some relief, and together with
the growth of cities and improvement of transport, increased the area
under cultivation and widened the markets for food crops. After 1850
for nearly two decades the picture of agriculture in Maharashtra was
bright.
The 1850s and 60s saw a series of good harvests. The reduction
in land revenues in many districts encouraged cultivation. Expansion of
agriculture was greatly facilitated and stimulated by the American Civil
War which began in 1861. Demand for Indian cotton increased, and a
large part of it was supplied by Khandesh. A large part of public works
programme in Western India in railways and irrigation helped exports.
The output of cotton nearly doubled, and the output of foodgrains also
showed a marked increase between 1860 and 1869.
However, the first beneficiaries from the agricultural boom were
traders and money lenders though the prosperity lasted long enough to
help some cultivators also. District after district reported increase in
cultivation, the number of ploughs, carts and livestock increased
appreciably upto 1870. The Gazzettier for Sholapur asserted that ‘‘in
contrast to 1839, bulk of the people were prosperous and independent
of money lenders  in 1871, the only exception being those who paid less
than Rs. 10 Iakhs in land revenue.” (The Cambridge Economic History
of India, Volume II, PP . 194). The total revenue of Bombay Presidency
increased by 37% between 1857 and 1871.
The years after 1870, however. witnessed reversal of the
agricultural prosperity World economic trends also affected Indian
economy. By now, the American Civil War was over and Americans had
recaptured the market for their agricultural products, mainly cotton.
Consequently , prices of agricultural products had fallen to the 1860 level.
The Government was forced to scale down the assessments but did not
reduce them enough. Once again, the peasants went to the greedy
moneylenders for loans to pay the land revenues (against security of the
crop). But the money lenders, who themselves were hit by the fall in
prices, were not always willing to lend.
As discussed earlier, agrarian distress led to agricultural riots in
the Deccan in 1875, with serious repercussions to the sahukars and
vanis. The Government tried to stop the peasant discontent by introducing
the Deccan Agricultural Relief Act of 1879. The Act, which became two
remedies: in order to protect the legal peasants. restrictions were
imposed on money-lenders, and provisions, were made (though
inadequate) for alternative sources of credit. The Act had some success.
The number of court cases declined sharply and more cases went for
conciliation (though the outcome was not always satisfactory). The
violence against them coupled with the legal restrictions on their
operations made a majority of the money-lenders to move out of the
rural areas to Bombay. But this did not reduce the peasants’ woes; fears
of the burden of agricultural debt were substituted by the opposite fear
of finding enough credit. They were now forced to mortgage and even
sell their lands.
The 1880s saw the second wave of railway building, and this gave
stimulus to agricultural output and agricultural exports. In several district
of Maharashtra, artisans, who otherwise’ would have gone into
agriculture, turned careers out of business, though small artisans, unable
to complete with foreign and domestic manufacturers may have gone
into agriculture. There was an extension of cash cropping not only for
exports but wherever there was sufficient irrigation to provide food for
the cities. For example, sugarcane cultivation in the Deccan, groundnuts
in Satara, cotton in Khandesh and elsewhere in the Deccan, and other
cash crops increasingly found favour with the cultivators. Some cultivators
made large profits and ploughed them back into agriculture. They also
bought carts to take their grains to markets where they could get better
price, instead of giving it to the local sahukar. For instance, when the
southern Maharatta Railway began operating in the 1880s in Satara
and a new settlement arose there in the 1890s, it was found that carts
owned by, peasants (ryots) had increased several fold since the
settlement. This showed that no longer did the moneylenders and vanis
monopolised agricultural commodities market and dictated prices.
In the last two decades of the nineteenth century, the prices of land
shot up, and continued to rise in the first two decades of the twentieth
century. The land was bought by the neo-rich farmers who had been
able to seize the new market opportunities. What is of more interest is
the fact that rich land owners came to replace the money-lenders as
sources of credit in the villages. Official inquiries in thirty-seven villages
in poor famine prone regions of the Deccan in 1892 revealed that the
monery lenders were the new rich farmers. An official report mentioned
that in 1899, “non—agriculturists” owned only one-quarter of the land,
but this category of land-owners included many inamdars.  Alien money-
lenders held about 15% of the land in 1890. In 1911, the Government of
Bombay estimated that “non-agriculturists” did not hold more than one-
sixth of the total area, though they held the more valuable land, and paid
about one-fifth of the total assessment.
However plague and famine continued to haunt Maharashtra. In
the last decade of the nineteenth century, several districts were hit by
famine and plague. During the famine years (1899-1902). the
Government had to cancel over one-third of its revenue demand; and in
1904, a policy of “automatic remission” was framed.
The first two decades of the twentieth century were years of mixed
fortune for agriculture; in many years epidemic killed men and cattle; in
others the rising demand for agricultural commodities, particularly cotton,
and good seasons brought fairly general prosperity. During the First
World War the prices of crops and land grew rapidly. But this created a
problem when resettlements were made after the War - the problem of
inflated wartime price of land. Thus, by “the end of the nineteenth century,
there was little uncultivated land in Maharashtra, but disease and famine
kept population down till 1921.
According to some economists, during the period under review,
number of rich farmers rose rapidly resulting in the increasing
stratification of the peasantry in the twentieth century. According to them,
the widening of markets and the commercialisation of agriculture
enabled those with resources, enterprise or luck to flourish, often by
buying up lands of small cultivators. But others are of the view that this
trend was not uniform in all areas of rural Maharashtra. For instance, in
1880, in Ahmednagar, a few men held over 400 acres of land, and twelve
to twenty bullocks, but the vast majority had less than twenty acres, and
one pair of bullocks. In two villages of the Deccan. surveyed in 1917, it
was seen that while the large holdings above twenty acres gradually
decreased, the number of medium and small holdings greatly increased.
This suggests that stratification in the rural areas differed from areas to
areas .
 Irrigation
From the sixties of the nineteenth century the Bombay Government
began to pay more attention to the irrigation needs of the Deccan.
Page 5


ECONOMIC DEVELOPMENT IN
MAHARASHTRA (1861-1920 )
  
In the preceding unit, we surveyed the rising discontent among the
common people of Maharashtra and that the condition of the farmers
throughout the nineteenth century was utterly unsatisfactory and that it
was the primary cause of the so-called “Deccan Decoities.” In this unit,
let us make a survey of developments in the economic front. At the outset,
you have to understand that within a few pages it is not possible to give
a detailed treatment to all aspects of the topic. Therefore, you will do
well to consult some standard works on the economic history of India
and Maharashtra (we have indicated titles of some books in the
bibliography). Nevertheless, we have attempted to present as succinct
a picture of the developments and communication in Maharashtra during
INTRODUCTION :
the period 1861 - 1920, as possible. A brief review of developments
before 1861 is given to enable you to have clear picture of the economic
development in Maharashtra.
AGRICULTURE :
Until about the middle of the nineteenth century, as noted earlier,
agriculture passed through sustained depression. Prices and output were
low and large tracts of land in several districts of Maharashtra were
deserted by peasants. The Ryotwari system had led, until 1835, to the
weakening of the solidarity of villages and undermined the position of
the headman and other village officials. There was widespread
agreement in the official circles that the Deccan suffered for more than
two decades from over assessment; the people were impoverished
villages dilapidated and land were out of cultivation. The new system
called “Bombay Survey of 1835”, brought some relief, and together with
the growth of cities and improvement of transport, increased the area
under cultivation and widened the markets for food crops. After 1850
for nearly two decades the picture of agriculture in Maharashtra was
bright.
The 1850s and 60s saw a series of good harvests. The reduction
in land revenues in many districts encouraged cultivation. Expansion of
agriculture was greatly facilitated and stimulated by the American Civil
War which began in 1861. Demand for Indian cotton increased, and a
large part of it was supplied by Khandesh. A large part of public works
programme in Western India in railways and irrigation helped exports.
The output of cotton nearly doubled, and the output of foodgrains also
showed a marked increase between 1860 and 1869.
However, the first beneficiaries from the agricultural boom were
traders and money lenders though the prosperity lasted long enough to
help some cultivators also. District after district reported increase in
cultivation, the number of ploughs, carts and livestock increased
appreciably upto 1870. The Gazzettier for Sholapur asserted that ‘‘in
contrast to 1839, bulk of the people were prosperous and independent
of money lenders  in 1871, the only exception being those who paid less
than Rs. 10 Iakhs in land revenue.” (The Cambridge Economic History
of India, Volume II, PP . 194). The total revenue of Bombay Presidency
increased by 37% between 1857 and 1871.
The years after 1870, however. witnessed reversal of the
agricultural prosperity World economic trends also affected Indian
economy. By now, the American Civil War was over and Americans had
recaptured the market for their agricultural products, mainly cotton.
Consequently , prices of agricultural products had fallen to the 1860 level.
The Government was forced to scale down the assessments but did not
reduce them enough. Once again, the peasants went to the greedy
moneylenders for loans to pay the land revenues (against security of the
crop). But the money lenders, who themselves were hit by the fall in
prices, were not always willing to lend.
As discussed earlier, agrarian distress led to agricultural riots in
the Deccan in 1875, with serious repercussions to the sahukars and
vanis. The Government tried to stop the peasant discontent by introducing
the Deccan Agricultural Relief Act of 1879. The Act, which became two
remedies: in order to protect the legal peasants. restrictions were
imposed on money-lenders, and provisions, were made (though
inadequate) for alternative sources of credit. The Act had some success.
The number of court cases declined sharply and more cases went for
conciliation (though the outcome was not always satisfactory). The
violence against them coupled with the legal restrictions on their
operations made a majority of the money-lenders to move out of the
rural areas to Bombay. But this did not reduce the peasants’ woes; fears
of the burden of agricultural debt were substituted by the opposite fear
of finding enough credit. They were now forced to mortgage and even
sell their lands.
The 1880s saw the second wave of railway building, and this gave
stimulus to agricultural output and agricultural exports. In several district
of Maharashtra, artisans, who otherwise’ would have gone into
agriculture, turned careers out of business, though small artisans, unable
to complete with foreign and domestic manufacturers may have gone
into agriculture. There was an extension of cash cropping not only for
exports but wherever there was sufficient irrigation to provide food for
the cities. For example, sugarcane cultivation in the Deccan, groundnuts
in Satara, cotton in Khandesh and elsewhere in the Deccan, and other
cash crops increasingly found favour with the cultivators. Some cultivators
made large profits and ploughed them back into agriculture. They also
bought carts to take their grains to markets where they could get better
price, instead of giving it to the local sahukar. For instance, when the
southern Maharatta Railway began operating in the 1880s in Satara
and a new settlement arose there in the 1890s, it was found that carts
owned by, peasants (ryots) had increased several fold since the
settlement. This showed that no longer did the moneylenders and vanis
monopolised agricultural commodities market and dictated prices.
In the last two decades of the nineteenth century, the prices of land
shot up, and continued to rise in the first two decades of the twentieth
century. The land was bought by the neo-rich farmers who had been
able to seize the new market opportunities. What is of more interest is
the fact that rich land owners came to replace the money-lenders as
sources of credit in the villages. Official inquiries in thirty-seven villages
in poor famine prone regions of the Deccan in 1892 revealed that the
monery lenders were the new rich farmers. An official report mentioned
that in 1899, “non—agriculturists” owned only one-quarter of the land,
but this category of land-owners included many inamdars.  Alien money-
lenders held about 15% of the land in 1890. In 1911, the Government of
Bombay estimated that “non-agriculturists” did not hold more than one-
sixth of the total area, though they held the more valuable land, and paid
about one-fifth of the total assessment.
However plague and famine continued to haunt Maharashtra. In
the last decade of the nineteenth century, several districts were hit by
famine and plague. During the famine years (1899-1902). the
Government had to cancel over one-third of its revenue demand; and in
1904, a policy of “automatic remission” was framed.
The first two decades of the twentieth century were years of mixed
fortune for agriculture; in many years epidemic killed men and cattle; in
others the rising demand for agricultural commodities, particularly cotton,
and good seasons brought fairly general prosperity. During the First
World War the prices of crops and land grew rapidly. But this created a
problem when resettlements were made after the War - the problem of
inflated wartime price of land. Thus, by “the end of the nineteenth century,
there was little uncultivated land in Maharashtra, but disease and famine
kept population down till 1921.
According to some economists, during the period under review,
number of rich farmers rose rapidly resulting in the increasing
stratification of the peasantry in the twentieth century. According to them,
the widening of markets and the commercialisation of agriculture
enabled those with resources, enterprise or luck to flourish, often by
buying up lands of small cultivators. But others are of the view that this
trend was not uniform in all areas of rural Maharashtra. For instance, in
1880, in Ahmednagar, a few men held over 400 acres of land, and twelve
to twenty bullocks, but the vast majority had less than twenty acres, and
one pair of bullocks. In two villages of the Deccan. surveyed in 1917, it
was seen that while the large holdings above twenty acres gradually
decreased, the number of medium and small holdings greatly increased.
This suggests that stratification in the rural areas differed from areas to
areas .
 Irrigation
From the sixties of the nineteenth century the Bombay Government
began to pay more attention to the irrigation needs of the Deccan.
Between 1868 and 1885 there was considerable activity for building
canals. The first of the large modern irrigation  schemes was built in the
Mutha River Valley near Poona, consisting of the Khadakwasla Dam
and Mutha Right and Left Bank Canals. This project was completed in
the year 1879. The Pravara system consisting of the Ojhar Canal Scheme
and Ojhar Weir, were completed in 1893. The Bhatgar Dam near Poona,
and the Nira  Left Bank Canals were completed in 1896. This was
followed by other irrigation projects, like the Godavari project, which
were completed in 1916. Other small projects such as Kadwar River
works, were also completed in the first decade of the twentieth century.
Inspite of the developments discussed above, the dawn of the
twentieth century saw an economically exhausted rural Maharashtra. The
fluctuating seasons, prices and general trend of events that followed the
scarcity of 1899 till 1902 made the life of the poor peasantry extremely
difficult. As R. D. Choksey writes, the decade which ended with 1910
was a period of indifferent rainfall. But there was no acute shortage of
grain and abnormal rise in prices. Labour had become more mobile
and the labourers more independent. A spirit of enterprise, which was
previously dormant, caused not only the labouring classes but also
smaller cultivators to seek, whenever there was local failure of the harvest,
employment out of their villages at good wages. This attitude rendered
them independent of Government aid during times of scarcity. This was
considered one of the most remarkable developments of the decade.
The twentieth century witnessed Government officials play a
sympathetic role to help the rural poor. Special attention began to be
paid to land problem by the establishment of various departments
devoted to issues concerning land and agriculture. But these efforts were
not ‘keeping with the demands made by the time and the needs of
progress. The worst enemy of development and the progress was
insufficient finance. Hence, all the efforts were in the nature of
experiments. Consequently, agriculture in the Daccan remained
backward and under developed, and the peasant continued to be poor,
debt-ridden, ignorant, and more or less indolent!
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