CORRESPONDENCE.
INDUSTRIAL DEVELOPMENTS IN INDIA.
[To MI EDITOR. Cy Tun " SnIcTAToa."1 Sra,—During a brief visit to India in connexion with the Imperial Durbar I had some opportunity of taking note of the industrial developments now in progress and of the political problems to which they are giving rise. Perhaps it may interest your readers if I call attention to the points which most impressed me, warning them in advance that my observations were necessarily rapid, and that consequently I may have easily exaggerated the importance of some facts and under-estimated that of others.
Among modern manufacturing industries jute and cotton hold the first place in India. The home of the jute industry is Calcutta; the cotton industry has its principal strength in Bombay ; but cotton mills are now to be found in many inland towns, and some of these inland mills are already doing better than the mills of Bombay. The jute industry is con- fined to the neighbourhood of Calcutta, because the raw material of the industry is exclusively produced in Bengal and finds its way by river to the Calcutta mart, and thence to the Calcutta mills. As most of the manufactured jute is required for export, it is an advantage to have the mills near to the port of shipment. The mills are on the river bank, many of them several miles from Calcutta, so that there is no lack of space for the mill buildings andfor the houses of workpeople. The position of Bombay with regard to cotton is very different. Bombay is a considerable distance from the cotton-growing centres, and has not the advantage of the cheap water communication possessed by Calcutta. Probably the cotton industry would never have been established in Bombay at all but for the fact that the pioneers of the industry were Parsees, whose home is in Bombay. Their natural impulse was to locate the industry where they could watch it, but they now find that they are greatly handicapped by the cost of labour and land in the congested island of Bombay. The only advantage they have in comparison with an inland mill is in regard to their ship- ments of yarn to the Chinese market. But this is a very precarious trade. Complaints are bitter among Bombay spinners that they are being driven out of the Chinese market by Japanese competition. Why this should be so it is for Bombay to explain. The Japanese have to come to Bombay to buy their raw cotton ; they have to ship it to Japan, convert it into yarn, and reship it to China. Yet apparently they are able to offer higher prices for Indian raw cotton than Bombay millowners are willing to pay, and can sell their yarn in China at a lower price than their Bombay competitors are willing to take. There is a good deal of intermittent outcry in Bombay against the cotton excise duties, about which I will say a few words presently; but the irritation caused by the excise duties is as nothing to the bitterness created among Bombay millowners by the spectacle of Japanese buyers standing in the Bombay market and buying up Indian raw cotton at high prices. On this subject the millowners with whom I conversed were cynically frank. They openly pleaded for an export duty on Indian raw cotton, so as to choke off the Japanese buyers. When I pointed out that it was a little unfair to the Indian cultivator to deprive him of his best market the instant reply was, " Oh, be is a poor man without influence ; he doesn't count." I commend this reply—which I have
quoted verbatim—to English Radicals and Labourites who demand " self-government " for India.
As to the causes of Japanese success in competition with Bombay I hesitate to express an opinion, but there seems to be a general agreement among those who are familiar with the facts that Japanese labour is both cheaper and better than Indian labour. There, indeed, lies the principal obstacle to any rapid industrial development in India. It is impossible to spend even a week in India, with one's eyes open, without feeling that Indians are industrially backward. That painful criticism applies not merely to the manual worker but to every typo of Indian employee with whom one is brought in contact. Complaints are often heard in London of the slack- ness of the young ladies behind the post-office counters, but the English girl works at lightning speed compared with the post-office babu in Bombay or Calcutta. Indians themselves are perfectly conscious of the facts. They may talk of Swadeshi—home industry—but when acting as employers they prefer efficient foreign labour to the home article. Among other experiences, I went over a large building in course of construction in Calcutta. The contract for the woodwork bad been let to a Bengalee. Instead of employing his own countrymen, to whom he would have paid about 20 rupees a month, he had engaged a gang of Chinese carpenters, each of whom was probably earning at least 50 rupees.
That is one side of the story, but there is another and a more .hopeful side. There are industrial enterprises in India on modern lines which are run by natives of India alone and are brilliantly successful. The most striking example is that furnished by the Empress Cotton Mills in Nagpur, which I had the privilege of visiting. These mills were established by the late Mr. Jamsetjee Tata, thirty-five years ago. During that period the average dividend actually paid over to the share- holders works out to just over forty-two per cent. per annum on the subscribed capital. In addition each shareholder has been credited with two fully paid-up shares for each original share. Needless to say the price of the shares in the market has risen enormously, with the result that in round figures the original shareholders, in addition to receiving the enormous average dividend of forty-two per cent., have had their capital increased tenfold. Nor is this a paper increase. The value is on the spot in the shape of freehold buildings, covering a large area of ground, and in the shape of the most up-to-date machinery that Europe can supply. A better equipped. mill, or rather group of mills, it would be difficult to find in any country in the world, and practically the whole of the existing equipment has been paid for out of profits. By those who know the facts a large part of the credit for this wonderful success is attributed to the manager, Sir Bazanjee Dadhabhoy, who has made the building-up of this great industry his life work. His well-earned knighthood was conferred by the King personally when passing through Nagpur. But even the best of managers cannot make a success if the elements of prosperity are not present, and to the late Mr. Jamsetjee Tata belongs the credit of having selected for his mills a site which has proved so eminently satisfactory. Nagpur is the capital of the Central Provinces, a town of no great size, right in the heart of India, far away from the sea and from the centres of European or of Parsee enterprise. Yet Mr. Tata, when the Indian cotton industry was still in its infancy, boldly planted a mill on this unbroken ground. His choice was the result of careful calculation,. Nagpur was and is the centre of a great cotton-growing dis- trict; it contained a large population accustomed to handling cotton, so that the labour would be relatively easy to train ; there was an immediate market among the local hand-loom weavers for machine-spun yarn ; and the principal Indian markets for cloth could easily be supplied from Nagpur. These are the elements on which the prosperity of the Nagpur mills is founded. They export, like the mills in Bombay, a certain amount of yarn to the China market, but their main business is in the home market. From the outset the management insisted on the maintenance of a high standard of quality and refused to countenance the dishonest tricks which have disgraced and ruined more than one Indian mill. The reward has come back in high reputation and relatively high prices. A. better illustration of the commercial advantage of honest dealing it would be hard to find.
It is, perhaps, worth while to add for the benefit of our English tariff reformers that the Indian cotton industry is a purely Free Trade industry. It beano protection of any kind either against Lancashire or against the bogey man from Germany. Yet it continues to flourish and to expand. The outcry against the excise duties to which I referred above is one of the most audacious pieces of bluff that can he imagined. The Bombay millowners and their Press advocates habitually talk as if the excise duties constitute a protective tariff in favour of Lancashire. This phrase is indeed actually used—unless my' memory deceives me—by Mr. Lovat Fraser in his recent study of Lord Curzon's Viceroyalty, and it also appears with much rhetorical embroidery in a popular book on India by an American author. As a matter of fact the excise duty paid on the cloth produced in an Indian mill is exactly the same as the import duty paid on the cloth imported from a Lancashire mill. I was careful to ask whether any hardship was experienced owing to the manner in which the duty was levied, but even those who were most indignant against the duty itself made no complaint whatever with regard to the manner of levying it. The levying of the duty involves no interference with the working of the mill and no vexatious supervision. The mill- owner produces his hooks to show how much cloth be has made and pays a monthly cheque for the duty. The yield of the duty now reaches the substantial sum of 2270,000 a year, which is not a figure to be despised at a time when on all sides the Government of India is being pressed to embark upon vast schemes of new expenditure. But, as every Free Trader will understand, the conclusive argument against abolishing the excise duty is that its disappearance would involve a. breach in the still more important revenue from the cotton import duties. Protectionists, whether in India or in England, argue that this loss would be recouped to the country by the general prosperity incident upon the expansion of a domestic industry. There is no space here to deal with the theoretical defects of this argument. It is sufficient to point out that the Indian cotton industry obviously needs no artificial stimulus to expansion. Between 1898 and 1910 the production of cotton cloth in India has increased from an anneal average of 323,000,000 yards to 865,000,000 yards. Further figures; which it is unnecessary here to quote, show that the Indian home production under purely Free Trade conditions is steadily gaining on the Lancashire importation. There is therefore on the facts absolutely no case for the protection which the Bombay manufacturers—like other protectionists— demand for their private benefit. What a small matter the excise duty is in the finance of a well-conducted mill may be seen from the balance sheet of the Empress Mills, which shows that the profit earned last year by the firm on their whole undertaking was more than ten times as great as the sum paid in excise duty on the cloth manufactured.
I have left little space for dealing with another great modern enterprise, which is also due to the Tata family. The Tata iron and steel works at Sakchi, about 150 miles from Calcutta, are still in the process of creation. When I had the pleasure of visiting the works, pig-iron was pouring out of the blast furnaces, but the steel works were not yet complete. It is anticipated that they will be ready within a few months. The appearance of these vast works planted down in the midst of an Indian jungle is extraordinarily impressive. The site seems to have been well chosen. Two rivers supply water in more than sufficient volume. The iron ore is within an easy rail journey ; Bengal coal is obtainable at about the same cost of haulage ; and the necessary flux in the shape of a dolomite rock is equally accessible. Every precaution seems to have been talren to give this gigantic enter- prise a fair start. The manager is an American of wide experience in iron and steel works. He has under him a staff of more than a hundred European and American assistants, and under them an army of five thousand native labourers and artisans, including many women, whose graceful carriage, as they stride along with baskets of sand on their heads, lends a charm to industrial processes not otherwise particularly beautiful. The gigantic blast furnaces are of American design and construction, but every effort seems to have been made to secure the best plant regardless of nationality. Much of the machinery comes from Germany, and was purchased, I was told, at "dumped" prices, thus effecting a very considerable saving in the capital cost of the works. All persona concerned scent to feel absolute confidence that this new industry will prove brilliantly successful, and will shortly be able to furnish a large amount of the steel in the shape of rails, girders, &c., that India annually requires. Every well-wisher of India will hope that these expectations may be fully realized; but the mere fact that such a huge enterprise should have been launched almost entirely with native capital is a most encouraging sign for the future. It will be many years before Indian capitalists in the mass have the daring and steadfastness of English and American captains of industry ; it will be longer still before Indian wage-earners, mental or manual, are on the average the equals of similar workers of European race ; but a beginning has been made, and it is probable that the industrial progress of the East will be considerably more rapid than that of the West has been. Nevertheless, we have always to remember that the main wealth of India is to be found in her fields, and, though it is fashionable to talk of industrial expansion and to spend the money of the rural taxpayer on technical edu- cation for the urban boy, it is only by increasing the yield of the peasant's crop that any appreciable addition can be made to the well-being of the great mass of the people of India.—
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