In a sense this book may be regarded as a supplement to A History of the Inchcape Group by the same author. The oldest of the companies constituting the Group were of Indian origin and amongst them were the India General Navigation and Railway Company Limited---the IG---and The Rivers Steam Navigation Company Limited---the RSN. The history of those two companies is thus of considerable interest to all concerned with the Group, but it may also attract a wider circle of readers, since it presents an important aspect of the economic history of Bengal and Assam.
Writing this book however, has been rather like making bricks without straw. Owing to many office moves and to some mishaps, many of the original records cannot be traced and there are periods for which no primary documents are available. In the case of the IG the gap is to some extent filled by two secondary works. Alfred Brame, the Secretary of the Company at the end of the 19th century, wrote an excellent detailed account of the Company’s activities up to that time. Several decades later C. Johnson carried the story on to 1945 in an unpublished typescript. We have drawn heavily on those two works, but in order not to disfigure this book we have not appended footnotes giving references to the many quotations or statements taken from these two secondary sources.
In the case of the RSN no comparable sources are available and for the early period there are, therefore, gaps which cannot be filled. It has nevertheless been possible to give a reasonably connected account of the main phases and events in the development of the two companies.
In general the conventions adopted in this book preclude mention of the names of individuals still alive, but there are one or two cases where such names have had to be mentioned in order to make the narrative intelligible.
Much help in the collation of material has been given by individuals in 40 St. Mary Axe, as well as by friends and former employees of the Companies, but they can only be thanked collectively.
Thanks are also due to the vast army of the Companies’ employees, from Directors to deck hands or humble clerks or peons, whose work enabled the Companies to succeed in spite of the many difficulties which will be recounted in the following pages.
Wentworth
November 1979
A little over a century and a half ago, Charles Alexander Bruce, commander of the steam gun-boat Diana, set out from Calcutta on an epic voyage. His destination lay well over a thousand miles distant and yet at no time in his two-month long journey did Bruce put his vessel to sea. When the Diana finally dropped anchor, she lay in the shadow of the Himalayan foothills, barely sixty miles from India’s north-east frontier with Tibet. . . . The first voyage up one of the great rivers of eastern India had been successfully completed.
Others followed in the Diana’s wake, exploring not only the Brahmaputra but the Ganges, its tributaries the Jumna and the Gogra, and the vast network of waterways in East Bengal which form the combined delta of these mighty rivers. From such beginnings, there grew an enterprise which ultimately embraced many hundreds of steamers and other craft, operating over some 5,000 miles of river routes---but sophisticated though the operation became, life on the Indian rivers was never to be routine and no one retracing Bruce’s route today could fail to recapture some of the wonder, drama and excitement of the earliest voyages.
Perhaps the first surprise is that the inland steamer, on leaving the port of Calcutta, does not head inland up the Hooghly river. Even before Bruce’s day, it had been established that the upper reaches of this distributary of the Ganges had inadequate navigable depth, except for a few weeks in the peak of the annual flood season. So the pioneer navigators went downstream instead and, just north of Saugor Island in the Hooghly estuary, they found a creek which led off eastwards into the maze of waterways of the Ganges-Brahmaputra delta known as the Sunderbans.
To this day, the Sunderbans district is virgin mangrove jungle populated only by tiger, deer, alligator and myriads of exotic birds. It is perhaps one of the most beautiful and unspoiled areas in all India but no early navigator could have regarded it as other than a nightmare. It has been calculated that there are well over 4,000 miles of interconnected waterways in the region, ranging from vast estuaries like the Mutlah which is over two miles wide, to creeks through,which it is barely possible to squeezes small launch. The direct route through this maze is only 187 miles long but there were no lights, buoys and channel marks to guide the pioneer; he navigated from ‘Silver Tree Point’ to ‘Black Bush Bend’ and thence to ‘Muddy Bank’ or ‘Blasted Palm’; but there were many silver trees, many black bushes, many identical creeks and many are the names they now bear in testimony of the struggle to find the way out. ‘Le Patourel Creek’ for example, leads 15 miles into nowhere taking its name from the steamer master who accidentally discovered this useless fact; and there is the narrow ‘One paddle Creek’, which tells its own story of many an unfortunate brush with the bank.
Once clear of the Sunderbans and beyond the town of Khulna (at that time only a small and isolated fishing village), the route was more straightforward. Even then, the Bakerganj District of East Bengal was largely settled and cultivated; the choice of waterways was not so great and although the Meghna estuary below Narayanganj--- five miles from shore to shore---might seem to us an inland sea, it probably presented few problems to men whose only training had been in ocean navigation.
However, north-west of the Meghna and beyond Goalundo at the confluence of the Ganges and Brahmaputra, an altogether different set of problems faced the inland navigator. No longer was he confined to tortuous cross-connected creeks; here were vast rivers, the banks of which were rarely less than two miles apart. But where the creeks of the Delta had invariably carried more than sufficient navigable depth, the muddy waters of the Ganges and the Brahmaputra concealed only one rather narrow and changing channel, scores of blind ends and mile upon mile of shoal area over which there were perhaps only inches of water.
Here, nothing was stable or well defined. Today’s channel could be tomorrow’s sand-bar. Current speeds could vary from a sluggish two knots to the roaring twelve-knot spates of the annual flood season when a steamer might struggle for days to proceed less than a mile. There were few fixed landmarks. Not even the main banks of the river could be relied upon; they could move hundreds of yards in a single season and in the annual floods, would vanish altogether as the river spilled over until it was three, four or five miles wide. A steamer might safely navigate where paddy had been cultivated the week before, yet run hard aground in a mid-river position and be stranded high and dry within hours.
Such hazards were never to be completely overcome and might well have defeated the pioneer navigators but, by the simple expedient of engaging local fishermen who knew every inch of the their waters, they succeeded in establishing a system of pilotage which was to prove remarkably efficient. It was however, no less remarkable for its unique character. The compass, landmark or celestial sighting were of little value where the navigable channel could pursue a course at 90° variance from the logical heading. Instead, the steamer commanders had to master the fishermen’s art of ‘reading’ the water---detecting channels by the pattern of current flow, by the movement of water hyacinth on the surface, or even by the subtleties of light and shade in the muddy colours of the river waters. Not surprisingly, a whole new range of nautical jargon also evolved: ‘sadha pani’ (pale-coloured water) indicated shallows and ‘kala pani’ (dark water) the opposite; ‘silli pani’ meant very much what it said---the current flow had become ‘silly’ or confused; varying channel depths were ‘dhips’ and ‘dhaps’ (‘hills’ and ‘holes’). . . . It is perhaps little wonder that in such conditions, the leadsman’s cry ‘ek baum mila nahin’ (idiomatically translated as ‘six feet and no bottom’) was to become the ultimate reassurance, a synonym for ‘all’s well’.
But as Sir Percival Griffiths tells us in this fascinating book, solutions to the intricacies of river navigation were not solutions to all problems. Natural hazards such as the great Calcutta cyclone of 1864, which sank or stranded 137 vessels of all types, combined with those of a commercial nature to thwart progress and few of the lesser lights of Inland Water Transport were to stay the course of the great freight wars of the last century, when ‘a carton of the choicest Burmah cheroots’ could buy a whole ship-load of cargo space!
Of those which did survive, two companies---the India General Steam Navigation Company and the Rivers Steam Navigation Company combined forces and, under the banner of ‘The Joint Steamer Companies’, went on to create one of the largest ventures of its kind in the world. Hard on the heels of the pioneers, their little paddle steamers pushed out through Bengal, the United Provinces and Assam, and the industrialisation of north-east India followed in their wake. Long before India’s first railway engine had steamed out of Bombay, the little ships had opened up the markets to trade, so laying the foundation of basic industry in the Bengal Presidency; they were to be the raison d’etre for the country’s first coal mines, the first ship-repair yards and the first rope-works; they carried the first bales of raw jute to the first jute mills in Calcutta and they carried into the Assam hinterland the men who opened up the first tea gardens which were to give the entire world a new beverage.
Here then, is the story of that great enterprise.
Inchcape
December, 1979
In the two or three decades before the first steamer service began to operate on the rivers of India, British rule was extended in two directions. In 1801 the Nawab of Oudh was forced to cede Allahabad and certain other districts to the East India Company in payment for the maintenance of a subsidiary force---the Nawab himself being left free to continue mismanaging the remainder of his territory.
Far to the East the Burmese were in an aggressive and expansionist mood. In the second decade of the century they had occupied much of Assam and had made frequent raids thence on the northern frontier of Bengal and on Chittagong and Sylhet. At the end of 1813 the Burmese advanced into Cachar. The East India Company displayed commendable patience, but in the early twenties it was clear that Burmese harassment could not be tolerated indefinitely. War was declared by the Company on 5th March 1824, but even before then the local British commanders had decided to take the offensive before it was too late. It is not necessary for our purpose to follow the details of the Burmese War, but two aspects of it are of interest. In the first place the EI Company’s forces were constantly hampered by difficulties of supply. When they advanced from Gauhati ‘the only practicable means of transport was by boats towed laboriously against the strong current of the river’. Secondly, the flotilla of the Company’s supply boats had an escort of gun boats and it is said that the first steam vessel on the Brahmaputra was the gun boat Diana---a paddler of 130 tons burthen* built in the EI Company’s Kidderpore Dock for its Bengal Marine. At one time it was commanded by C. A. Bruce, the discoverer of the indigenous Assam tea plant.
In the course of the next two years the Burmese were expelled from Assam and by the Treaty of Yandaboo they undertook to abstain from further interference in that country. The Ahom kings, who had thus in theory regained their independence, were incapable of maintaining their authority and even before any formal annexation took place, David Scott, the Agent to the Governor-General in north-east India, was entrusted with the administration of Lower Assam. Upper Assam remained under the rule of independent chiefs and in 1833 one of them, Purandar Singh, was made a Protected Prince, with a vague authority over the other chiefs except those in Sadiya and Muttock. He was not able in practice to establish that authority and in 1838 the British annexed Upper Assam.
In the meantime the tyrannical behaviour of the Raja of Cachar had almost killed the trade between Manipur and Sylhet and the British had therefore annexed Cachar.
The vast tract over which the Company now ruled extended some 1,000 miles east from Allahabad, but it was far from homogeneous either in climate or in the ethnic character of its population. The area from Allahabad to the western border of Bengal was inhabited mainly by people of Aryan* stock who lived in what has been called a continental climate, with extremes of heat and cold and little humidity. In Bengal, a race whose parentage was less purely Aryan, lived almost entirely on the cultivation of rice and other crops suited to a climate which has been described as a permanent Turkish bath. Assam was sparsely populated by a variety of races---easy going plains Assamese and hill tribes at various stages of development.
One thing, however, all these regions had in common---they were watered by two of the world’s greatest river systems. The Ganges, sacred to all Hindus, rises in the Himalayas, leaves the foothills and enters the plains of India at Hardwar and flows south-east to Allahabad.
There it is joined by the Jumna, which also rises in the Himalayas and follows a course roughly parallel to that of the Ganges. Thence the Ganges flows east to Bengal. Until late in the 18th century it turned south at Narainpur into the Bhagirathi---a river that unites much lower down with several other rivers to form the Hooghly, which disgorges itself into the Bay of Bengal and upon which Calcutta is sited. Gradually the Bhagirathi silted up and the main stream of the Ganges was forced to turn further east. It found several new channels in succession, but they in turn silted up and eventually the Ganges adopted a channel between Rajmahal and the Garo hills, to flow through the Padma marshes to Goalundo, in what is now Bangladesh.
The Brahmaputra rises in Tibet in which country it is called the Tsangpo and flows east until it turns south to cross the Indian frontier in the north-east of Assam. It then doubles back on its course and flows west or south west to the Garo hills. As was the case with its sister river, silting up compelled it to try one channel after another, but after the great earthquake of 1787 it also broke through the Rajmahal-Garo gap to rush on to Goalundo. It must be emphasised that Goalundo is not a fixed spot. It is little more than the name given to the place where the confluence of the Ganges and Brahmaputra happens at any particular time to be---and that can shift several miles in a year. The combined river, now known as the Padma, is truly awe-inspiring and we cannot do better than quote a description from an excellent manuscript history of the India General written by C. Johnson in 1946. ‘One of the most wonderful sights in the world,’ says Johnson, ‘is to see the Ganges in full flood at the point where it joins the Brahmaputra. Over eight miles in width, the swirling waters of the two rivers join and spread out over the low-lying countryside, forming what looks like a stormy inland sea. The regular harsh swish of the current breaking over the banks, the bubbling, sucking noise of the eddies and the muffled roar of the two rivers as they unite to sweep together with terrifying force down the broad bed of the Padma, make a fitting accompaniment to the grandeur of the scene.’ As if the Padma were not mighty enough, further south it is joined by another great river, the Meghna, which is itself formed by three rivers which have their source in the hills of southern Assam---the Surma, the Barak and the Kusiyara.
From this point onward the river pattern is so complex that it can only be properly appreciated from a map or from an aerial view. The main river splits up into a large number of ever-shifting channels through which it discharges its waters into the Bay of Bengal.
The entire coastal belt between Calcutta and Chittagong is indeed a vast delta, the most interesting area in which is the Sunderbans---‘a network of tidal rivers, swamps, creeks and islands covered with jungle’. It is still a paradise for those interested in crocodiles and the larger beasts of prey, though tigers are now rare.
To the north of the confluence of the Ganges and Brahmaputra the pattern is equally complex. The foothills of the Himalayas stretch across Bihar, Bengal and Assam and innumerable rivers rise in them and empty their waters into the Brahmaputra or the Ganges. Some of these feeders would in many countries themselves be regarded as large rivers, but their most important characteristic is their instability. The soft alluvial soil of their banks offers no effective resistance to any force tending to divert their channels. In the rainy season they flood the surrounding countryside, but when the floods subside in the winter it will often be found that the rivers have adopted wholly new courses. In many countries rivers offer splendid guidance to a lost air pilot, but in India or Bangladesh they can be dangerously misleading, since last year’s map may tell the pilot nothing about this year’s topography. Some idea of the magnitude of these annual changes can be gained from an experience of the writer. It was once his duty to try to settle a land dispute and this involved relaying the map on the ground. To find an identifiable fixed point on the map it was necessary to go six or seven miles from the disputed area---and the writer shudders to think how great the margin of error must have been and what injustice he may have perpetrated by his decision.
From the point of view of the navigator, the Ganges, the Brahmaputra and the Meghna have one feature in common, but they differ from one another in one important respect. The common feature is the fact that they all debouche into the plains at altitudes which are only a few hundred feet above sea level, although still many hundreds of miles from the sea. Consequently they become sluggish and during much of the year the pilot thus has to cope with constantly shifting shoals of sand. In the summer however, the snows of the high Himalayas melt and supplemented by the subsequent annual Rains, the Ganges and Brahmaputra become raging torrents. They spill over their banks, but the force of the current is still sufficient to scour away all sandbanks (or chars, as they are called).
The difference between these two rivers and the Meghna arises from the fact that since the Meghna is not snow fed, in the early months of the year it falls to much lower levels than the Ganges or Brahmaputra. On the other hand, confined as it is to a deep gutter-like channel, it is more susceptible to dramatic rises of water level than the other two rivers. Navigation depths in the Meghna in the height of the annual Rains season can attain as much as 30 feet, whereas a more normal depth on the broad reaches of the Brahmaputra would be from 10 to 12 feet. In the case of the Ganges where conditions must once have been similar to those on the Brahmaputra, its tributaries have been tapped over the years, either for irrigation purposes or for hydro-electric supply, and conditions have therefore progressively deteriorated to maximum depths of 6 to 8 feet.
The difficulties of navigation in this network of evershifting rivers are obvious, but the nature of the country presents a great obstacle to the construction of roads in many areas and those who need to travel or to send goods to a distant market must perforce do so by river. Before the introduction of the steamship, three main types of vessel were in use. For the East India Company’s high officials, as for their Mughal predecessors, there was a boat known as a budgerow---a long and unwieldy state barge of spoon-shaped build fore and aft, with two or more cabins ornately decorated and a small open deck on the roof of cabins. This was a slow and stately, but comfortable, method of progress though the comfort was not shared by the gangs of coolies who struggled along the banks, towing the budgerow by a rope attached to its mast.
Indian society has always been hierarchical and the East India Company’s servants continued that tradition, so that it was natural that smaller and less comfortable boats known as bholias should be used by officials of the second rank. As for subordinates they had to make do with mat-roofed dinghies, which afforded little protection from sun or rain. Whatever the type of vessel used, its master had to be weatherwise. Woe betide its occupants if he had not sought the shelter of a creek well before the onset of one of those ‘north-westers’ which are so frequent in Bengal in April and May.
When it was necessary to proceed into the interior away from the big rivers and up small streams known as Khals, recourse was had to primitive canoes or dug-outs, which were nothing more or less than the hollowed-out trunks of suitable trees. This kind of travel may not have offered much in the way of physical comfort, but in modern times, for the writer and those like him, the peace and quiet of a small khal far from any village and the beauty of the paddy fields or lush jungle through which one glided, were an abiding joy. Perhaps, however, the writer of a history of steamer companies should not indulge in too much nostalgia for times and places into which modernity had not penetrated. It would be better for him to turn to the difficulties faced by those who established steam transport on the rivers of India.
When Lord William Bentinck became Governor-General in 1828 the condition of India was far from happy and in some respects it could almost have been called a backward country. The East India Company had indeed laid the foundations of a sound judicial system, but it was still experimenting with different forms of district administration and it had not yet established a satisfactory police force. Thuggee was rife, dacoity was rampant and the criticisms made by a House of Commons Select Committee two decades earlier were still valid. ‘The establishment of an efficient police . . . appears to be a part of the new internal arrangements in which the endeavours of the Supreme Government have been least successful.’ This was indeed a masterly understatement, for outside the Presidency towns no effective police system existed. In early days the responsibility for the maintenance of law and order in Bengal and eastern India had rested with the zemindar* who discharged it through his own servants or through the villager chaukiders* who were subordinate to him. Cornwallis, so many of whose well-intentioned reforms were misconceived, had broken down the zemindari system and nothing effective had taken its place.
Matters were made worse by the appalling state of communications. In 1837 the Collector of Hooghly reported that ‘with the exception of the great lines of communication which are kept up by Government and which by the way are frequently in a wretched state, no provision whatever exists for making or repairing roads or bridges in the interior of the district’. Even as late as, 1852 it was stated that in Oudh there were no roads at all.
In these circumstances it is not surprising that the economy was backward. The operations of the East India Company had to some extent broken down the old village self-sufficiency; modern industry was not yet established on any significant scale; and a sound currency had only recently been introduced.
In culture and learning, too, India had fallen on evil days. That country, which had once been renowned for its philosophy and its drama, was now intellectually stagnant. It had been untouched by the development of modern science and at the beginning of the century even Sanskrit learning was at a low ebb.
India in fact needed an injection of new life and Lord William Bentinck was well equipped by nature to start the process. He abolished the transit duties between one part of India and another; he took steps which led to the foundation of the Tea Industry; and in 1834 he established India’s first steam inland water transport system. Another factor also was beginning to operate in the same direction. Although there was much in India that was discouraging, British businessmen were in an enterprising mood and in the first half of the century British companies, which would prove to be important factors in modernising India, came into existence. Amongst them was the India General Steam Navigation Company.
The India General cannot claim to have been the pioneer of the Inland Water Transport Industry in India. That honour belongs to the East India Company, followed some years later by the Assam Company. In the 19th century businessmen did not often look to governments to set up new industries, but in the case of the East India Company three special factors operated. In the first place the Company had been primarily a trading organisation and many of its senior officials had what might be called a business background. Secondly, in 1813 the Company had lost its monopoly of the India trade. Private businessmen were no longer its rivals and indeed revenue considerations alone made it desirable to encourage commercial development. Thirdly, the Company had long maintained its own fleet of ships and its own dockyards and had considerable experience of transport by water, whether on the ocean or on inland waterways.
Early in the governor-generalship of Lord William Bentinck consideration was given to the construction of river steamers and in 1828 the keels of two vessels were laid down in a dockyard belonging to the Kyd brothers in Calcutta.
The brothers possessed in full measure the spirit of adventure which characterised young Englishmen at that time. Born in India, they were sent home to learn the art of shipbuilding. In 1800 they returned to Calcutta as apprentices to the East India Company’s master shipbuilder and a few years later they purchased the Kidderpore dockyard and one of the brothers, James, became the master shipbuilder. The East India Company bought the dockyard from him in 1836.
By 1832 the idea of establishing a river steamer service had taken more definite shape and Bentinck had minuted to the effect that the object of the project would be the benefit which would result from ‘a great facility of commerce and intercommunication between the extremes of the Empire’. The scheme was put into effect in 1834 when the s.s. Lord William Bentinck---built at Lambeth and steamed out to Calcutta in 1832---began to ply between Calcutta and Allahabad. Three more vessels were then commissioned and by 1836 four East India Company vessels were operating on this route. There was also the steamer Enterprise, which had been built in England and ‘partly steamed and partly sailed out to Calcutta in 1825’ in 113 days, but this vessel was mainly intended for voyages to Rangoon and Singapore.
The ships of the Ganges fleet were ‘paddle wheelers built of iron and were 100 feet long and 22 feet broad amidship excluding paddle boxes’. They had two engines each and were also rigged to carry sail. The steamers carried cargo and provided quarters for the officers, while ‘the accommodation barge for passengers and cargo was towed behind and in addition to the towing hawsers there was a broad beam of wood secured by a socket and pin on the front of the barge with a similar arrangement on the stern post of the tug, connecting the two vessels.* This beam acted as a communicating gangway and also prevented the barge from colliding with the steamer when the latter ran aground. The accommodation barge was called a flat and had a fairly large saloon forward, with six to eight single cabins opening on to it. Cargo was stacked in the holds and on the after deck of the flat’. In those days discipline had not become a dirty word and the regulations for those on board were strict. ‘European or Christian servants are never permitted to appear without their jackets or shoes; they are required to keep their hair cut and are not permitted wear it long and bushy. Each servant, when attending table, is required to carry a clean napkin in his hands.’
According to the season of the year, there were two possible routes from Calcutta to Allahabad. What might be called the all season route was down the Hooghly and then by a narrow channel, through the Sunderbans to Khulna and thence north into the Padma and on into the Ganges proper. In the rainy season it was also possible to steam from Calcutta up the Bhagirathi into the Ganges and so to avoid a great detour. The first government steamers to Allahabad were able to follow the short route and were under the command of Capt. Henry Johnston, R.N., who had commanded the Enterprise. It is interesting to note that the captain did not have to live on his pay, but was able to make a considerable profit out of the Table Money of Rs. 4 per day paid by passengers for their messing. First-class passengers were charged a fare of Rs. 300 for a single journey between Calcutta and Allahabad and the time taken was between 22 and 28 days according to the season. The demand for passenger accommodation or for cargo space nearly always exceeded capacity and it was necessary to book well ahead.
It will be noted that the steamers were mainly employed on the service to Allahabad and not to Assam. The Tea Industry had not yet been established and there was little trade to be had from Assam, so that when steamers went to Assam, it was to meet the needs of the military or civil services. The direction of trade from Bengal was to the west, where Allahabad was the most important town except for Delhi, where the Moghul Court, though deprived of power, was still a focal point for arts and crafts and such industry as existed. Roads between Calcutta and Delhi were in a bad state and moreover, they were still infested by thugs and dacoits. Travel by river might be slow, but it was at least preferable to the hazards of the highways. It was natural, therefore, that the first government steamers should be utilised on the Ganges.
An important development now took place. For the first time, private enterprise became interested in one branch of river steamer transport in India. Since 1835 the East India Company had employed some of its older steam vessels in towing ships up and down the Hooghly and thus lessening the hazards of that dangerous river. The demand for this service exceeded the supply and it was clear that profit could be made from it. The opportunity was seized by the firm of Carr, Tagore and Co., which had its offices in Old Court House Street and in which British and Bengali businessmen were associated. Dwarkanath Tagore was one of the leaders of Bengali society and a relation of the future poet. William Carr had gone out to Calcutta in 1829 as an assistant in the firm of Palmer and Co., but there is no information as to how he came to be associated with Tagore. The other partners were D. M. Gordon, about whom we know nothing and William Prinsep---a brother of the famous Master of the Calcutta mint whose researches made it possible to decipher the script on the Asoka pillars. In 1837 Carr, Tagore and Co., took the initiative in forming a Steam Tug Association to take over the towage service on the Hooghly. The firm became the Managing Agents for the Association and appointed as their Superintendent Capt. A. G. Mackenzie, who had been a second officer on the Enterprise when that ship was engaged in towing work on the Hooghly. Mackenzie knew his job and the service seems to have worked well.
The Assam Company
The next step in the development of inland water transport followed the foundation of the Assam Company---the first Tea Company in India---in 1839.
As far back as in 1778 Sir Joseph Banks had made proposals for the cultivation of tea in areas bordering on Bhutan, but some of the most suitable localities were not then fully under British control and no action was taken. During the Burma war nearly half a century later two brothers appeared on the scene in Assam and drew attention to the possibilities of tea growing. Major Robert Bruce was an enterprising trader who became the agent for Purandhar Singh, while his brother C. A. Bruce commanded a gun boat which had its base at Sadiya in north-east Assam. C. A. Bruce collected tea leaves and seeds from a Singpho chief with whom Robert had made an agreement and sent them to David Scott, the Agent to the Governor-General in Assam. The experts of the Royal Horticultural Society in Calcutta were not prepared to recognise that the leaves and seeds were in fact those of the tea bush and the matter was dropped for a decade. In the thirties Bentinck was very conscious of the growing difficulty of trade with China and in 1833 he appointed a Tea Committee charged with the duty of obtaining tea seeds and tea growers from China and endeavouring to establish tea cultivation in India. Capt. F. Jenkins, who was now the Governor-General’s Agent, responded to the Committee’s enquiries by sending down tea seeds and leaves to Calcutta and it was at last accepted that tea was indigenous in Upper Assam. A scientific panel, to which C. A. Bruce was attached, found that the tea bush was more widely scattered in Assam than had been realised and in 1836 Bruce was appointed Superintendent of Tea Forests and was charged with the duty of establishing a few plantations.
Bitter controversies now arose amongst the experts, first as to the best localities for the experimental plantations and secondly, as to whether they should be established with indigenous Assam seed or with seed from China. The advocates of China seed won the day and by 1839 the East India Company had established tea nurseries with China seed at various places in Assam. Annual production had now reached 5,237 lb. and Bruce proposed that the nurseries and the indigenous tea tracts which he had discovered should be handed over to private enterprise.
This fitted in well, not only with the policy of the East India Company, but also with the adventurous mood of British businessmen. On 12th February 1839 a number of merchants assembled in Winchester House in London under the Chairmanship of G. G. de Hochepied Larpent to form a company which would take over the Government plantations in Assam. At the same time the enterprising firm, Carr, Tagore and Co. had proposed the formation of the Bengal Tea Association with similar objects. It is not necessary for us to follow the negotiations which led to the amalgamation of the two projects. It is enough to say that the Assam Company came into being in 1839 with an authorised capital of £500,000 in 10,000 shares of £50 each, of which 8,000 were to be allotted in Great Britain and 2,000 in India.
The Assam Company’s Directors realised at once that one of their major difficulties would be presented by the transport of tea from Assam to Calcutta and the consignment of stores to Assam. Local transport from the outgardens to the Company’s headquarters at Nazira might be arranged either by elephant or by country boat, but it was only occasionally possible to make use of Government steamers between Calcutta and Gauhati. The readiness of the East India Company to encourage the growth of the tea industry is illustrated by the fact that in 1841 the Government steamer Jumna was placed at the disposal of the Assam Company’s Chairman, William Prinsep, for a tour of inspection of the properties, at the very moderate charge of Rs. 200 for a journey expected to last 28 days. The Company’s historian tells us that the Company Secretary had to make do with a camp bed on deck.
It is not surprising that the Assam Company soon considered the possibility of employing its own steamer and in 1841 a sub-committee was appointed to advise as to what could be done. The sub-committee was of the opinion that, apart from questions of speed and convenience, a steamer could earn more by the carriage of government stores, treasure and provisions than the cost of running it. The steamship Assam 140 ft. in length, of 450 tons and fitted with two 50 h.p. engines was accordingly designed by Captain A. Henderson and sent out in sections to Calcutta. The Assam soon proved unsatisfactory. Even on her maiden voyage to Gauhati in March 1842 the steering was found to be defective and the steamer became unmanageable. After alterations to the steering apparatus the Assam was employed as a tug on the Hooghly and as her performance then appeared to be satisfactory, in June 1842 the Assam was again despatched towards Gauhati. She had only reached Kishnagar when the rudder again proved unserviceable. It was thought that the defect might be remedied by reversing the vessel and after this had been done one more journey to Assam was made. In December, for reasons which do not appear, the Assam was sent on the Calcutta-Allahabad route. That route proved unprofitable, but this did not deter Carr, Tagore and Co. from hiring the Assam, with its flat the Naga, to take valuable cargo to Allahabad. The towage arrangement went wrong and the flat was cast off and the Assam returned to Calcutta. Thereafter the Assam made several successful trips to Allahabad alone, but this was not the purpose for which she had been constructed and the Directors decided to sell her.
The Formation of the India General Steam Navigation Company*
The Government of Bengal were not interested in buying the Assam, but a prospective purchaser soon appeared on the scene. Early in 1844 the firm Carr, Tagore and Co. approached a number of leading Calcutta businessmen with a proposal to inaugurate a steamship service on the Ganges with possible extensions elsewhere in due course.
On 6th February a draft prospectus was put before a meeting of the Steam Tug Association and it is interesting to note that the Provisional Board of Directors included a relative of the first Chairman of the Assam Company as well as John Storm, a future Chairman of that Company. The proposed company was to be called the India General Steam Navigation Company and was to have a capital of Rs. 20 lakhs*. The Provisional Board was encouraged to go ahead by the Governor-General, Lord Ellenborough, and obtained an assurance that ‘when private enterprise had placed a sufficient number of boats on the line to meet the requirements of the public, Government would confine its steamers to the purposes of the State’.
The formal organisation of the Company was of an unusual nature. The first articles of association provided for a co-partnership for 21 years between T. C. Morton and A. de Larpent as trustees, and the general body of shareholders. John Storm was elected chairman and Samuel Smith, a Calcutta bookseller and newspaper proprietor, became vice-chairman. An important clause, which was to lead to disagreement later, provided for the formation of a London Board, in addition to the Calcutta Board. The functions of the London Board would be to help in the purchase of vessels and to protect the interests of the London shareholders. Voting rights were so arranged that small shareholders would have disproportionate weightage, but no information is available as to how the shares were in fact held or as to the proportions in which they were held in London or Calcutta. These articles were embodied in a formal indenture on 8th August 1844, but the co-partnership took effect from 1st June 1844, which can perhaps be regarded as the date of foundation of the Company.
Captain A. D. Mackenzie, who had been the Tug Associations’s Superintendent, was appointed Managing Director and Secretary of the new company and his first task was to acquire a fleet.
Orders for two steamers and two flats were at once placed with a well-known London firm, but it was obvious that there would be a considerable time lag before delivery and the Directors were anxious to start the Ganges service at once. Alfred Brame, the Company’s historian, tells us that, to meet this difficulty, in 1844 the Company bought the Assam and the Naga from the Assam Company for Rs. 70,000. As against this H. A. Antrobus, in his admirable History of the Assam Company, states that negotiations for the sale of these two vessels in 1844 came to nothing and that the sale did not take place until 1846. Antrobus’s statement is based on Minutes of the Assam Company’s Board meetings at the times concerned and it is impossible to reject it. The East India Company’s steamer Enterprise was purchased in 1844, but after a short trial that vessel proved unserviceable. Her engine and boiler were removed and her hull was converted into a flat. But how then, if at all, did the IG operate a service on the Ganges before the arrival of the steamers ordered from London? It is unfortunately impossible to answer this question but there is a strong Company tradition that the service did start in 1844.
Even when the Assam was bought in 1846 it was found that extensive repairs were needed before she could be run---and as for the Naga, that vessel was sold for scrap immediately after purchase.
It was now necessary to arrange dockyard facilities for the vessels ordered from London. Fortunately the Steam Tug Association already had its own dockyard on a piece of land belonging to William Prinsep, a partner in Carr, Tagore and Co. A five-year lease of that area was now taken for the purposes of the IG, but for reasons which are not clear the lease was issued in the name of Capt. A. Mackenzie. The dock area was now known as No. 2 Garden Reach. The plant and machinery of the Steam Tug Association were bought by the IG for Rs. 58,000 and it was arranged that the IG should carry out repairs for the Association.
The steamers and flats from London arrived in 1846 and were assembled in Garden Reach under Mackenzie’s supervision. Mackenzie seems to have had a fairly free hand in all these matters and Brame states that he spent lavishly and made provision far in advance of the Company’s requirements---a not uncommon experience when technical enthusiasts are not controlled by cost-conscious directors. Of the two steamers from London, one proved to be a dead loss. The Sir Herbert Maddock made one successful trip to Allahabad and back in 1846, but on her second voyage she grounded on the river bank in the Hooghly, just below Budge Budge, broke her back and sank. Brame records that ‘the disaster was due to the wheel chains being rove the wrong way’ and that though the Captain discovered the mistake as soon as the vessel started he thought he could run on until he anchored. This was a serious blow to the young Company and perhaps even worse than the material loss was the fact that public confidence in the Company was shaken. Fortunately the second ship ordered from London, the General Malcolm, proved very satisfactory. The Directors ordered another ship from London to replace the Sir Herbert Maddock, but it was not until 1848 that the Sir Frederick Currie, together with two flats, arrived in Calcutta. The fleet then consisted of three steamers and six flats.
The Company at this stage had to face two adverse factors, one of which was the growth of competition. The Government steamers on the Ganges were plying reguarly and had a good reputation for comfort and reliability. Moreover another private company---the Ganges Steam Navigation Company---had come into existence in 1845 and was a serious competitor with the IG.
A second difficulty was the high cost of coal. Brame points out that although the price of coal from the Bengal Coal Company’s Ranigunj field was not high, heavy expenditure was incurred in transporting it to the up country stations where it was needed. ‘Low pressure engines of those days consumed large quantities of coal and the steamers were too small to carry more than a fourth of their consumption.’ Coal dumps had, therefore, to be maintained at various stations. Coal in fact accounted for 40% of all running expenses.
Financial Difficulties and Recovery
Although there were indeed these adverse factors, the financial difficulties into which the Company now fell were at least partly due to mismanagement. The purchase of the Assam and the Auckland had been ill advised; the technical staff, must be held to a great extent responsible for the loss of the Sir Herbert Maddock; and the Directors can justly be blamed for allowing Mackenzie to overspend.
By 1847 the Company’s liabilities considerably exceeded its liquid assets and feeling amongst the shareholders was running high, even though part of the trouble arose from their unwillingness to respond to calls for payment of further instalments of their capital.
The shareholders meeting in June 1847 was a stormy one. Not only was the Board accused of mismanagement, but it was also alleged that Mackenzie had subordinated the interests of the IG to those of Carr, Tagore and Co. ‘The work of the India General was put aside to permit that of the Tugging Company to be expedited.’ Evidence on which to judge these matters is not now available, but a vote of want of confidence in the Board was passed. The directors resigned and Mackenzie was dismissed. Unfortunately, as we have seen, the lease of the dockyard had been issued in his name and it was only after litigation and the payment of compensation to Mackenzie that the Company obtained possession of it.
James Hume, a barrister and Police Court Magistrate in Calcutta, became Chairman and J. F. Harrison, the editor of a local paper, was appointed Secretary. Capt. J. Engledue, the Superintendent of the P. and O. in Calcutta, became Vice-Chairman and brought invaluable technical knowledge to the service of the Company. Hume was a man of strong personality who properly asserted the authority of the Board. This involved friction with the London Board which had tended to usurp an authority it was never intended to possess. In 1850, after protracted argument, the London Board was abolished and an unworkable arrangement was thus brought to an end.
The Company continued for another three years to make losses and in respect of 1847 and 1848 dividends not justified by results were paid out of capital. At a shareholders meeting in June 1849 a proposal to dissolve the Company was considered, but Hume had faith in the future of the Company and was able to defeat the proposal. The value of the shares was written down and at the end of 1849 the final instalment of capital was called up. Brame records that at this time there were 1,073 shares, held by 153 individuals. The capital now called up was used to increase the fleet and two more steamers and two flats were ordered from England. The fleet was thus brought up to a strength of five steamers and eight flats.
In 1851, as a result of a dispute over the right of the Secretary to carry on private trade, Hume resigned as Chairman and was succeeded by J. S. Judge, a Calcutta solicitor. Hume himself then led a somewhat factious opposition, but it is only right to record that he had improved the management of the Company considerably and paved the way for the period of prosperity which ensued.
Shortly before Hume’s resignation the Company had begun to make profits and thanks to the improved prospects, when the question as to the future of the Company was again put to the shareholders in March 1851 there was a large majority in favour of its continuance. Secretarial and managerial arrangements were now for the first time put on a sound footing by the appointment of a very competent Commander-Secretary, Capt. J. F. Stace. At the same time a Wear and Tear Account was opened, from which the cost of replacement of the older vessels could be met. The newly-found prosperity also enabled sums to be set aside from which the shares were restored to their original value.
In 1856 the Company was even able to make a bonus issue of one share for every four shares held. When Judge retired in 1857 on account of ill-health he could look back on a period of good profits and satisfactory dividends.
There was, however, one cloud on the horizon. The Ganges Steam Navigation---a company registered in Benares but having entirely English shareholders---was proving a serious rival. Until 1855 its policy had differed from that of the IG in one important respect---it did not employ flats, but used its steamers ‘single-handed’. This gave it an advantage over the IG in respect of speed, but on the other hand the IG had the greater carrying capacity. In 1855 the Ganges Company changed its policy and added flats to its fleet and thus became a more direct competitor of the IG.
At this stage the Mutiny drastically changed the situation. Although the first outbreak occurred in Bengal in January 1857, it was in Upper India that the East India Company faced the gravest threat and there the authorities were hampered by the lack of adequate means of rapid transport of troops and supplies. The Grand Trunk Road was in bad condition and the railway from Calcutta had only been constructed as far as Raniganj. The Government were thus almost entirely dependent on river transport, but their fleet was quite inadequate to this new task. The IG Company’s steamers---and presumably those of the Ganges Company also---were requisitioned under charter to the Government.
It is surprising to learn that in March 1858 a shareholder who was also Chairman of the Municipal Justices of Calcutta---Mr. (afterwards Sir Stewart) Hogg---objected to the terms of the charter and urged that the Company should throw it over and carry public cargo. Either from public spirit or because the charter was proving lucrative, the general body of the shareholders rejected Hogg’s proposal and the fleet continued to play an important part in assisting the authorities to suppress the Mutiny. It is interesting to record that during this period IG steamers were engaged in some of the longest voyages ever undertaken by powered vessels in India---as far afield as Garmukhteswar on the Ganges (some 1,760 miles from Calcutta by river) and Agra on the Jumna (1,640 miles). Although the trade of the country was to a great extent brought to a standstill, thanks to the charter the IG made handsome profits and since the idea of an excess profits tax had not then been conceived, the shareholders received good dividends.
It was now necessary to modify the Company’s Articles of Association. The concept of Limited Liability which had been adopted in England in 1855, was now applied to India and in 1858 the IG was registered as a Limited Liability Company. This involved changes in the articles and incidentally they enhanced the voting rights of the larger stockholders, though they still left considerable power in the hands of the smaller stockholders.
Considerable additions to the fleet were made at this time, the cost being met from revenue but against them must be set the first loss of a flat. When the flat Durga was lost in the Ganges the Company found itself faced with a heavy liability under the Common Carriers Act for the cargo of indigo and in the consequent litigation the fact that the Captain had tampered with the log book told heavily against the Company.
Competition Becomes Formidable
At the end of the sixth decade of the century the Company’s finances were sound and the Directors might have been excused if they had been complacent. Fortunately, they were very conscious of the formidable competition now developing. The profits made by the IG since 1851 had naturally attracted the attention of other businessmen and in 1860, besides the Ganges Company, four other companies---the Oriental Company, the Bengal Rivers Company, the Commercial Company and James Cleghorn and Co.---were all competing for the Ganges trade. Although the immediate effects of the Mutiny and its aftermath had been devastating, British and Indian enterprise was very active at this time and the natural growth of trade might well have given scope for all the new competition on the river, but a much more formidable competitor was now appearing on the scene---the Indian Railways.
One of the most important British contributions to the modernisation of India was the construction of a great system of railways and it is of particular interest that the first practical suggestion for such a system was made within twenty years of the construction of the first steam railway in England in 1825. In 1844---the year in which the IG was established---a Mr. Macdonald Stephenson went to India and produced a pamphlet containing plans for the construction of trunk railway lines in that country. Even in Britain people had not entirely recovered from their initial sceptism about railways and in the case of India it was widely believed by conservative Englishmen that ‘the natives, with their stereotyped habits, would never take to this novel mode of conveyance’. Stephenson’s proposal met with opposition in the Court of Directors of the East India Company, but the advocacy of the plan by the acting Governor-General, Mr. Wilberforce Bird, led to a survey which in 1845 resulted in a specific proposal for the construction of a line from Calcutta to Delhi. The substantive Governor-General, Lord Hardinge, supported the scheme and proposed a subsidy to the railway company. After much discussion between the Court of Directors and the Board of Control, whose President was lukewarm about the proposal, sanction was given to a scheme under which shareholders in the contemplated railway company would receive guaranteed interest of 5%. In 1849 contracts were entered into with two such companies, but the capital which could be expended on them was limited. In the case of the East India Railway the limit was fixed at £3 million, later reduced to £1 million and the length of the track was limited to 40 miles. Construction was started in 1853 and the first train on the EI Railway ran from Calcutta to Hooghly, some 23 miles from Calcutta, in August 1854.
At this stage Lord Dalhousie became Governor-General and he may rightly be regarded as the Governor-General who, after Bentinck, contributed most to the modernisation of India. His Minute of 20th April 1853 was a masterly exposition of the need for a system of railways ‘upon a scale commensurate . . . with the vast and various benefits, political, commercial and social’ which it would provide. It was impossible to controvert his arguments and within the next ten years the guaranteed capital was increased to £60 million spread over eight lines.
There were three lines which would in due course directly affect the IG and other steamer companies. First there was the East Indian Railway, which came to consist of what were known as the main line and the loop line. The main line was opened as far as Burdwan and the Raniganj coal fields in 1855 but was not at that stage a potential threat to the Companies. Of far greater significance, was the loop line on which work commenced in 1858. This took off from the main line a few miles beyond Burdwan and proceeded due north to meet the Ganges at Rajmahal. It reached the latter station in 1860 and in the ensuing two years, was extended along the south bank of the Ganges via Bhagalpur and Patna to Mughal Sarai, near Benares. A little later the region to the north of the river was also opened up to rail traffic when the Oudh and Rohillkand Railway was constructed to carry the produce of this fertile area down to the junction with the EIR at Mughal Sarai.
In 1864 the East Bengal Railway was opened as far as Kushtia and was intended to carry the rich produce of East Bengal to Calcutta and so to avoid the roundabout river journey through the Sunderbans. There was also a Calcutta and South Eastern line which was intended to connect Calcutta with a proposed relief port, Port Canning, on the River Mutlah but the plan for such a port was abandoned.
It is remarkable that as far back as 1854, when the main EIR line had not been opened even as far as Burdwan, the Directors of the IG realised the implications of these developments and warned shareholders that the railway was bound to be a powerful rival. It speaks equally well for the Directors that in 1860 they looked to Assam as the region in which they could find new business to make up for what would be lost on the Allahabad route.
By the early fifties the Assam Company had shewn that the cultivation and manufacture of tea could be profitable and its success naturally attracted rivals, prominent amongst whom were James Warren and George Williamson Senior. By 1859 there were 51 tea gardens owned by individuals or firms and in that year the Jorehaut Tea Company was founded by William Roberts, who had been Managing Director of the Assam Company. Nevertheless, annual tea production had only risen to 1¼ million lbs.---and Assam had practically no other export industries. The decision of the IG Directors to operate in Assam was thus an act of great commercial courage. That courage, however, was tempered with a prudence which led them to make their decision conditional on the willingness of Government to withdraw their steamers, which left Calcutta for Assam once in every six weeks. The reaction of Government was favourable and the Company accordingly began to operate in Assam.
The starting of an Inland Water Service to Assam in 1860 did not involve immediate abandonment of the Allahabad route. The transfer was gradual and was indeed not completed until 1874. The first two decades of the Company’s operation in Assam can conveniently be considered in four phases, each of four or five years’ duration, the first of which was one of experiment. The first voyage to Assam was made by the Lucknow, under Captain Fox, which left Calcutta on 16th September 1860. It was scarcely profitable, but the Directors decided to continue the experiment and in 1862 seven voyages from Calcutta to Dibrugarh were made. They are said to have been profitable, but details of the breakdown of profit between the Allahabad and the Assam routes are not available. It was then decided to run a monthly service to Assam and for this purpose fresh capital was raised from the existing shareholders and three flats which had been used by the East Indian Railway during the construction of the first section of the line were purchased.
The Company now turned its attention to Cachar, where the possibility of tea cultivation had recently been realised. Tea was in fact indigenous in Cachar, but it was only brought to notice in 1855 when F. Skipwith, a judge at Sylhet, sent specimens of Cachar tea down to the Agricultural and Horticultural Society in Calcutta. Little time was then lost by enterprising businessmen in following up this discovery. The first garden was opened in 1856; others followed quickly and by 1863 there was a considerable demand for transport for the importation of labour and stores. In 1863 the IG therefore despatched the Agra on a voyage to Cachar. The establishment of a monthly service had been contemplated, but the experience of the first voyage shewed that the shallowness of the Cachar rivers in the dry season created considerable difficulties and for some years the IG steamers only plied to Cachar in the rains. Fortunately that season more or less coincided with the busy season in the Tea Industry.
At this time satisfactory profits were being made and the Directors were perhaps not unduly perturbed by the appearance of a new company which in due course was to become, first a formidable rival and then an associate. Few names are of greater importance in the economic history of Assam than than of the Williamson family. The Assam pioneers included three members of that family--- George Williamson senior and his two cousins, George Williamson junior and Capt. J. H. Williamson. It is with the last named that we are concerned. Capt. Williamson had commanded two IG vessels---the General McLeod and the Madras---but in 1862 he left the IG and formed a rival concern, the New Rivers Company. There are, unfortunately a number of gaps in our knowledge regarding the foundation of this company. There is even some doubt as to its original name and we know nothing as to its capital, or constitution; nor do we know from what source it obtained the three steamers and three flats with which it began to operate. It is however clear that it began by establishing a service, not to Assam, but on the Allahabad route. Its progress was slow and it did not become a serious rival to the IG until the late seventies. In 1865 Capt. Williamson left the Company and founded the great Tea Agency House of Williamson Magor and Company. The management of the steamer company was then entrusted to the well known Calcutta Agency House, Begg, Dunlop and Co. At the same time the name of the company was changed to the River Steamer Company.
The second five-year phase was characterised by a great increase in the fleet of the IG, but presumably because of the decline of the Allahabad traffic, profits fell and on several occasions the dividend was passed. This phase was ushered in by a great natural disaster. On 5th October 1864 Calcutta was stricken by a cyclone of unprecedented violence, which has been well described in Johnson’s history of the Company. ‘The day before the cyclone there was some rain, but nobody in Calcutta thought the rain was anything more than the usual breaking up of the monsoon. On the morning of 5th October a strong wind had sprung up and most of the sailing vessels in port began hurriedly to take in all unnecessary canvas and batten down hatches. In an hour’s time the wind had developed into a terrific hurricane constantly veering round from all points of the compass and to complete the disaster a tidal wave about twelve feet high hurled itself down river . . . There were 192 vessels, excluding boats, at the time in port and most of them were stranded or wrecked. . . . The damage to the city itself was also serious . . . but the worst loss of all was on the river where the conditions were so appalling as to call for the remark from an old resident that the Port of Calcutta had been ruined.’
Fortunately for the IG, few of its vessels were in Calcutta at the time and it suffered very little loss. Some of its rival companies were much less fortunate---and moreover the disaster occurred at a time when their financial resources were badly over-strained. The loss from the cyclone was more than they could stand and two of them---the Oriental Steam Navigation Company and the Commercial Navigation Company---went out of business almost at once. The IG acquired their fleets, which together amounted to two steamers and flats, for the knock down price of Rs. 87,000.*
Perhaps of greater importance was the amalgamation of the IG with the Bengal Rivers Company---the most formidable of the IG’s rivals. It had been clear for some time that the competition between these companies was uneconomic and in spite of the opposition of some shareholders, in 1867 a merger was effected on the basis of the issue of IG shares and debentures to the shareholders of the Bengal Rivers Company. The IG thus acquired 4 steamers, 9 flats and 2 hospital ships. At about the same time the Ganges Company found itself in financial difficulties and when it ceased to operate it sold three of its steamers and two of its flats to the IG in exchange for shares and debentures. The only company now remaining in competition with the IG was the RS Company and as that company’s fleet was still very inadequate, the IG dominated the inland waters of Eastern India for a decade or so.
In 1869 the fleet of the IG consisted of 16 steamers, and 32 flats. The operation of this large fleet naturally posed administrative problems, but fortunately, in 1864 a very able man, Capt. C. J. Scott, who had been with the Company since 1863, had become Secretary after his predecessor had been drowned in the great cyclone. With the support of the Directors he followed a bold policy in spite of discouraging results on the Allahabad route and although profits declined, the foundations of future prosperity were well laid.
The Third Phase
The fleet was now adequate and in the next five years very few additions were made to it. Several matters of interest during this phase call for mention---the withdrawal from the Allahabad route, the unsuccessful attempt to establish a service on the Irrawadi, technical developments and administrative reorganisation.
Two factors accounted for the decline in traffic on the Allahabad route. The East Indian Railway, which had reached Allahabad in 1864, now attracted most of the traffic on the south bank of the Ganges, but of equal importance was the fact that great irrigation works had been constructed to draw off water from the Ganges. The level of the river in the dry season had fallen sufficiently to make navigation difficult and it was reported that a journey to Mirzapur, 230 miles beyond Patna, which had taken only 12 days in 1847 now took 16 days. At one stage the IG had attempted to compensate for loss of traffic on the south bank by opening a service north of the Ganges up the Gogra river to Fyzabad. This was not successful and was abandoned in 1864 and although, a few years later the construction of the Oudh-Rohilkand Railway justified its re-establishment, the reprieve was only temporary and the service was again closed in 1874. At the same time the Ganges service was closed.
At this time the Tea Mania---when tea land had been bought more often as a speculation than with a genuine intention of growing tea---had been left behind and the industry was in a flourishing condition. By 1873 about 73,000 acres of tea were under cultivation in Assam and transport between Calcutta and Assam had become the mainstay of the IG’s business. The long journey through the Sunderbans was a handicap. In 1869 five years after the East Bengal Railway had been extended to Kushtia, the IG made a working arrangement with the Railway by which goods for Assam would be railed to Kushtia and transhipped there under through booking documents. For reasons which do not appear, this arrangement was abandoned in 1871, but by 1873 the railway had been extended to Goalundo and the importance of that point at the junction of three great rivers was obvious. It became one of the IG’s most important stations and thenceforth the normal route for passengers to Assam or East Bengal from Calcutta was by train to Goalundo and thence by steamer. As the writer has written elsewhere ‘many old hands will remember with pleasure the early morning change from train to steamer, followed by a sleep in a comfortable cabin as a prelude to beer and curry on board before reaching Narayanganj’. One cannot help feeling sorry for the men of today who have to make that journey by air. What a lot they miss.
With the fleet available as a result of the withdrawal from the Ganges, the Company was able to introduce a regular service to Assam once in ten days and also to develop a large and lucrative cargo trade with the great jute centres of East Bengal. Cachar continued to be served once a fortnight.
Captain Scott was a man of great energy and a spirit of enterprise and in 1870, with the support of the Directors, he sought to obtain a subsidy from the Chief Commissioner of Burma for the establishment of a service on the Irrawadi. The subsidy was not forthcoming, but the Directors nevertheless decided to go ahead. In 1871 the IG therefore despatched two steamers and four flats to Rangoon. The steamers at once began to ply to Mandalay, but the Irrawadi Flotilla Company was well established on the river and its undercutting of rates drove the IG out of business. Losses were made for three years, though according to Brame the commanders of the vessels did very well out of private trade. The IG decided to withdraw, but that process was protracted and it was not till 1874 that the steamers returned to India. The loss during the three-year period was over Rs. 11 lakhs.
Two interesting technical developments took place during this period. The first was the lengthening of the steamers to increase carrying capacity, though the flats continued to be the main vehicle for cargo. An even more important development was the introduction of the compound engine. The underlying principle of the compound engine is that steam passed through a single cylinder has not exhausted its thrust when it leaves that cylinder. If it is then passed into a larger cylinder, although the pressure per square foot will be less, the thrust will be maintained as before because of the larger area of the second cylinder. A given unit of steam will thus supply more propulsive power than if only one cylinder had been used---and this clearly means that less fuel will be used. This new principle had been in use in England in the fifties and in 1872 the IG adopted it in one of their existing steamers. This cut coal consumption and the change was gradually introduced throughout the fleet.
In spite of the progressive attitude of the Company, profits in the five years ending in 1874 were disappointing, since the loss on the Burma operation and the decline in the Ganges trade to a great extent offset the increased earnings from Assam and East Bengal. The company was nevertheless in a sound financial position and in the last year of the period there was a marked change for the better.
Towards the end of this phase important changes in the organisation of both the IG and the RS Co. took place. As we have seen when Williamson left the RS Co. its management was entrusted to Begg Dunlop and Co. At some time in the sixties two nephews of Sir William Mackinnon---Duncan Macneill and John Mackinnon---joined that firm. In 1872 as a result of a disagreement of some kind they left Begg Dunlops and formed Macneill and Co. in Calcutta and an associated partnership, Duncan Macneill and Co. in London. They were able to take with them three Agencies, including that for the management of the RS Co. In the following year that company was incorporated in London under the name the Rivers Steam Navigation Company with the Macneills and the Mackinnons as its principal shareholders.*
In 1873 an equally important change took place in the management of the IG. Up to that date the company had been managed by its Directors and the Commander-Secretary, but in that year management was entrusted to a Calcutta firm Schoene, Kilburn and Co., which had been in business in Fairlie Place since 1847. The Kilburn family had had business connections with India since the early days of the East India Company and when reasons of health made it necessary for Edward Dunbar Kilburn to go abroad, it was natural that his thoughts should turn to that country. In 1847 C. E. Schoene, who had been in business in Calcutta since 1842, was seeking a young partner. He and Kilburn suited each other and entered into a successful Calcutta partnership. F. Kilburn, a brother of Edward, was the first member of the family to have shares in the IG, but he did not become prominent in the company and it was Edward who became a director in 1864. He was a colourful character and it appears that during the Indian Mutiny he inaugurated the Voluntary Cavalry in the drawing room of Fairlie House, and then took part in the fighting against the mutineers. When he was elected Chairman in the following year he was the largest shareholder and held 165 shares of Rs. 1,000 each. It is not surprising, therefore, that on 7th May 1873 Schoene, Kilburn and Co. should have become the Managing Agents of the IG and that the IG staff should have moved into the Fairlie Place office. Although Scott had managed the IG well, the change was wise and soon justified itself. The new Managing Agents at once instituted a sound system of accounting.
The fourth phase of the two decades---1874-1879 was a period of almost unqualified success, in which profits were satisfactory and good dividends were paid. At the beginning of this period the IG and the RSN had as we have seen, withdrawn from the Ganges. The vessels thus released were made available for Assam, where the Tea Industry was booming and for East Bengal, where jute cultivation was being rapidly extended. Weekly services from Calcutta to Assam were inaugurated and from 1875 flats for the receipt of cargo and for the accommodation of travelling planters were stationed at various places on the Brahmaputra. As it happened all the most important Tea Gardens were inland, at some distance from the Brahmaputra, and the IG therefore began to employ small paddle steamers on feeder services up the tributaries of that river, particularly up the Desang, Dikhu and Dhansiri on the South Bank and up the Subansiri for gardens on the North Bank.
All these developments made increasing demands on dockyard facilities and in 1879 the IG took a lease of a plot of land three miles down the river from Garden Reach, known as Raja Bagan. It had originally been used as a dockyard by the old Oriental Steam Navigation Company and Johnson tells us that ‘a large drain surrounded the plot and it was honeycombed with fetid mosquito-breeding tanks’---but it had a good river frontage and could be obtained at the low rental of Rs. 250 p.m. The RSN at this period had its dockyard at Sibpur, in Howrah.
The fleet of the IG was increased considerably during this period and some shareholders were inclined to grumble at the fact that this was financed out of revenue, but the dividends paid suggest that there was little justification for their complaint. Indeed in 1879 it was possible to make a bonus issue of one for four.
During this period the RSN also began to augment its fleet and became a potentially serious rival to the IG, but a more immediate threat came from the Eastern Bengal Railway Company’s flotilla which conveyed goods from the East Bengal jute districts and from Cachar in conjunction with the Railway. In 1879 the two river companies petitioned Parliament against this competition by public enterprise, but before any action was taken on the petition, in 1880 the flotilla was withdrawn from Cachar. The IG then chartered some of the EB Railway Company’s fleet.
All in all, at the end of the second decade of operations in Assam, the IG directors could feel well satisfied with the company’s position, while the directors of the RSN must have been conscious that they were drawing level with their rival.
By 1880 the RSN had increased its fleet to a level which enabled it to compete on equal terms with the IG Company and the story of the next decade is one of fluctuating relations between the two companies, complicated by the competition of outsiders.
At the beginning of the decade those relations appeared good. Not only had they joined forces against the threat from the EB Railway Flotilla, but in 1880 they had also made a joint agreement by which shippers of tea had the option of sending their goods by the steamers of either company at agreed, reduced rates. In 1882, however, strains began to appear. Both companies were operating weekly services from Goalundo to Assam, but the vessels towed flats and were therefore so slow that ‘they rarely landed a passenger at Dibrugarh within fourteen days from Goalundo’. The Government of Assam had for some time been pressing the companies to establish fast passenger services, at least between Dhubri and Goalundo. Particular importance was attached to this in view of the fact that tea garden labour was now being imported into Assam on a considerable scale and Dhubri was the point at which immigrants entered Assam. In 1873 an attempt by the Government of Bengal---within whose jurisdiction Assam then lay---to secure the establishment of such a service had failed, but in 1874 Assam was separated from Bengal and became a Chief Commissionership. The Assam Government was thus in a stronger position to exert pressure and in 1880 it threatened to put on its own steamers for this service.
It is strange that the IG, which had shewn so much enterprise in many directions, should have resisted this pressure in the belief that the service would not pay. The RSN grasped the opportunity and entered into a contract by which it undertook to establish a fast daily ‘single-handed’ service between Dhubri and Dibrugarh in return for a subsidy for ten years as well as a promise of preference for the transport of immigrants and government stores. The Company ordered nine steamers from the Clyde for this purpose and before long this service became the normal method of transport of labour to Assam. The IG had definitely ‘missed the bus’ and this was perhaps the initial cause of jealousy between the two companies.
This did not prevent them, however, from working in harmony against outside competition, or from agreeing in 1883 to share earnings for cargo carried beyond certain limits on the Brahmaputra. That agreement was known by the charming name of the Joint Purse Agreement.
The Assam Railways and Trading Company
The first threat of outside competition came from the Assam Railways and Trading Company. The history of that splendid company well illustrates the way in which British enterprise transformed Assam from a backward region into a prosperous province with an economy based on coal, tea, railways---and later oil---all financed by British capital. The existence of coal deposits in Assam had been brought to notice as early as in 1828 and in the same year C. A. Bruce had stated that there were petroleum deposits in that region, but it was not until the eighties that any practical action was taken to exploit these resources. In 1878 Dr. Barry White, a Civil Surgeon in Dibrugarh, took the initiative and persuaded the Government of Assam that the appalling lack of communications in Upper Assam seriously hampered development and that this deficiency could best be supplied by the construction of a metre gauge railway from Dibrugarh along the Sadiya Road, which would take it past a number of prosperous tea gardens, with a branch to Makum, thence to an area where rich seams of coal could easily be developed.
The Government of Assam agreed to make a subvention to such a project and in 1879 a proposal to form the Assam Railways Company was mooted. Unfortunately applications for shares in the Company were insufficient and the plan seemed to have collapsed. In 1880, Benjamin Piercy, a well known railway engineer in England, took an interest in it and sent his brother Robert to make a local investigation. Robert’s report was most encouraging. Subscriptions were now forthcoming and in 1881 it was possible to incorporate the proposed company. It was decided to construct a line from Dibrugarh to Sadiya and a branch line to the coal mines at Margherita. By 1884 the line to the coal fields was completed and by the following year the main line was taken as far as Talap.
The construction of this line, in a region of dense jungle where no indigenous labour was available, was fraught with difficulty, well described by a contemporary who refers to ‘the matted and tangled undergrowth, dense cane brakes, inextricably confused creepers and parasitical growths’ through which the line had to be cut. He goes on to picture the evening return to camp of the pioneers ‘spent with toil, lacerated with thorns, their life blood half drained by leeches . . . with poor fare to look forward to’. The construction of the line was indeed a magnificient example of determination and endurance.
It was clear from the outset that the carrying capacity of the RSN and the IG would be inadequate for the conveyance of the building materials and stores required for the construction of the railway and the directors of the Assam Railways and Trading Company decided to have their own fleet, which could also be used for the transport of tea chests from Dibrugarh to Calcutta. At this time the completion of a railway more or less parallel to the Indus had driven the Indus Steam Flotilla out of business and the AR and T Company was able to buy five of its steamers and six flats. Eight new flats were also ordered from Britain. The flats were in due course used to carry the Company’s coal to Calcutta, East Bengal and the towns of Assam, but this was found to be unprofitable and contracts were made with the RSN and the IG for the carriage of coal at agreed rates. Some thought was then given by the AR and T Company to the establishment of a Planters Line for the transport of tea on a cooperative basis ‘forever free from the iron grasp of the existing steamer companies’, but the project was soon shelved and in 1887 the RSN Company purchased the fleet and the AR and T Company withdrew from the river. The IG declined to participate in this purchase.
Competition and Development
By now, other rivals had begun to present problems to the RSN and the IG. Although, as we have seen, the EB Flotilla had been withdrawn from the Cachar service in 1880, it continued to serve East Bengal. In 1882 negotiations between the EB Railway and the IG resulted in what was known as the Combined Service Agreement, by which goods were carried by the IG from Jaganathganj to Goalundo, to be conveyed thence by rail to Calcutta. This agreement did not apply to the Goalundo-Narayanganj route, on which the EB Railway continued to compete with the steamer companies---nor did it apply to passenger traffic.
Another rival, with powerful Calcutta backing, now appeared on the scene. In the economic history of Bengal in the 19th century, the name of Yule must rank equal to those of Mackinnon and Macneill and by the time with which we are concerned, the house of Andrew Yule and Co. was well established. In 1882 Andrew Yule floated an associated company, the Inland Flotilla Company, with a proposed capital of Rs. 20 lakhs. The primary objective of the new company was the up country trade in raw jute, which had hitherto been carried mainly in country boats. Vessels were ordered from England and assembled in Garden Reach and when the service was started in 1884 the first four of them were commanded by former IG officers. Two unforeseen factors frustrated Andrew Yule’s plans. In the first place the IG and RSN had considerably increased their fleets in the last few years and were now making an all out bid for the traffic from Narayanganj. Secondly, as it happened the jute crop of 1884 was much below average. A rate cutting war followed with results which, though damaging to the RSN and the IG, were disastrous to the Inland Flotilla Company. The IG raised fresh capital and jointly with the RSN entered into negotiations for the purchase of the fleet. The RSN then drew back and the IG alone bought it for Rs. 25,17,877. Payment in respect of Rs. 16,22,000 was made in the form of shares in the IG.
There were two other developments at this time in which the IG took the initiative without the cooperation of the RSN. The first was in Orissa. Since the seventies various individuals had run services to Chandballi, an important stage on the way to the great Jagannath temple at Puri which was visited annually by vast numbers of pilgrims. In 1878 these services seem to have been discontinued and Captain Scott, the Secretary of the IG, seized the opportunity of establishing his own sea-going coastal service on that route. In the 19th century it was not altogether uncommon for an employee of a company to have outside ventures, but the IG shareholders disapproved of Scott’s action. The matter was settled by the purchase of Scott’s steamers by the IG, which continued the Chandballi service and a little later established a line linking Chandballi with Cuttack.
In 1885 the IG, again acting on its own, secured a contract for a despatch service to Cachar. In view of the difficulty of navigating the Cachar rivers in the dry season, special vessels of shallow draft were required. Eight such steamers were acquired, but they could only start from Narayanganj since the coaching traffic between Goalundo and Narayanganj was still the preserve of the EB Railway. The terminus of the service was Fenchuganj, but the IG also put a vessel on to link Fenchuganj with the important business centre, Karimganj. At one stage the RSN attempted to operate a rival service to Cachar, but it failed and was withdrawn. It is interesting that the eight new steamers employed on the Cachar route were commanded, not by Europeans, but by Indian Serangs.
As against these successful ventures must be set one instance of a half-hearted development, quickly abandoned. Gewankhali at the junction of the Rupnarain with the Hooghly, was the centre of a rich inland trade and in the late seventies the IG opened a service between Calcutta and Gewankhali with two feeder steamers. The venture was successful and it is not easy to understand why it was abandoned in 1882. The Calcutta Steam Navigation Company took up this service and a later attempt by the IG to revive its service in competition with that company was unsuccessful. Negotiations between the two companies then resulted in an agreement by which the IG withdrew from the Gewankhali route, while the CSN Company undertook not to compete further east.
The Fleets and the Calcutta Dockyards
The first five years of the ninth decade of the century were thus a period of intense activity, characterised by a great increase in the IG and the RSN fleets, through both new construction and acquisition from competitors. In spite of the losses incidental to operations in difficult rivers, by 1884 the IG fleet consisted of 29 steamers, 2 launches and 55 flats, as compared with 10 steamers and 10 flats five years earlier. To a great extent this expansion was financed from revenue---in spite of grumbling from shareholders---but debentures were issued in 1885. Similar details regarding the fleet of the RSN are not available, but it is clear that in that Company, there had been even more spectacular expansion and that its fleet of steamers, if not flats, was by then significantly larger than that of the IG.
This increase in the fleets naturally required a corresponding expansion of dockyard facilities. Here it will be convenient to recapitulate the history of the two companies’ dockyards. When the IG company was first formed it took a five-years’ lease of a piece of land known as 2 Garden Reach adjacent to the East India Company’s Kidderpore dockyard and in addition to docking facilities substantial godowns were built there for the reception of cargo. This was found inconvenient for shippers and arrangements were therefore made for the reception of cargo in godowns opposite the Company’s office at 5 Clive Ghat Street. The dockyard, however, remained at Kidderpore and in 1859 the IG was able to extend it by buying adjacent premises belonging to the Bengal Coal Company. Those premises were known as No. 3 Garden Reach, but later Nos. 2 and 3 were renumbered as 6 and 7 respectively. Further expansion was still necessary and in 1879 the IG took a 10 years’ lease of a property known as Raja Bagan, 3 miles lower down the river. In 1883 the Company purchased yet another Garden Reach Property with a view to extension of the dockyard, but it was realised almost at once that this property might be acquired by the Government in connection with the Kidderpore development scheme. It was therefore decided by the IG to develop Raja Bagan and to install there a slipway which had been intended for Garden Reach.
At about the same time the RSN also made a change in its dockyard arrangements. In 1865 one David Ezra had sold to William Mackinnon a site at Garden Reach---a locality in which wealthy European merchants of Calcutta had their weekend villas. Mackinnon had no immediate use for it, though he apparently constructed a few repair sheds there, and in 1885 leased it to Macneill and Co. who utilised it as a dockyard for the RSN in place of Sibpur.
The old Sibpur site was converted into the Shalimar Coal Depot, for bunker coal for the RSN’s steamers.
The Joint Steamer Companies
Thanks to all these activities the early eighties were prosperous, but the second half of the decade was less satisfactory to the shareholders, partly because of a bitter struggle between the IG and the RSN. The jealousy on the part of the IG Directors aroused by the RSN’s monopoly of the Assam Despatch Service was exacerbated, when, in 1883, the RSN operated that service from Goalundo instead of from Dhubri and put four new large vessels on that route. In 1884 the IG decided to compete and employed two steamers on ‘a single handed accelerated passenger and goods service between Goalundo and Dibrugarh’. In spite of the use of the term ‘accelerated’, those vessels were in fact slow and could not compete with those of the RSN, but in 1885 the IG built three fast steamers ‘replete with every convenience of that day for European and Indian passengers . . . and commanded by European officers’. There was nothing in this development contrary to the Joint Purse Agreement but the RSN resented what it regarded as an encroachment and gave notice that it would not renew the Agreement when it expired in June 1888. The IG responded by putting three more fast steamers on the route, but even those steamers were still unable to compete with the RSN mail steamers. Eight more steamers were therefore ordered by the IG and they were to be larger in size than the RSN steamers, but ‘still within the limits allowed by law for Asiatic commanders and engineers’.*
Before these steamers had arrived, a mad rate-cutting war was proving disastrous to both Companies. Planters and others rejoiced at the completely uneconomic rates offered for freight and passengers, but it was at last realised that the Companies could not long continue on this course. In 1889 peace was declared and an agreement provided, first, that on all services the Companies should have equal fleet and equal profits; secondly, that in order to equalise the fleets the IG should purchase seven of the RSN’s Assam Mail steamers; and thirdly, that in all future extensions, negotiations and contracts should be entered into jointly. The management of the two Companies affairs at the various inland ports at which they called, hitherto largely in the hands of Agents, was from that time progressively placed in the charge of employees of the Companies who retained the old title but were designated ‘Joint Agents’. Perhaps most important of all, the two Companies agreed to a new management structure under which operational control was shared between them: the joint services on the Ganges, in Sylhet and Cachar (and later on the Padma) were brought under IG management whilst those in the Delta, on the lower Brahmaputra from Goalundo to Dhubri and in Assam became the operational responsibility of the RSN.
This was indeed not just a cease-fire but a genuine peace and as Brame remarks ‘from this time onwards the two steamer companies may be regarded as partners, while retaining separate management and fleets’. The Companies became informally known as The Joint Steamer Companies and the agreement between them was fully honoured. It must be one of the few instances where profit-sharing arrangements between rival companies which retained their separate identities, have really worked.
At this time a heavy building programme, together with the absorption of the Inland Flotilla had left the IG with a fleet larger than it needed and even after the sale of three steamers and four flats to the Irrawaddy Flotilla Company in 1887, the Company still had vessels surplus to requirements. In 1888 it was decided to employ some of them on the Ganges. A start was made with two local services in Rajshahi and Pabna Districts, some way above Goalundo and a little later a similar service was started between Patna and Revelganj---an important market centre some 20 miles higher up this river. To meet the special conditions of traffic on the Ganges, the Company constructed its first stern wheeler, the Nemotha, built by John King and Co. in 1888. The Nemotha did not prove satisfactory, but as a stern wheeler it set a pattern which was to be followed later.
In the eighties the minds of the Directors of both companies were much exercised over their liability as Common Carriers. This had indeed become of practical importance as far back as 1873 when, as a result of an error of judgment, the flat Kali was cut in two by the cable of a vessel at anchor. The High Court held the IG liable for the loss of the cargo on the flat. In 1881 a case occurred in which there was no question of any error of judgment or even negligence. The flat Delta, carrying jute, struck a submerged snag and sank and although the IG argued that the snag was ‘unforeseen and unpreventible’ Courts held that in the absence of contracts exempting the Company from liability it was liable for the value of the cargo.
It is not altogether easy to share the Directors’ feeling of injustice at the application of the Common Carrier principle to the hazardous waters of Bengal, but they did in fact resent it and on no fewer than fourteen occasions petitioned Government for a modification of the law. The petitions were unsuccessful and at some time in the middle eighties the Companies began to insure against their risks as Common Carriers. They also introduced ‘no recourse’ clauses in their contracts with shippers, and as time went on this practice became more common. General insurance as Common Carriers thus became more selective.
A Decade of Expansion
At the beginning of the nineties, prospects for both Companies were good and the decade was indeed one of good profits and steady dividends. In a sense it was less exciting than the eighties, but it witnessed a remarkable expansion of the fleets, together with technical advances in their construction. The expansion began with the repurchase by the IG, at half the original sale price, of the fleet which it had sold to the Irrawaddy Flotilla Company some years before. This was followed by a short period in which the IG and the RSN seemed to be vying with each other in building larger flats, but it was then realised that smaller flats would not only be handier, but would also reduce the Common Carrier’s liability in the event of an accident. The design of flats was also changed to what was known as the ‘sunk deck’ pattern, according to which the flats had open holds like barges---a change which obviously made unloading easier.
Railway competition now made it necessary to employ faster vessels---‘small, handy steamers and correspondingly sized flats for the trunk system’. This was indeed a reversal of the obsession with size which had gripped the companies for a time---and the change well illustrates the imaginative flexibility of the Directors’ policy and their willingness to learn from experience. There was none of the rigidity which in modern times has so often ossified large concerns.
Two other technical developments require mention. The first is the installation of electric searchlights for navigation at night. The first such installation was on the Nemotha in 1892, but it soon became common practice and Brame tells us that the most powerful searchlights in the IG were in advance of those supplied to the Royal Navy. Electric lighting of vessels also become common practice, but for the first-class passenger enjoying the relative cool of the evening on the foredeck, electricity was not an unmixed advantage, since the jute and paddy moths and other insects seemed to be so fascinated by it that they made life a misery for the passenger who was trying to read. On the other hand it made it easier for the Khansamah* to provide ice for his chota peg.
The IG dockyard at Garden Reach was already proving inadequate, but as expansion there was out of the question in view of the continuing threat of acquisition, it was decided to make Raja Bagan into the main dockyard area. Additional land was purchased and the area was extended to about 20 acres. A new slipway was constructed locally and an engine shop, with ancillary services was established. In 1898 the IG’s Garden Reach workshop was partially closed and all work transferred to Raja Bagan.
Increased workshop facilities were now found to be necessary up-country and in 1898 the Joint Companies set up a workshop in Fenchuganj. For many years that workshop not only serviced the Companies’ steamers, but did much engineering work for tea gardens and other concerns.
The Companies were now in a position to expand their operations in many directions. The carriage of jute from East Bengal to Calcutta was a growing source of revenue and in 1890 a threat from one of Andrew Yule’s jute companies to employ a flotilla of its own led to an agreement by which rates for the carriage of jute to Calcutta would be substantially reduced, though they would vary seasonally. There remained the difficulty that a flat might bring down consignments of jute for a number of the 54 mills spread over a wide area round Calcutta and the flats would lose much time in moving from mill to mill. It was therefore decided to build a fleet of barges to operate round Calcutta harbour and in which the jute could be delivered to the mills. There were already a number of launches so employed and they were now to be used in conjunction with the barges. By 1898, 68 barges were used in this duty.
In other directions too, there was scope for expansion. Experience with the local services on the Ganges had shown that the railway did not take all the available traffic in Bihar market produce and that there were river stations not on the railway lines from which a considerable number of coolies* required transport to Assam and Bengal. There was also the fact that reduced coal consumption and the use of flats carrying larger cargoes at the same draft of water as those of 1864, had modified the economic factors which had led to the closure of the Ganges service. In 1894 local Ganges services were linked up and a daily service was inaugurated between Goalundo and Patna, the older steamers being put on this run.
In the following year a fresh opportunity arose. It will be remembered that the agreement with the IG had allowed the EB Railway to operate its own coaching service on the Padma between Goalundo and Narayanganj. In 1895 the EB Railway withdrew and the Joint Companies took over the Padma service, operating it with the IG’s Cachar steamers. This change attracted the attention of the Statesman’s Dacca correspondent, who wrote thus---‘The first vessel to leave Goalundo was the Hawk and the first steamer from Narainganj under the new regime was the Merlin. These fine vessels . . . are amongst the newest of the river steamers afloat and are lighted with electric light and handsomely furnished throughout!’
A little later an almost equally important development took place in East Bengal. From 1884 the Bengal Central Flotilla Company had operated a steamer service between Khulna and Barisal. In 1897 its fleet of about 12 steamers and launches was purchased by the Joint Companies and in 1897 they opened a mail service between Narayanganj, Chandpur, Barisal and Khulna via the Kaleegunga and Madhumatee rivers.
In this decade the RSN and the IG were genuine partners. They had established joint agencies at a number of steamer stations, including joint regional controlling offices at Gauhati in Assam, at Goalundo for the Ganges services and at Narayanganj and Barisal in East Bengal. The Joint Purse arrangement which in 1889 had applied only to main line and despatch services, was extended to cover even such outlying services as that to Orissa, where the Joint Companies competed with the Orissa fleet of Macneill and Co. Elsewhere their only serious rival was the Bengal Assam Steamship Company, established in 1895 by Andrew Yule and Company with a capital of Rs. 15 lakhs. Its flotilla consisted of ‘small steamers and flats worked entirely with native labour’. Fortunately the rapid growth of the Tea and Jute industries offered scope for the BASS Co. as well as for the older companies.
In 1896 the IG embarked on a new form of enterprise. It had been decided by the Railway authorities to extend the Dacca-Mymensingh line, first to Jamalpur and then to Jagannathganj and surprisingly enough the Directors of the IG agreed to undertake the construction of this extension. For this purpose they obtained powers to borrow up to Rs. 30 lakhs of which Rs. 12 lakhs was at once issued in the form of debentures. The work proceeded satisfactorily and the first section was completed by 1898.
London Control
At the end of the century an important change in the constitution of the IG took place. For several reasons it was decided to replace the existing company by a new company to be formed in London. In the first place more capital might well be needed and it was thought that it would be easier to raise sterling than rupee capital.
Secondly, the interests of the steamer companies and those of the Tea industry were closely intertwined and the latter industry was in the main controlled in London, where alone liaison at the highest level could take place.
Thirdly, the railway---the extension of which was now being constructed by the IG---was controlled by a sterling company. There was also the consideration that the RSN was a London based company and that the transfer of the IG to London would facilitate the close cooperation which both companies considered essential. The IG therefore went into liquidation and a new sterling company, the India General Navigation and Railway Company, was formed to take it over on 1st July 1899. Kilburn Brown and Co. became Secretaries to the new company and Kilburn and Co. remained as managing agents in Calcutta. In the main, British capital had built up the Tea industry, developed inland water transport and constructed the railways of Bengal and Assam. It was not unfitting, therefore, that the ultimate control of all the connected enterprises should be located in London.
The years between the beginning of the century and the First World War were characterised by steady but unexciting progress. The main services of both companies had already been established; considerable experience had been gained in the design and handling of ships; and most important of all, the confidence of the public had been won. Moreover both companies were in a sound financial position. The main feature of the period was the expansion of the services, accompanied by a great shipbuilding programme based on the latest ideas and design. At the same time internal organisation was improved and the Companies maintained a reasonably good level of profits and dividends.
To describe these matters chronologically would be confusing and tedious and it will be better to deal with them subject by subject. Obviously we must begin with the expansion of the services. A list of services in operation in 1900 is shown in Appendix 1.
The Expansion of the Services
The first important development in our period was the opening of the Assam-Sunderbans tri-weekly Despatch Service in 1904. Previously tea in transit to Calcutta from Assam had been transhipped to the railway at Goalundo and this involved not only delay and an extra handling charge, but also the exposure of the chests to the hazards of the weather. From now on tea could be brought direct to Calcutta, to the new Tea Transit Sheds in Kidderpore, while upward goods could be loaded out of Calcutta at Juggernathghat. This development has been described as a great event in the history of the Joint Companies, but it was of equal importance to the Tea Industry. At about the same time a fast passenger service was opened between Goalundo and Narayanganj, with new mail steamers replacing the Cachar steamers earlier employed.
Chittagong was now growing as a commercial centre, particularly since some of the Assam tea companies had begun to ship their tea through that port and in 1906 the Joint Companies considered the establishment of a regular service between Barisal and Chittagong. There was already a service between Barisal and Sandip Island, via Noakhali, but its extension to Chittagong involved a run across open sea for which most of the Companies’ vessels were unsuitable. A decision now became urgent, since it was learned that Turner Morrison and Co. proposed to start a service between Chittagong and Noakhali. The Joint Companies decided to delay no further, but to employ the Seagull for this purpose---a ship of 709 tons which had been used on the Orissa route. The Seagull made its first voyage to Chittagong in October 1906, but the traffic was disappointing and in March 1907 the Seagull was replaced by a smaller steamer, the Dharla, which had to be altered in some respects to fit it for the run. Meanwhile the threat from Turner Morrisons had become more serious as that Company had obtained the promise of a subsidy from the AB Railway and the Noakhali District Board. Turner Morrisons began to construct a special steamer for this service, but after some argument an agreement was reached by which the RSN took over that vessel and the service and in 1908 zones of interest between the Joint Companies and Turner Morrisons were demarcated, respectively north and south of Chittagong.
While these developments were taking place, in one direction there was a contraction. In the closing years of the 19th century the East Coast Railway, linking Calcutta and Madras, was under construction and in 1901 the line was completed. It ran through Cuttack where the pilgrim traffic and export of agricultural produce had up to this time been the mainstay of the Joint Companies’ business. After the construction of the railway, that business declined and the services were reduced---a reduction which made it possible to put the Seagull on the Chittagong route.
Another service developed during this period was that between Calcutta and the Delta of the Ganges via the Sunderbans. It should perhaps be explained that for the purposes of the Joint Companies the term ‘Delta’ has a narrower connotation than its ordinary geographical meaning---it refers to the region within the triangle Narayanganj-Barisal-Khulna. The service was opened with some sternwheelers which had proved unsatisfactory on the Upper Ganges route. The first vessel so employed was the RSN’s Ardlussa which left Calcutta for the Delta on 29th September 1909. This, however, did not meet all the needs of the area and in 1910 the Joint Companies introduced what might be called a direct door to door service from Barisal to the merchants of the Delta. Barges were used for this purpose and they were towed for the first part of the journey by the vessels of the Delta Despatch Service and then by launches to the merchants’ godowns.
There can be no doubt that the Directors of the Joint Companies were in an enterprising mood but the physical difficulties concerning them in the Delta areas were considerable. For example, during most of the year the voyage from Calcutta to Assam or the Ganges basin involved a long detour via Barisal. It was hoped that this would be avoided when the Government constructed an artificial channel about 38 miles in length through the Madharipur Bheel to connect the Madhumati river on the west with the Faridhpur Kumar river on the east. Construction was a lengthy process and although it was commenced in 1899, it was not until 1911, after four years of dredging, that it was completed. There was then a channel more than 150 ft. wide and 10 ft. deep, through the Madharipur Bheel, but to enable up and down steamers to pass in certain sectors of the channel it was found necessary to employ two dredgers. After some years the dredging was discontinued, presumably for economic reasons, and thereafter the route was open only for a short period during the rains.
The Shipbuilding Programme
To support all these new services and to cope with the increased traffic on the older routes, larger fleets were required and both companies embarked on ambitious ship building programmes. The IG began by adding two large steamers for the Assam service. The Mimbu was built from plate in Calcutta and the Minhla was constructed by William Denny & Co. in Dumbarton and shipped to India in ‘knocked-down’ condition to be assembled in Raja Bagan.
It will be remembered that the joint working agreement provided that the fleets of the IG and the RSN should be evenly balanced and after the IG had ordered more large steamers for the Ganges in 1903, in the following year the RSN Company ordered six new sternwheelers, with steel decks. Unfortunately some of these sternwheelers gave a great deal of trouble. The rudder of one of them was bent as a result of a breakdown of the steam steering gear and shortly afterwards all of them had to be returned to the RSN dockyard.
It appears that in the sternwheelers of both companies the weight of the engine, the boilers and the stern wheel was not properly distributed. As a result the ships’ hulls bent under the strain, being low at the extremities and high amidships. The vessels had to be strengthened with girders and cross pieces, but even then the defect was not entirely cured. The vessels were, in fact, said to be hogged. For this reason sternwheelers never came into general use. They were employed on the Ganges and as feeder vessels in Cachar and Assam but not on the Assam, Cachar or Delta Despatch Services.
It is interesting to note that vessels built in Calcutta with engines supplied by Dennys cost less than ships entirely built in Glasgow and sailed out. As other concerns were to discover in years to come, it paid to use the relatively low paid lower labour in Calcutta, provided that European supervision was employed. That proviso was essential, since highly qualified Indian engineers hardly existed at that time, and in fact both Companies found it wise to continue ordering ships from Dennys. The connection of William Denny and Company with the Joint Companies was very close and indeed, from early in the century, the Denny family had a financial interest in the IG.
In addition to the building of new ships, opportunities also continued to occur to acquire the fleets of rival concerns. One such opportunity arose in 1906. In the previous year the well known Calcutta firm Birkmyre and Co., which was mainly concerned in the Jute industry, had established a flotilla of one steamer and four flats. The flotilla attracted a fair amount of jute traffic but Birkmyres presumably discovered, as so many others have done, that side lines do not always pay. In 1906 they sold the flotilla to the Joint Companies and the BASS Company on a basis which divided it amongst the three companies in proportion to their carriage of jute during the past two seasons.
A little later, the Joint Companies were able to acquire the Dwara Flotilla, which had been established in 1903 by George Garth, the Manager of the Dacca Nawab Estate, with the Nawab as its principal shareholder. At that time the Nawab was described as the uncrowned king of East Bengal. Even thirty years later when the present writer was in charge of the Nawab’s Estate, the launch on which he was travelling up the Dhaleswari with the Nawab’s flag at masthead, was greeted with awe-struck cries of ‘Dekho Dacca Nawab Bahadur’. It might have been thought that a flotilla thus sponsored would have captured much of the traffic from the Joint Companies, but this did not happen and in 1904 the flotilla, consisting of two steamers and five flats, was leased to the Joint Companies. In 1907 they bought it.
Even with all these additions the fleets were not adequate for the rapidly increasing traffic. Not only were the tea and jute industries growing apace---they were also acting as priming pumps for commerce generally. Tea, jute and inland water transport were in fact bringing new life to Assam and East Bengal and there was close correlation between the growth of these three major industries and that of the Railways. The Raj was at its zenith and India was an attractive field for investment. It is indeed a pleasing thought that this growth was made possible mainly by British capital.
The opportunities seemed unlimited and both companies continued to augment their fleets in carefully considered relation to the expected growth of traffic. This was not a hit and miss operation but a well thought out plan, in accordance with which, in the decade preceding the First World War, the two Companies between them constructed no fewer than 39 flats and barges, 32 despatch and mail steamers, 12 towing steamers and many smaller craft. When war broke out the IG fleet thus consisted of 113 steamers, 18 tugs and launches, 185 flats and 138 cargo boats. The RSN fleet at this time consisted of 117 steamers, 22 tugs and launches 171 flats, 50 cargo boats and 23 miscellaneous craft. There were also 13 pilot launches and bholias jointly owned by the IG and RSN.
Technical Advances
In their desire to increase the size of the fleet the Directors were not unmindful of the need for constant improvement in design. The period was in fact one of continual experiment.
It will be remembered that the earliest vessels employed by the Joint Companies were side paddle wheelers with iron hulls and that although they were steam powered, they also had sails. Late in the 19th century the sails were abandoned and the iron hulls were replaced by steel.
In 1905 the Companies gave much thought to the possibilities of push-towing and they sent a Mr. A. Pointer to study the system by which large numbers of barges were push-towed on the Mississippi. Push-tow flotillas were made up of integrated barge units arranged in line ahead or a ‘train’, with the tug pushing at the stern and inasmuch as the flotilla presented a limited bow surface to the water, it was much more efficient than the side-towing system by then in vogue in India. However, two factors rendered its introduction on the rivers of Bengal and Assam impracticable. Firstly, the many sharp bends and tortuous channels over most of the routes then operated by the Companies precluded the operation of push-tow flotillas of any reasonable length. Secondly, push-tugs depended for their manoeuvreability on twin-screw propulsion and screw driven vessels were inherently susceptible to disablement on most of the routes on which the Companies operated at that time. Unlike the paddle wheel which can usually be repaired on the spot when damaged by striking bottom or a snag, the screw vessel suffering such damage had to be put into dry dock for repair.
In the event, half a century was to pass before changed traffic patterns, induced by the Partition of India, created a demand for bulk cargo movements over the deep and relatively straight reaches of river between Khulna and Narayanganj. Only then did push-towing become feasible. It was also only at this late stage in the Companies’ history that technical developments on screw propulsion became sufficiently advanced to provide adequate protection against damage, so making shallow water operation by screw driven vessels a more practicable proposition.
Nonetheless, by the closing decade of the 19th century the Companies had already established that screw propulsion was considerably more efficient than paddle drive for deep water operation and virtually all vessels thereafter constructed for exclusive operation in such waters were screw propelled---amongst them the Delta Feeder service steamers, the Chittagong service steamers and the Harbour tugs deployed in Calcutta, Narayanganj and elsewhere in the Delta area.
Another technical matter to which attention was given was dredging. The rivers of Bengal bring down large quantities of silt and either deposit it on the bank or allow it to raise the bed and create sandbanks and shoals here and there. Dredging is thus essential, but unfortunately it is a costly process. Apparently it was not until the 20th century that the Governments of Bengal and Assam rather grudgingly began to recognise that they had as much responsibility for the maintenance of channels in the principal rivers as for the upkeep of highways. The steamer companies were in fact left to cope with this problem for themselves and in 1903 they purchased a dredging plant which was fitted on to the Nemotha. Dredging was done through a suction head and discharge pipes.
River conservancy involves not only dredging but bandalling---and establishing marks and buoys. A bandal consists of a framework of bamboos driven into the river bed and buttressed by bamboo struts. To this framework are tied mats made of bamboo splits. Bandals can be laid to cause silt to be deposited in order to close a minor channel and divert water into the main channel or to deflect the main current away from an eroding bank.
In 1905 the Government decided to build a powerful dredger for work on the Nadia rivers and in the Sunderbans. This dredger, known as the Foyers, for which the IG supplied the commander and the engineer, was initially employed on the Madharipur Bheel. The cost of conservancy was still heavy and in 1909 the Joint Companies pointed out that they were spending large sums of money on work some of the benefit of which accrued to other inland water concerns. This representation was successful and in 1909 the Government of Bengal agreed to pay the Joint Companies Rs. 10,000 p.a. for the upkeep of marks and buoys and the maintenance of snag boats. Even before this, Assam had recognised the justice of the Companies’ claim and from 1906 onwards had made an annual grant of Rs. 3,000 for river conservancy work in the channel along the southern bank of the Brahmaputra near Dibrugarh.
Internal Organisation
Up to the end of the 19th century the development of the Companies’ business had to a great extent been brought about by sturdy individualists many of whom operated in remote places without much in the way of detailed instructions from headquarters. In every organisation, however, when it reaches a certain size some degree of centralisation is necessary or is thought to be so. At this stage bright young men work out schemes which sometimes provide for greater uniformity than is practicable. The years before the First World War witnessed a good deal of this kind of centralisation. It began in connection with the fixing of freight rates. In earlier years rates had been fixed by local agents or by the Freight Superintendents in Calcutta on what might be called a bazaar bargaining basis. In Calcutta, the Freight Superintendent ‘held court every day and dispensed rates to the Marwaris who used to congregate in his office’. The rates depended on such facts as the traffic offering, the space available and the amount which the particular commodities could bear. This system was now completely changed and rates for different classes of goods were laid down in a schedule, but in practice the schedule was soon found to require a good deal of modification. The growing competition of the railways and of rival inland water transport concerns made it necessary to fix many special rates which had not been envisaged when the schedule was constructed. These special rates were, however, controlled from headquarters and not left to the discretion of individual officers.
In other matters, too, greater uniformity was established—procedure and documentation in connection with traffic arrangements for dealing with claims; the control of the services and decisions as to variations in them---all these matters were brought under central control.
This increased centralisation enabled the Directors to scrutinize in detail the factors on which profits depended and in particular to consider where retrenchment was possible. Early in the century, this consideration led to the replacement of the European commanders by Indian where possible.*
Another economy was forced on the Companies a few years later. Business in the year 1908-1909 proved to be exceptionally dull and the RSN found it necessary to lay up all except one of its main line steamers. At the same time the IG laid up eight main line towing steamers and twelve of the largest flats. This, however, was not as disastrous as might be thought. The flats had been increased in size to cope with peak periods of seasonal traffic and the laying off of vessels in the slack season was inevitable. Moreover the slack period must have been short lived, since there was no serious falling off of profits or dividends.
Side by side with this scrutiny of expenditure went a determination to improve the ancillary services of the Companies. Dockyard facilities needed to be increased to cope with the expanded fleets. In the case of the IG the development of Raja Bagan was of particular importance in view of the acquisition by the Port Commissioners of that Company’s Garden Reach property in 1903. That transaction well illustrates the fact that governments and public authorities all over the world are notoriously unfair in fixing the price for property acquired. The compensation of Rs. 7,29,429 offered to the IG was clearly inadequate and as a result of an appeal it was raised to Rs. 10,13,590 in addition to costs and interest and although the Port Commissioners, perhaps rather unfairly, went to the High Court on appeal, they lost their case. While this litigation was proceeding, the IG hit on the ingenious idea of constructing a half floating dock to take the forward and stern of a vessel. Such a dock was sent to Goalundo, where it proved a success and in 1907 it was replaced by another dock of the same type, the cost of which was shared between the Joint Companies. As it happened, however, the volume of work at the IG’s Goalundo dock was reduced as a result of the decision to base the Assam Despatch Service in Calcutta. In 1908 one of the Goalundo Floating Docks was therefore transferred to Barisal, which was the centre of a rapidly growing traffic. The other Goalundo Floating Dock served both Companies.
It is impossible to study this period in detail without being impressed with the way in which the Directors of both Companies combined enterprise with prudence. Nevertheless, two factors threatened to thwart their efforts. The first of them was the political unrest which followed the Partition of Bengal in 1905. On administrative grounds that partition had much to recommend it, but it was regarded by Hindus not only as a ‘vivisection of their Motherland’ but also as a surrender to the Moslem community which would now dominate East Bengal. The swadeshi movement, which was now inaugurated involved the boycott of European goods. This obviously threatened the Companies’ business directly, but of equal importance was the hostility displayed by many young Bengal students towards the staff of the two foreign companies---who nevertheless proved very loyal under the strain. After a time the agitation to some extent subsided and normal conditions returned.
A second threat appeared in October 1909 when Goalundo was hit by a severe cyclone. Storms of this nature are not uncommon in that region, but this one was of unusual violence and can reasonably be compared with the Calcutta cyclone of 1864 which we have already described. After the cyclone Goalundo presented a lamentable spectacle. ‘The banks for more than a mile were strewn with wreckage. . . . Almost the entire Goalundo fleet was either sunk or stranded.’ Steamers and flats in other areas of East Bengal also suffered, but it was in Goalundo that the cyclone did its worst. An anti-climax followed. It was soon found that the damage had been far less than had at first appeared and after very efficient salvage operations conducted by Capt. E. C. Graham, the amount to be written off in the accounts of the IG was only about £12,000. Corresponding figures for the RSN do not appear to be available, but the only vessels of that company finally reported as lost were one steamer, one tug, two flats and two barges.
The Companies had thus survived two major threats very well and on the whole, this period was one of prosperity in which the dividends were maintained at a reasonable level.
The history of the Joint Companies in the quarter of a century before the Second World War falls naturally into four phases---the First World War and its aftermath; the boom of the middle twenties; the slump of 1930-1934; and the subsequent period of recovery and prosperity.
The First World War
In 1914 no experience was available to enable businessmen to guess the probable economic effects of a world war and it was not realised that, outside the theatres of fighting, some types of commerce and industry might be stimulated. The apprehensions created by the appearance of the Emden in the Bay of Bengal in September 1914 were short lived and of greater importance was the general expectation that business would be dislocated. This affected both Companies but it may be illustrated by the speech of the Chairman at the Annual Meeting of the IG in May 1915. He expressed considerable anxiety as to the probable effect of the war on the Company’s business and indeed during the first few months trade had fallen off and profits had declined. This, however, was a very temporary phase and in the Annual Meeting in July 1917 the Chairman was able to report that the Company ‘had emerged from its troubles with a favourable result’. Profits for 1916 were, indeed, less than in the last year before the war, but they were still very satisfactory. In the following two years the Joint Companies flourished and in 1918 record profits were made---partly as a result of the inability of the railways to carry all the wartime traffic that was offered and partly because it had been impossible for the Company to carry out the normal programme of repairs.
This did not mean that the operations of the Companies had been unaffected. In the first place, although the demands on European personnel were not as heavy as in the Second World War, from 1917 onwards all Europeans under a certain age were required to undergo military training unless specially exempted. The Companies’ Marine and Engineering Officers were in fact exempted, but even before compulsion had been introduced a number of the Companies’ Traffic Officers had joined the forces. Serangs and drivers were also recruited on a voluntary basis for IWT service in Mesopotamia.
Secondly, some of the Companies’ resources were diverted to the manufacture of munitions. In September 1915 the IG began to manufacture 18-pounder shell cases at Raja Bagan, but in the following year it was decided to transfer this work to the RSN Company’s workshops at Garden Reach.
An even greater impact on the Companies resulted from the demands made on them for the Mesopotamian campaign. The present writer has elsewhere given a brief account of this operation. ‘When the British failed to advance to Baghdad and retired to Kut in November 1915, the despatch of reinforcements to Kut was a matter of urgency. A road on the right bank of the River Tigris was built with remarkable speed, but river transport was of paramount importance. The Euphrates and Tigris services were sufficient for peacetime requirements, but could not cope with the new demand. The Goverment of India was asked to come to the rescue and plans were made for the provision of at least 40 steamers, of which 24 were to be sternwheelers, particularly suitable for the traffic on the Mesopotamian rivers. The steamer companies more than met this demand and in the years 1916-1918, 48 ships and 23 flats were made available by the Joint Companies. The provision of steamers was one thing, their being safely transported to Mesopotamia was another. Of the river steamers sent from Egypt and India to Mesopotamia, three were burnt, seventeen were sunk en route and the bulk of the remainder did not reach Kut until April 1916. By that time Kut had fallen and the depletion of the transport resources of eastern India had thus not achieved its main object. River transport nevertheless played an important part in Iraq when the Allied again advanced.’
The vessels were originally impressed on a charter basis, but no terms for payments had been fixed up to March 1917, when Government decided to purchase the vessels. An Arbitration Board under the Chairmanship of Sir Hugh Stephenson was appointed to determine fair compensation and it was agreed that for vessels still afloat the price should be original cost less 2% depreciation plus 70% replacement cost and that for vessels lost in transit the basis should be original cost plus 5% interest less 2% depreciation, plus rates of replacement which varied according to the period when the loss took place. The Joint Companies accepted the award.
Another effect of the war was the inevitable interruption of the building programme. Shortly before the war both companies had begun to construct towing steamers of improved design---they were, for example, fitted with balanced rudders worked by a special steering gear and they all had ballast tanks fore and aft. Some of these new steamers were completed in 1915, but the plans for the rest had to be put in cold storage.
In spite of wartime difficulties, a number of important organisational changes took place in this period. One of them was the reorganisation of the RSN’s Calcutta dockyard arrangements. That dockyard, as we have seen, was on a site rented by RSN from Sir William Mackinnon and his successors. In August 1916 a separate company, Garden Reach Workshops Ltd. was formed by the British India Steam Navigation Company and the RSN to take over the dockyard. The land, machinery and stores at Garden Reach were sold to the new company for Rs. 27,86,971, of which Rs. 5 lakhs was retained by RSN as its share in the capital of Garden Reach Workshops Ltd. The dockyard and workshops were then greatly extended to take care of the requirements of the RSN, the BI and the P. and O. and also to do outside work.
At about the same time the Joint Companies reorganised their up country workshop and dockyard arrangements. The vulnerability of Goalundo to storms made it an unsuitable place for a main workshop and for some years after the cyclone of 1909 the Joint Companies had been considering the advisability of transferring the workshop to Narayanganj, where they already had a plot of land on the opposite bank of the river, at Sonachora. That land had been held by the jute merchants Nahapiet Brothers as permanent tenure holders under four superior landlords. In 1897 the Joint Companies had negotiated for the purchase of that tenure, but after everything was settled it transpired that one of the cosharers was a minor and that might lead to future doubts as to the validity of the transfer. The Joint Companies decided to run this risk and completed the purchase in May 1897. The property comprised 49½* bighas, with a river frontage of 1,410 feet and it had the advantage that ‘a dock had been excavated and the soil from it had been used to raise the length of about half of the property above flood level’. There were also a number of godowns and an engine house and after taking possession the Companies built more godowns intended to be used by merchants for storing jute for shipment in the slack season. The merchants did not in fact use these godowns and they remained empty until the workshops were transferred from Goalundo. On 1st September 1916, the floating workshop, the floating foundry and the store flat were towed from Goalundo to Sonachora. In the following years staff quarters and more foundries were constructed and Sonachora became a well-equipped modern workshop which served the Companies well until Partition. In the same period an important change was made in the Barisal Workshops, the site of which had gradually silted up. They were transferred across the river.
In 1918 another important change took place as a result of the amendment of the Inland Vessels Act of 1884 by a new Act in 1917. Under the earlier Act Second-Class Masters and Drivers were only allowed to handle vessels of not more than 80 n.h.p. There were at this time no First-Class Indian Masters and the Commanders of all except the smallest vessels were therefore Europeans. The Act of 1917 raised the limits for Second-Class Masters and Drivers to 120 n.h.p. or 1,700 i.h.p., provided they obtained a Government Certificate of Competence. The way was thus paved for the replacement of European commanders and drivers by Indians. It is impossible not to regret the disappearance of a cadre which had served the companies well but it cannot be said that the change resulted in any loss of efficiency.
These changes were all man made, but just before the end of the war, nature again took a hand in the affairs of the Companies. On 24th September 1919 a hurricane swept across the Sunderbans and on to Khulna, Narayanganj and Dacca and then blew itself out in the Khasia hills. It was accompanied by a great tidal wave which carried many vessels over the river bed and deposited them in paddy fields. Sixteen or seventeen of the Joint Companies’ vessels were sunk, but luckily a number of them were in shallow water at the time and were salvaged easily. Over 130 vessels were damaged, but as in the case of earlier cyclones, the ultimate loss was not as great as had been feared. Perhaps the most serious consequence of the storm was the damage done to jute cargoes at a time when the price of raw jute was at the high level of Rs. 20 per maund.
Although the present writer did not go out to India until 1922, the stories of the cyclone are vividly impressed on his memory. Over and over again when he had occasion to deal with a land dispute, one party or the other, conscious of the weakness of his case, would exclaim tearfully that all his documents had been destroyed in the great ‘tufan’. The plea may sometimes have been true.
Temporary Troubles---followed by the Boom Period
At the end of the war the demand for commodities of military use came to an abrupt end, but normal world trade was not immediately resumed. There was thus an interval between the war and the boom of the middle twenties, which naturally affected the business of the Joint Companies. Their difficulties in this short period were made worse by labour unrest, not only amongst their own staff, but also in one of the industries on which they depended. The first signs of unrest in the Tea Industry appeared late in 1920 in two districts of the Assam Valley, but it was in Sylhet that the disturbances assumed their most serious proportions. Early in May 1921 the coolies on a number of tea gardens in the Chargola Valley struck work and demanded substantial increases in their wages.
It was impossible to meet these demands and the labour force left the gardens. The movement spread rapidly and by the middle of May between 6,000 and 7,000 coolies had left the Valley and poured into the town of Karimganj, where the local authorities were hard to put to it to feed and control them. Some months later the Assam Labour Enquiry Committee examined the causes of the trouble and arrived at a well-balanced conclusion. It was clear that labour had suffered great hardship as a result of a rapid rise in prices of foodstuffs and other essential commodities, but this had occurred at a time when the economic condition of the Tea Industry was precarious. It may be, opined the Government in commenting on the Report, that wages should have been increased in the years of prosperity, but this was not practicable in 1921.
The basic fact, however, was that labour had genuine grievances which provided fertile soil for the political agitators who ‘interfered with garden bazaars and addressed meetings on the subject of low wages’. The agitators, concluded the Commission, ‘were mainly activated by the desire to unsettle and disturb labour and not by any benevolent intentions of improving the material condition of the labourer’. The whole atmosphere was surcharged with racial feeling.
On 24th May 1921 the employees of the AB Railway struck work in sympathy with the garden coolies and four days later the crews of the Joint Companies’ vessels lying at Chandpur, Goalundo and Narayanganj followed suit.
‘In a few days all despatch services ceased to function as crews left their vessels at all big centres.’ Serangs and Drivers stated that they would be ready to carry out their duties, but could not do so for lack of crews---but it is by no means certain that this attitude was in all cases genuine. The strike of the crews only lasted 41 days, but its effect on the revenues of the Joint Companies was serious.
By the middle of 1922, however, the Companies’ troubles were at an end---at least for some years. Labour unrest had to a great extent subsided and world trade had picked up remarkably. A boom period had in fact begun and nowhere were its effects more spectacular than in Bengal and Assam. The Tea Industry had been able to abandon the restrictions on production which had necessarily been made in 1921 and in 1923 tea shipments were the heaviest for some years. In the same year jute shipments also reached record figures and moreover, the high prices for raw jute gave a great stimulus to the economy of East Bengal. ‘Jute cultivators,’ says Johnson ‘found themselves rich beyond their rosiest dreams. Almost every man decided to rebuild his house and roof it with corrugated iron. In consequent, upward shipments of corrugated iron from Armenian and Juggernath Ghats increased to a phenomenal extent. . . . Then came the demand for cloth, shoes and fancy goods and traffic in those commodities rose steeply.’
As a result of all these factors the Companies’ revenues rose steadily. They created a record in 1925, but they were even higher in the following three years and in 1928 the IG made a profit, after tax and depreciation, of £179,725. Figures of profit for the RSN were £130,436, £159,249, £131,202 and £130,451 in 1925, 1926, 1927 and 1928 respectively.
On the strength of these profits, both Companies’ fleets were substantially expanded to cope with the growing traffic demand. During the 1920s no less than 26 Despatch Steamers were added to the Assam and Cachar Despatch fleets, together with 14 main line towing steamers, 3 mail steamers for the Pudda (or Padma) service, 5 other mail steamers, 6 sternwheel feeder steamers and numerous flats and lesser craft. Perhaps the most interesting feature of this building programme was the emphasis on size. The three new Pudda steamers were the largest mail steamers to be built up to that time, each being licensed to carry over 1,300 passengers. However, even they were dwarfed by the six giant steamers of the Persian-Shwebo class built simultaneously for the Assam Despatch service. These were of 305 feet overall length with a deadweight capacity of just under 1,000 tons at an operating draft of 6 feet 6 inches and were the largest vessels ever built for service on the Indian inland waterways.
Apart from this major expansion of the Companies’ activities, perhaps the most important happenings in this period were the tightening up of labour legislation and the growth of Trade Union activity---and the two were of course interconnected. With the growth of industry in India the need for new labour legislation was obvious and it had two aspects. There were Acts to which no reasonable person could object, such as the Indian Workmens Compensation Act of 1924 or the Bengal Factories Rules of 1923 designed to ensure greater safety in Factories. There were also measures of a more controversial nature---the Indian Trade Union Act 1926 and the Trade Disputes Act 1929. Even some enlightened employers considered that this legislation was premature---that Indian labour was not yet sufficiently advanced. They feared that Unions would become political instruments in the hands of agitators. These forebodings were only too justified, but with the growth of more democratic forms of government the promotion of Trade Unions was inevitable and perhaps even desirable.
The first important strike in this period does not appear, however, to have been connected with Union activity. It was a strike by pilots on the Lower Cachar and Pudda sections. It seems appropriate at this point to give a brief account of the pilots and their work. Johnson tells us that in the early eighties when the IG began to operate a system of pilotage they recruited fisherfolk and boatmen from the rivers of East Bengal. Their descendants generally followed them into the Companies’ service and in time there developed what could almost be called a hereditary caste of Joint Companies’ pilots. ‘These men,’ says Johnson, ‘spend almost all their lives on the river and when not piloting vessels live as a general rule in pilot dinghies.’ There are usually from three to six pilots on a Beat which may be from 25 to 30 miles in length according to river conditions. They are almost a race apart. During the strike the serangs and sukhanies carried out the pilots’ duties without much difficulty and perhaps for this reason the pilots returned to work within four days.
The next trouble came from the Bengal Mariners Union, a group which became affiliated to the All India Trade Union Congress. In the Madras session of that body in January 1926, resolutions regarding the grievances of the Bengal Mariners were passed and in the following year the Bengal Mariners’ Union threatened to call a strike. After hard bargaining in September 1927 a settlement was reached on the basis of an increase in the wages of the deck crews and the restoration of the number of engine room crew to what it had been before retrenchment in 1921. Another demand had been that there should be second serangs on feeder steamers, but the Companies had already agreed to this before the September settlement.
There were no spectacular changes in the services operated during this boom period but three matters call for brief mention. First, in 1927 the Orissa Canal Service was closed, partly because of competition from the Bengal Nagpur Railway and partly on account of the unsatisfactory maintenance of the Canal.
At about the same time it was decided to build a fleet of motor boats to compete with the numerous Indian owned motor boats carrying passengers in the Barisal and Narayanganj areas.
The third matter requiring mention is the Companies’ relations with the railways. South India jute mills had begun to buy considerable quantities of jute from areas served by the Companies, but they had to be re-booked from the steamers on to the BN Railway at Shalimar. At the beginning of 1924 an agreement for through booking was reached.
Further east, extensions of the Assam Bengal Railway in Assam and Sylhet produced severe competition with the steamer companies, but the Directors must surely have had their tongues in their cheeks when they protested against the extensions. At one time an even greater threat seemed to be posed by a suggested railway from Dacca to Aricha in the neighbourhood of Goalundo, but the Directors need not have worried about it. When the present writer was in Dacca in 1929 he heard of this project as something imminent---only to discover when he enquired about it that it had been under discussion for many years. In fact it was never taken up, mainly for the reason that it would disturb the drainage system of the region. The mills of government may or may not grind surely, but there can be no doubt as to their slowness and so the Directors were kept on tenterhooks for a long time.
The Slump 1930-1934
As it happened the Directors soon had much greater cause for anxiety than the Dacca-Aricha Railway. Falling prices in the US, followed by a collapse of several American Banks ushered in a severe world trade depression. This particularly hit the jute industry, which was of so much importance to the Joint Companies. Slackness in world demand coincided with a period of considerable over-production of raw jute and the efforts of the Government of Bengal to curtail production were unsuccessful. The present writer was concerned with those efforts in a small way. At the request of the Government he wrote a Bengali pamphlet explaining in simple terms that it would pay cultivators to grow less jute and he then toured East Bengal in a plane piloted by a splendid Bengali amateur pilot, dropping the leaflets in large quantities. The net result was that cultivators decided that since everybody was going to grow less, prices would rise---and so there was every incentive to grow more! As so often happens, propaganda recoiled on itself.
If over-production had meant that more jute would be sent down to the mills in Calcutta the Companies might have benefited, but the most important jute mills necessarily agreed to restrict production of jute manufactures and curtailed hours of working. The industry was in a sorry plight and staff were retrenched wholesale. Narayanganj was the most important jute centre in East Bengal and the British Managers and Assistants---a cheery set of men---were in the habit of visiting the Dacca Club for convivial Saturday evenings. On one Saturday in 1930 the usual party arrived in the Club and a dozen or so assistants announced that they had just been sacked and were on their way home. This did not stop them from having an uproarious evening---but the prospect was in fact bleak, both for them and for the industry.
The Tea Industry was also in difficulties in this period. Some years of prosperity had encouraged over-production of tea in India and the Netherlands East Indies and in 1929 world supply considerably exceeded demand. A drastic fall in prices led in 1930 to a voluntary agreement to curtail production in India. In the following year support for a similar agreement was not forthcoming and prices again fell. In 1931, 42 out of 87 listed sterling companies passed their dividends and a similar position was reached in the Netherlands East Indies. The Governments concerned could no longer remain inactive and in 1933, India, Ceylon and the Netherlands East Indies agreed to limit exports and the necessary legislation was passed. At the same time producers in India agreed on a voluntary scheme for the restriction of production. These measures had the desired effect and in 1934 the Industry returned to prosperity after a bleak three years.
Curtailment of production of jute and tea would by itself have seriously affected the earnings of the Joint Companies, but almost equally damaging was the depression of the general level of the economy of Assam and Bengal. Neither firms nor individuals had money to spend. Schemes for industrial or commercial expansion were put into cold storage and the demand for consumer goods declined. Passenger traffic also fell off so seriously that in 1931 several services in the Barisal sector were closed and the motor launch services were much curtailed. The traffic figures for 1932 were the worst on record in modern times and although 1933 was not quite so bad, the actual improvement was small.
The Joint Companies also suffered from the extension of the EBRSS Co.’s services to Bhairab and Mirkadim and from the new policy under which the Yule Group of mills bought raw jute at riverine centres and transported it to Calcutta in the vessels of the BASS Co.
The Joint Companies made every effort to reduce expenditure during these lean years. Salaries and wages were cut in 1932; overtime was almost abandoned; building programmes were suspended; and repairs were reduced to a bare minimum. In spite of these measures, in 1931 the Companies worked at a loss and in the following two years profits were low. The only relieving feature was that the Ganges Service did well, since traders in a time of slump preferred the cheaper but slow transport by river to the quicker but dearer carriage by rail.
In this dull and depressing period, only two other matters occurred which call for comment. The first was the enactment in 1930 by the Indian Legislature of what was generally known as the Neogy Act, since it was piloted through the Assembly by K. C. Neogy. It empowered the Government of India to fix maximum and minimum rates per mile for the carriage of goods or passengers by inland water transport. Its principal interest lies in the proviso that minimum fares were not to be fixed unless any group of IWT carriers had reduced prices with the deliberate intention of forcing other carriers out of business. The authors of the Act were evidently aware of the rate cutting which in the past had so often been practised with this very intention.
The other matter of interest was the passing of the Waterways of Bengal Act 1934. The Joint Companies had long been demanding that the governments concerned should take a greater share of responsibility for river conservancy and in 1930 the Government of Bengal appointed a committee to consider the formation of a Waterways Board. The Committee paid a tribute to the conservancy work of the Joint Companies and went on to propose the establishment of a Waterways Trust in which neighbouring provinces should participate. Parturient montes, nascetur ridiculus mus. A Waterway Trust was not formed; neighbouring provinces did not join in; and the only upshot of the Committee’s labours was the Bengal Waterways Act 1934 which set up a Waterways Committee. The Committee met from time to time, but the Bengal Government was in financial difficulties and little practical result followed in the next few years. The Joint Companies came to the conclusion that the only hope lay in securing the transfer of the whole matter to the Central Government, but provincial autonomy and then the War, supervened and nothing was done.
Recovery and Prosperity 1934-1939
By 1934 world trade had begun to recover and the economy of Bengal and Assam resumed its normal growth. The five years before the Second World War were indeed a period of prosperity, during which the traffic returns of the Joint Companies rose steadily until they reached a peak in 1938. The most interesting features of this period were relations with the railways, the growth of opposition from the BRS Company and the development of new types of steamers.
The general policy of the Joint Companies continued to be that of sharing with other transport concerns, on an equitable basis, the traffic offered. Fondness for cut throat competition was a thing of the past. This policy, however, came under strain in 1932. The levy of an import duty on sugar in that year and its increase later, virtually shut out the competition of Java sugar and led to the establishment of a considerable number of new sugar mills in India. Sugar production in U.P. and Bihar increased from 1,41,403 tons in 1931-1932 to 9,81,600 tons in 1939-1940. It was clear that this might give a new impetus to the Ganges traffic, but much would depend on cooperation with the railways. The sugar mill owners were prepared to use the river-cum-rail route and the railway authorities at first agreed to make wagons available at Revelganj and three other stations on the Ganges. Sugar would thus go by river to those stations and be transhipped there on to the railway. After a time the attitude of the railway authorities became less cooperative and wagon supplies at three of those stations were withdrawn. This was clearly an unfriendly act and the Joint Companies responded by organising carting services from those sugar mills which were within carting distance from the river. At the same time they reduced their rates to Calcutta drastically. The railways obviously lost by this arrangement and this put them in a more cooperative frame of mind. In 1936 an agreement was reached by which the railway undertook to provide an adequate supply of wagons at two of the four stations, and the Joint Companies withdrew their carting services. At the same time agreement was reached as to the rates to be charged by the railways and the Joint Companies respectively. This was a satisfactory settlement and it worked well.
Little difficulty was experienced in arriving at amicable arrangements with the EB Railway. The inauguration by the EB Railway in 1936 of a fast goods service between Calcutta and Dacca naturally diverted some traffic away from the Joint Companies and the construction in 1937 of a bridge over the Meghna, linking Mymensingh and Dacca Districts with Chittagong, had a similar effect. This, however, was fair competition to which nobody could reasonably object. It did not generate feelings of hostility nor did it prevent the negotiation of arrangements for through booking or adjustment of rates by consent.
Competition also had to be faced from the growing number of other inland water transport concerns. Some of those concerns were small and ephemeral, but there were three more formidable rivals, one of which was the EBRSS Co. That company had joined in the jute mills agreement in 1931 and obtained much of the traffic of the Indian mills, but agreement was reached between the Joint Companies and the EBRSS Co. as to the rates to be charged. In 1932 a new company was formed---the Bengal River Service Company. It offered reduced rates and rebates and obtained a considerable share of the traffic. The third important rival was the BASS Co. which continued to carry raw jute to mills in the Yule Group. At this time, however, trade and commerce were expanding rapidly and there was sufficient traffic to maintain all these companies at a reasonable level.
In this period of prosperity much attention was given to the development of new types of vessels in continuation of work undertaken before the depression. This is not the place for technical accounts of all the new designs, but attention should at least be called to the new, fast Pudda steamers built by Dennys. Steel floats in the paddle wheels; a new design of engine cylinder block; engines capable of developing over 900 indicated horse power; single berth cabins for first-class passengers and electric fans for the inter and second-class accommodation---these were the main innovations in this type of ship. In the same period single-screw tugs were built at Rajabagan Dockyard and were fitted ‘with propelling machinery of sufficient power to handle laden jute flats in the strong water encountered in the river Hooghly at Calcutta’.
Altogether this was one of the most satisfactory periods in the Companies’ history---a period in which the designers and engineers could see continual progress, while the financial experts could point to satisfactory profits and dividends. The Companies’ combined fleet now aggregated 1,177 vessels, comprising 124 Despatch and Mail Steamers, 46 Feeder Steamers, 44 mainline Towing Steamers, 75 Tugs and Launches, 307 Flats, 411 Barges and 170 Miscellaneous craft. The joint service network extended over 5,000 miles throughout Bengal, Assam, Cachar, Bihar and the eastern districts of the United Provinces, serving 324 inland ports, large and small, all of which were under the Companies’ own management. The Companies were thus in a sound position when the Second World War broke out in 1939.
In 1939 the Indian Political scene was somewhat confused. At the centre, executive power still remained with the Governor-General and his Council, though popular representation in the Central Legislature was strong. The brightest feature was the fact that Congress Ministries in seven provinces had found, to their surprise, that they enjoyed the substance of power. Officials, from whom they had expected non-cooperation, gave them every possible help and Governors shewed no desire to use their reserve powers. The British Government was determined that Provincial Autonomy should be a reality---so much so that it declined to authorise the Governor of Assam to withhold assent to an Agricultural Income Tax Bill which was clearly discriminatory in effect against the interests of the largely British controlled Tea Industry.
A less happy feature was the communal situation. In the Congress majority provinces, Muslims either were---or believed they were---oppressed and were profoundly apprehensive regarding the next step towards independence.
When war broke out Indian sympathies were undoubtedly with the Allies, but Hindu politicians have always been hard bargainers. They complained that India had not been consulted over the declaration of war, but behind this complaint was the desire to secure virtual self government on terms which would have given the Congress a dominant position. When their demands were not met, they declined to cooperate in the war effort and Congress Ministries resigned. The Muslim League, for tactical reasons, made no official offer of cooperation, but in fact Muslim Ministries did all that was required and encouraged Muslims to join the armed forces.
For the first two years of the war, Congress noncooperation made little practical difference and the difficulties which affected the Inland Water Transport industry were economic and administrative rather than political. Compulsory military service for Europeans was introduced in 1940 but many Europeans had volunteered without waiting for conscription. The Joint Companies encouraged this spirit and by the middle of 1940 nearly all of the European staff not in key positions had joined the regular forces. The full effects of the resulting depletion of staff were not felt, however, until 1942 brought the war closer to India.
In the meantime, economic factors had both favourable and adverse effects on the Companies’ operations. Lack of ocean shipping restricted exports of jute from India and imports of raw jute from the jute growing districts to Calcutta fell off considerably in 1940-1941. The jute mills agreed to take certain minimum quantities of raw jute, but the Companies’ earnings from this source declined. In the following year jute cultivation was restricted by Government, but more ocean-going shipping was now available and imports of raw jute to Calcutta from the interior rose again.
Paradoxically enough, the lack of ocean shipping space led to increased carriage of tea from Assam to Calcutta by IWT. There was no virtue in using the more expensive rail route which might or might not be quicker when there was no certainty that ships would be available in Calcutta. At the same time lack of shipping at Chittagong resulted in the diversion to Calcutta of tea normally shipped via Chittagong.
The net result of all these factors was that earnings in the first two years of war remained satisfactory, as will be seen from the following figures:
| IG Earnings Rs. |
RSN Earnings Rs. |
|
|---|---|---|
| 1939 | 121,26,726 | 125,55,780 |
| 1940 | 118,50,376 | 121,94,937 |
| 1941 | 128,85,469 | 131,75,451 |
The Companies’ War-time Problems
As in the First World War, between 1939 and 1945 heavy demands were made on the resources of the Joint Companies and the first of them came almost immediately after the outbreak of war. It was clear that mine sweeping would be of major importance and seven vessels of the Joint Companies’ Chittagong fleets were requisitioned for this purpose. The conversion of these ships was carried out so rapidly in the Kidderpore Docks that they were commissioned for their new duty within a few weeks.
The next demand arose from the needs of the Allies in the Middle East. In view of experience in the First World War, it seems strange that no detailed thought had been given to the organisation of IWT in Iraq, but such seems to have been the case. In July 1941 a Commission of Enquiry with Mr. J. W. E. Berry of the IG as its leader, Mr. H (later Sir Hamilton) Macaulay of the RSN as Deputy Leader, and with two other Joint Companies’ employees Captain R. C. Middleton and Mr. W. R. Humphreys as members, was sent to Iraq to advise on the organisation of IWT for military purposes on the Tigris and Euphrates. Their report went into great detail---the type of craft required, the setting up of workshops, measures for river conservancy---these were only some of the matters considered. The Mission was in Iraq for about three months in close contact with GHQ in Baghdad and it is amusing to read that its members were nicknamed ‘the four wise men’. When the Mission had reported, a Col. R. E. Sudbury of the Royal Engineers was sent to Iraq to organise river transport, with Macaulay as his Deputy. Berry meantime was appointed Transport Adviser to the Government of India at GHQ in New Delhi.
The help given by the Joint Companies was not, however, confined to advice. Vessels and crews also had to be provided and in 1942 the IG fitted out 10 towing steamers, 3 Cachar Sunderbans Despatch Steamers and 17 barges for the sea journey to Iraq. Other requisitions followed, not only on the Joint Companies, but also on BASS and the EBRSS companies. The steamers had to be converted to oil burning and strengthened for the sea journey. They were in most cases manned by Joint Companies’ Deck and Engineer officers and men. In Iraq they had three main functions to perform. They discharged cargo at Basra from ocean-going vessels; they conveyed military stores for the 10th Army up the Tigris; and they carried similar stores from the specially constructed port of Khorramshah in Iran, up the Karun river to the Russian railhead at Ahwaz. They also served the oil installation at Abadan and the ports of Kuwait and Bandershahpur. Altogether the crews and the vessels made a notable contribution to the Allied cause.
Although India had not yet become a theatre of war, she was rapidly becoming an important producer of munitions. This and other wartime demands so stimulated her economy that she was soon designated by the I.L.O. as one of the eight major industrial countries of the world. This placed a great strain on her transport resources and the problem of meeting both military and civil needs was far from easy. Moreover, the Railway authorities were still somewhat jealous of other forms of transport and IWT was thus not used to the best advantage. There were also difficult questions as to the priorities to be given to different classes of traffic.
In 1941 a Regional Priorities Committee was set up in Calcutta, under the Chairmanship of Sir Thomas Elderton, the Chairman of the Calcutta Port Commissioners, to exercise the necessary control. A little later this duty was transferred to the Regional Controller of Railway Priorities, Mr. R. S. Vipan, and much non-perishable traffic was diverted from the railways to the rivers. As the military aspect of all these matters assumed greater importance a military control Panel was established and the Joint Companies were represented on it by Mr. J. Aitken of the RSN, who was appointed Director of IWT operations. Relations between the railways and the Joint Companies were now very harmonious and coordination worked smoothly. Other industries also cooperated and for a time the Indian Tea Association arranged for the transport of export tea by river and rail from Assam and Sylhet via Karachi---but the arrangement was apparently not satisfactory and was soon abandoned.
Until near the end of 1941, the War had seemed remote from India, but the surrender of Singapore and the Japanese occupation of Malaya and Burma changed the situation dramatically. For a century, almost all the attention of the military authorities in India had been concentrated on defence against possible attacks from Russia. Railways and roads had been constructed in the north west mainly for military and strategic purposes and all the important military bases were established in that area or in Upper India. It was left for Lord Linlithgow---a Viceroy whose great abilities have not yet been sufficiently recognised---to realise the vulnerability of India from the north-east, but by then it was too late to close the gap. Communications in Assam were barely sufficient in peacetime and a single track metre gauge railway throughout the Province, together with two unmetalled roads, one on each bank of the Brahmaputra, were hopelessly inadequate as lines of communication for war with the Japanese. Steps were at once taken to improve roads and in cooperation with the Indian Tea Association aerodromes were built in a number of places. It was from those aerodromes that the famous flights over the Hump to Chungking took off. Nevertheless a gap between demand and supply of transport remained and only Inland Water Transport could fill it.
The Joint Companies had now two new tasks to undertake. First and foremost was the carriage of military supplies through Assam to the Front and this mainly involved transport from Calcutta---or from the railhead at Dhubri in Assam---to Pandu, Gauhati, Neamati and Dibrugarh on the south bank of the Brahmaputra. The importance of Pandu and Neamati arose from the fact that both were directly connected with the AB Railway’s metre gauge line to Manipur Road, which was the railhead for Kohima. However, the steamer stations at Gauhati and at Dibrugarh were scarcely less important, the former being the starting point of the road to Shillong whilst it was through the latter that supplies were routed to the Ledo Road and to the airfields operating the Hump flights.
Bald figures convey little of the drama of those days or of the dedication to the Allied cause which animated all ranks in the Joint Companies, but for what they are worth, statistics must be quoted. Movement of military stores from Calcutta rose from 138,000 tons in 1942 to 452,000 tons in 1943 and 1,000,900 tons in 1944. Moreover, the pattern of this traffic was complicated by the fact that special provision had to be made for the carriage of aviation spirit in bulk from Dhubri where it was received by pipe line, to Tejpur or Neamati, where it could be discharged into railway tank wagons. Seventeen flats were converted for this purpose and eight towing steamers were specially adapted for it.
These military movements were mainly upwards from Calcutta or Dhubri, but there was a more tragic downward movement of passengers. After the partial evacuation of Rangoon in February 1942 the Japanese rapidly tightened their grip on the surrounding country and the fear which they inspired led to a mass exodus of Burmese and Indians to the north. The Burmese probably hoped to remain in comparative safety in Upper Burma, but in the case of the Indians there was an overmastering desire to get home. The suffering and miseries of the trek over the three available passes between Burma and India have been graphically described by Geoffrey Tyson in Forgotten Frontier and we need not recount them here. Nor can we stop to describe how a handful of officials and planters---and their courageous wives---in spite of great personal discomfort and hardship, shepherded the survivors down to the plains.
There the Joint Companies joined in the rescue operation and in the course of three months over 200,000 refugees were carried from Chandpur to Goalundo, or from Dibrugarh to Tejpur or from Fullertoll to Silchar---and it must be remembered that this was not just a simple question of providing transport. Many of the refugees could scarcely walk, most of them needed medical attention and all of them had to be fed. All ranks of the Companies’ staff, of whatever race, rose magnificently to the occasion and displayed a humanitarian spirit of which the Companies can be proud.
Another exodus of a less tragic character placed a further strain on the Companies’ resources. The fall of Rangoon and the Japanese advance into Burma created consternation in Calcutta and in the early months of 1942 some 50,000 persons left the city. A much worse panic amongst some sections of the population occurred later in the year when Japanese aircraft appeared over the city and a mild bombing attack took place. Thousands fled by rail or steamer and there were wild scrambles, or even fights, for tickets or places. It was generally believed that many ticket clerks and station officials grew rich in the process.
From the point of view of the Joint Companies the main difficulty arose, not from the need to provide for a greatly increased passenger traffic, but from a large-scale exodus of labour from Calcutta. ‘For almost six weeks the Joint Companies had to depend partly on Military Pioneer Units to load and discharge vessels at the Calcutta ghats.’
During all this time, the staff of the two companies, both ashore and afloat, refused to surrender to the general panic and Johnson speaks rightly of their loyalty and steadfastness during this critical period. Here, as was found elsewhere in India, everything depended on leadership and that quality was very evident in the officers of the Joint Companies.
It is comforting to be able to report of one threat which seemed imminent at this difficult time, but which did not materialise. The military authorities had to have constantly in mind the possibility of a Japanese attack by sea and in May 1942 the Government of India embarked on a denial policy in respect of boats in the coastal area. This inevitably created great difficulties for the many people whose whole life depended on boats and at a later stage the policy was relaxed. A scheme was, however, prepared for the denial of powered craft also to the Japanese, but fortunately the turn in the tide of the Allies’ fortunes made it unnecessary to put this plan into effect.
The Quit India Movement
In the meantime a new danger had arisen. In view of the complete disagreement of the Congress and the Muslim League, the progress of India towards independence was necessarily interrupted by the War, but when the Japanese danger was at its height the British Goverment made a supreme effort to end the political impasse, and so to enlist loyalty in the war effort. Sir Stafford Cripps was sent to India with the authority of the Cabinet to seek a solution. In spite of his sincerity he had no chance of success and as so often happens when peace talks break down, their failure made matters worse. Many Indians had lost faith in the possibility of an Allied victory and Mahatma Gandhi went so far as to describe British promises as a post-dated cheque on a failing bank.
In August 1942 a widespread rebellion, generally known as the Quit India Movement, broke out. Congress leaders claimed that it was spontaneous, but to objective observers it was clear that it was in fact organised by the various Congress committees. It led to violence on an almost unprecedented scale. ‘A large part of the East Indian Railway and practically the whole of the Bengal and North Western Railway was put out of action. Bengal was almost completely cut off from the North’---and all this at a time of maximum danger from Japan. The main disturbances took place in Bihar, Upper India and Bombay and the need for carrying troops and police to threatened areas in Upper India was urgent. The Joint Companies’ fleets on the Ganges and Gogra rivers were therefore placed at the entire disposal of the military authorities. It is remarkable that at a time when so many of their compatriots were involved in the riots, the Companies’ Indian staff were steadfast, in spite of threats of personal violence. They carried out their duties almost to a man and once again leadership had proved its value.
Assam was not as seriously affected as Upper India by the Quit India Movement, but sabotage on the railways throughout the Brahmaputra Valley threw a heavier volume of traffic than normal on to Inland Water Transport.
As on almost every critical occasion in its history, the Congress Party had misjudged the position and this time it gravely underestimated the might of the British Raj. The Quit India Movement was soon brought under control, law and order were restored and India remained fairly quiet for two years.
The Bengal Famine
This period of relative quiet was marred by the great tragedy of the Bengal Famine of 1943. That tragedy only affected the Joint Companies indirectly and we need not, therefore, discuss it in detail. It is enough to say that five factors contributed to it. First, there was a widespread failure of crops; secondly, import from Burma and elsewhere, which would normally have alleviated the situation, was impractible in the circumstances of 1943; thirdly, once the impending shortage was clearly seen, fear or greed naturally led cultivators and others to withhold supplies; fourthly, the Government of India signally failed to coordinate supplies between one Province and another; and finally, the administration was too weak on the ground to make draconian measures of procurement possible. Even if such measures had been taken, the fact would have remained that there was not enough rice to go round. Any estimate of the number of deaths from famine is pure guess work and as in any famine, many people died not directly from starvation, but from diseases to which insufficient food made them vulnerable.
The famine did not greatly affect the Companies’ services, but it entailed serious hardship for their employees and this the Companies sought to alleviate in two ways. In the first place, they introduced a fair scheme of dearness allowances for all ranks. In the case of the clerical and subordinate office staff it was based on the scheme formulated by the Bengal Chamber of Commerce, but allowances for masters, serangs, drivers and crews had to be worked out by the Companies themselves. It is not necessary to particularise as to those allowances, but it can be said that they seem to have been accepted as fair. Secondly, the Joint Companies issued foodstuffs to their Indian employees at concession rates. This system was also adopted by the Tea and other industries and it is interesting to note that this was found to be the only means of protecting employees in times of gravely inflated prices and that, in the Tea Industry at least, the demand for discontinuation of the scheme some years later came, not from labour, but from employers.
A time came, however, when mere protection against high prices was not enough. Availability was even more important than price and the Joint Companies therefore organised ration shops in which food grains were sold to their employees on a scale fixed by Government. To a great extent these shops depended on supplies from Government sources, but the Companies had wisely laid in stocks of rice by purchase from surplus areas while this was still permitted. All these operations were expensive, but the Companies could afford them and could claim that, within the limits of what was possible, they had taken such measures that their employees were better off than the majority of their fellow countrymen.
Faced as they were with all these problems, the Joint Companies found at times that they could not cope with all the traffic offered. In 1942-1943 for example, they were unable to carry all the available raw jute to Calcutta and took the unprecedented step of asking shippers to send their jute by country boat or by rival IWT companies. Some of those companies also carried upward traffic which would normally have been despatched by the Joint Companies’ ships, while on the other hand, one of the opposition companies, the BRS, ceased operating from Calcutta early in 1942, since its entire fleet was occupied in carrying coal for the B and A Railway from Khulna to Goalundo and Chandpur. Altogether the opposition companies did well during the War---but so also did the Joint Companies. Earnings were in fact very good. Those of 1942 were higher than in the boom years 1927-1928, while in 1943 in the case of the IG they reached what was regarded as the astounding figure of Rs. 2,00,19,735. The figure for 1943 for the RSN is not available but it was of the same order. In 1944 profits were still higher.
By no means all these earnings accrued to the shareholders, since an Excess Profits Act had been passed in 1940 with retrospective effect from 1st September 1939. The initial rate of 50% was raised to 66? in 1941 and in 1943, with additional income tax and supertax, it was brought up to 80%. Of the balance, two-thirds was required to be deposited with the Government.
In spite of these justifiable but heavy imposts, net profits were good and the Companies ended the war in a sound financial position to undertake the task of rehabilitation.
In 1945 the Joint Companies were well placed for the return to normal working and for the rehabilitation of the fleets which would be necessary. It was clear that Independence was just round the corner, but very few British businessmen envisaged the possibility of the partition of India. The Directors of the Joint Companies thus planned in terms of a unified system in Bengal and Assam.*
Plans included four new towing steamers (three for RSN and one for IG); five passenger vessels for the main line services in East Bengal (three for RSN and two for IG); and four creek steamers for the feeder services (two for RSN and two for IG).
The Effects of Partition
It was not until 1952 that these plans were fully implemented and by then the Partition of India had made them to some extent meaningless. Historians will argue to the crack of doom as to the wisdom or necessity of Partition. In the view of the present writer it was inevitable, but the tragedy was that the intense communal bitterness which had made it necessary was carried over into the relations between the two new dominions. The Punjab massacres, the struggle for Kashmir, the Indus Valley Waters dispute and the problems connected with evacuee property created a near-war situation. The tension was at its highest in the Punjab---with which we are not concerned---and in West and East Bengal.
Strangely enough the immediate effect of Partition was a dramatic increase in passenger traffic in the Delta. In East Pakistan the travelling public had mainly consisted of Hindu professional men, Bhadra lok* and large shopkeepers rather than of the Muslim cultivators and small shopkeepers. The Punjab massacres had inspired terror and the Hindus were in a state of great nervous tension.
Whenever there was a rumour of some new immigration or customs control large numbers of Hindus migrated from East Pakistan to Calcutta, but when tension seemed a little relaxed many of them returned. There was thus for a time a constant coming and going and a consequent boom in passenger traffic. By 1950 these temporary factors had ceased to operate and the situation was governed by a permanent state of fear amongst the Hindu public in East Pakistan. Passenger traffic therefore fell off rapidly and the Companies found that they had built or were building new ships to no purpose. Nobody could have foreseen this when construction was undertaken, but the effect on the Companies’ finances of such unprofitable expansion of the passenger fleet was serious.
However, the Companies were not wholly without foresight in the additions made to the fleet at this time. The acquisition in 1948 of five second-hand coasters for the Chittagong service, followed immediately by the building of three sea-going tugs and twelve sea-going flats for the same route, was an entirely new development and successfully anticipated the diversion to Chittagong of export traffic from the interior of East Pakistan which had hitherto moved through Calcutta.
The factors affecting the goods traffic between India and Pakistan were complicated and cannot easily be broken down into their political, economic and administrative components. Even if the two countries had been on friendly terms, the disparities between their economies would have created difficulties in the way of any kind of free trade. Pakistan was still a good example of the colonial economy which depended on agriculture to pay for the import of manufactured goods whereas India had reached a relatively advanced stage of industrial development. It was not to be expected that the two countries could long maintain a common currency, or do without tariff barriers. It is indeed much to the credit of Nehru and Liaqat Ali Khan that in 1948 they not only agreed to have no exchange control between their two countries, but also made an agreement for the supply of cotton, jute and other commodities from Pakistan in exchange for coal, iron and steel and jute goods from India. This sensible arrangement soon came under political strain and broke down altogether in 1949 when Pakistan decided not to devalue its currency in line with Britain and India. It is difficult now to realise the anger aroused in India by Pakistan’s decision. As the present writer has put it elsewhere, ‘what should have been regarded as a cold unemotional act of financial wisdom or unwisdom was treated as a deadly blow to Indian prestige. Pakistan was exultant and the common man in both countries entered with deep emotion into a controversy of which he can have understood nothing’.
Pakistan’s decision did, of course, have serious implications for India, since it meant that raw jute would cost India 40% more than before. India refused to recognise the Pakistan rupee as its new rate, or indeed at any rate at all and trade thus came to a standstill, except in so far as it could be carried on by black market operations. ‘Pakistan, without any justification, refused to allow the export of jute fully paid for before devaluation of the Indian rupee. . . . India retaliated by stopping supplies of coal to Pakistan.’ Raw jute had been the most important item in the Joint Companies’ traffic between East Pakistan and Calcutta and suspension of this traffic was a grave matter for them. Calcutta was in fact cut off from the main raw jute areas and at the same time new jute mills were being constructed in East Pakistan.
Besides the difficulties created by official policies, there was a good deal of obstruction at lower, administrative levels. In neither India nor Pakistan had the Customs and Immigration officials the least intention of being helpful to those whom they regarded as enemies. Necessary checks were carried out so slowly as to become a source of harassment and the turn-round time of vessels plying between India and Pakistan or passing through Pakistan was increased by perhaps 10 or 15%.
Whereas these difficulties were the result of ill-will, there were other obstacles of a more genuinely economic character. The first of these was the natural diversion from Calcutta to Chittagong of East Pakistan’s overseas trade. As has been seen, the Joint Companies had already anticipated the problem created thus and had constructed or purchased ‘a semi-sea-going fleet for operations between the East Pakistan hinterland and Chittagong’. Nevertheless, this traffic diversion was inevitably reflected in a corresponding reduction in the utilisation of the Companies’ conventional inland fleet on the Calcutta route. Although cargo was won over from other IWT operators who did not have a sea-going capability, the considerable capital cost of the new Chittagong fleet served more to sustain the Companies’ revenues than to enhance them.
At this stage also a new competitor appeared on the scene. Until 1949 all rail and river traffic between Assam and Calcutta had passed through Pakistan, but in that year the Government of India set themselves to construct a railway line which would be entirely within India, just north of East Bengal. ‘This involved the construction of over a hundred bridges and the formidable task of bridging the swift-running glacier-fed river Tista.’ Such a project had often been considered, but very able British engineers had considered it impracticable. It is to the eternal credit of an Indian Railway Engineer, Karnail Singh, that he achieved the impossible and established an all India route from Assam to the rest of India. This involved realigning the original Calcutta-Assam route further north into the foothills of the Dooars over exceedingly difficult terrain, with the rail track at right-angles to the natural drainage of the land. One must admire the ability and tenacity of Karnail Singh, but from the point of view of the Joint Companies this posed a new threat. Fortunately, as it would seem to them, the capacity of the line was limited and whenever political conditions permitted, the river steamers continued to be the main means of transport between Assam and Calcutta.
While these changes were taking place, the Joint Companies had endeavoured to adapt their organisation and management to the new conditions. In 1947 British businessmen had perhaps been misled by Congress propaganda into believing that Pakistan would not last and that the logic of facts would soon compel a reuniting of the two countries. This view, indeed, was widely held in Britain---so much that the present writer, as Adviser to the India-Pakistan-Burma Association found it necessary to visit a number of Chambers of Commerce in Britain, to persuade them that Partition had come to stay. Under the influence of their mistaken view, British business houses in Calcutta at first made no attempt to set up separate Pakistan companies. In due course it became clear that Pakistan Ministers and officials resented Calcutta control of companies operating in East Pakistan, even though these companies were incorporated in UK. In 1950 Kilburn and Co. and Macneill and Barry Limited therefore established wholly-owned subsidiaries in Pakistan which took over the agencies of the Joint Companies in that country. Even this was not enough and in 1951 the Companies found it necessary to split up their fleets and to register them separately in India and Pakistan. Commercial factors largely dictated how the division should be made. The large despatch carriers had been mainly concerned with the traffic in tea and tea garden stores and so they naturally went to India. The majority of the passenger vessels on the other hand, went to Pakistan, whilst the main-line towing vessels and flats which were utilised for bulk movements of commodities such as jute, coal, cement and foodgrains, were divided between India and Pakistan pro-rata to the volume of traffic normally carried. It must, however, be realised that many of these vessels, wherever registered, still had to cross the boundary into the other country, so that the difficulties which we have described in connection with frontier formalities did not disappear.
Even before the separation of the fleets, Partition had created a staff problem. The majority of the shore staff in East Bengal were Hindus and they left for India almost immediately. Poorly educated Muslims had to be trained to take their place and for this purpose the Joint Companies established a training school in Barisal. The training was well organised and in due course the newcomers learned their job, but there was necessarily a loss of efficiency for some time. Moreover, the Companies felt a responsibility for the Hindu staff who had left East Pakistan and had to fit them into posts in India, even at the cost of overmanning.
Feeling between India and Pakistan gradually became less strained and by 1951 trade had begun to run a little more smoothly, but some of the difficulties we have described were of a permanent nature. Moreover, in the years of bitterness the earnings of the Joint Companies had been gravely affected. The excess of earnings over expenditure, which was Rs. 77 lakhs in 1948, had fallen to Rs. 5 lakhs in 1949 and 1950. Profits were inadequate to enable the Companies to undertake the much needed replacement of their old cargo vessels. The position improved somewhat in 1952, mainly as a result of the curtailment or discontinuance of unprofitable services, but the improvement was short lived, since in 1953 there was a general trade recession and the Joint Companies incurred a trading loss of over Rs. 44 lakhs.
From this stage onwards it will be convenient to consider India and Pakistan separately.
Developments in India
The Government of India were concerned about the state of inland water transport---and when governments are concerned about a problem, their instinctive reaction is to appoint a committee. Such committees often assemble a great deal of information and then recommend the formation of another committee. Such was indeed the case with inland water transport in India. In August 1949 the Government of India appointed an Inland Water Transport Conference, which then set up a Special Committee to consider the constitution of an Authority for the administration and control of river services, as well as the need for services on new routes and the coordination of road, river and rail transport. No practical conclusion emerged from the Committee’s deliberations, but in December 1949 yet another committee was appointed to investigate the traffic possibilities between Allahabad and Buxar. The main recommendation of the Traffic Survey Committee was that more information should be collected. It touched on the possibility of a service in the high and middle water season, but did not consider the economics of such a service.
In the early fifties India was looking very eagerly for help from international bodies in its various problems and it was natural therefore that the ECAFE should take a hand. In February 1952 Mr. Otto Popper, that body’s consultant on Inland Water Transport, visited India for this purpose. Three interesting points appeared from his report. First, he considered that there was scope for the large scale organisation of country boats, with ‘their enormous traffic potential’. Secondly he referred to the possibility of mechanical sweepers for clearing channels; and thirdly, he was much impressed with the shipbuilding and repairing organisation of the IG. It is difficult to feel that Mr. Popper’s visit did much to assist in the development of inland water transport.
The next investigation was that connected with a proposal of the United Nations Technical Administration to finance a Pilot Project to study the difficulties of inland water transport and the possibilities of technical improvements. The investigation was to have particular reference to the Ganges and Gogra, but was also to deal with the Brahmaputra. The Pilot Project was never, in fact, carried out, but a preliminary enquiry was conducted by a Mr. J. M. Surie, from Holland. Perhaps the most interesting part of his report was the section in which he described the characteristics of the Ganges and Gogra rivers. He made the interesting point that their navigable depth did not increase or decrease in the same measure with the rise and fall of the water level. ‘When the level rises,’ he wrote ‘silt is deposited, existing channels deteriorate and on the whole the navigable depth increases a few feet only, whereas with a falling river, new channels are scoured out, necessitating relatively little decrease in draft.’
His most important conclusion was that the Ganges-Gogra region was already well served by railways and high roads and that, at least on the Ganges, commercial IWT operation would be uneconomic. Both on those rivers and on the Brahmaputra he considered that the Governments concerned---or the recently established Ganges-Brahmaputra Water Transport Board---should accept responsibility for marking and bandalling---a burden which hitherto had so largely been borne by the IWT operators. He also recommended that experiments should be made with push-towing services.
In 1954 two factors led to some improvement in the Joint Companies’ position in India. In the first place there began to be a general revival of trade and secondly, ‘the managements of the two companies, which had been hitherto distinct, were in a great measure progressively integrated’. This was necessarily a gradual process and it was not until 1958 that all the necessary administrative details were finalised. A Chief Executive Officer was made responsible to the Directors of both Companies ‘for the day to day management of the Rivers Steam Navigation Company and the India General Navigation and Railway Company Limited in India and for liaison with the organisation in Pakistan’. The Accounts, Labour and General Departments of the two companies were combined and an Administrative Officer was appointed to work under the Chief Executive Officer. A similar integration was effected at local level, by the appointment of a Controlling Agent for Assam and Cachar.
A new difficulty now arose in India. In pre-independence days the various railway systems in India had each had its own rating system and when increased costs necessitated an increase in fares and freight rates, this was done by what was rather comically called an inflated mileage system. After Partition the Indian railways were integrated into a national system. Inflated mileage was abolished and the profitable lines were, in effect, made to subsidise those which did not pay. This meant that the North Eastern railway---which ran more or less parallel to the IWT route---was able to charge uneconomic rates. This can be seen from the fact that the outgoings of that line exceeded revenue by Rs. 900 lakhs in each of the years 1954-1955 and 1955-1956. Naturally, traffic was attracted away from the rivers and the position was made worse in 1954 by the imposition of an Assam State tax on goods transported by road or river. Railways were a Central subject and the tax could not, therefore, be imposed on them by the State Government. The effect of the tax was thus discriminatory in favour of the railways and against the Inland Water Transport Operators.
The net result of all these factors was that, in spite of unavoidable enhancements of rates for freight on the river services, earnings continued to decline and in 1956 and 1957 the expenditure of the two Companies taken together exceeded their earnings by over Rs. 37 lakhs and nearly Rs. 21 lakhs respectively. Drastic measures were clearly called for. As early as 1950 the Joint Companies had recognised that they could no longer fulfil their traditional role of providing a comprehensive IWT system, but the need for abandoning that role now became more urgent. There was no alternative to suspending unremunerative services and recognising that in some areas the field must be left to other forms of transport. These changes had to be made gradually and each of them met with local and political opposition. It was, indeed, beginning to look doubtful if, in the conditions of India and Pakistan, a public utility in private, mainly foreign ownership could be viable.
The Companies now embarked on a desperate struggle for survival in India. It was clear that a mere pruning of expenditure would not meet the case, but that although attempts must be made to improve the services, the main need was the discontinuance of unprofitable lines.
As regards improvement of the services, it is sufficient to say that the Companies introduced express cargo and passenger services which could ‘regularly compete on speed and cost of delivery with almost all other forms of transport, including in certain cases the air-freight system’. These measures did result in improved earnings, but a much greater difficulty was posed by the decision to discontinue certain services.
Withdrawal from the Ganges
The most important of the unprofitable services were those on the Ganges and Gogra and the Joint Companies at first intended to withdraw completely from those rivers. Informal discussions in Delhi shewed that there would be strong opposition to such a move and in September 1956 the Companies therefore made proposals for the retention of certain internal services in Bihar, but for the discontinuance of all services between Bihar and Calcutta or Assam/Cachar. These proposals were incorporated in a well-reasoned Memorandum which opened with the statement that the Companies’ losses on those services were in the neighbourhood of Rs. 24 lakhs a year. The Memorandum went on to analyse the reasons for those losses. The governing factor was the existence of more capacity by rail, river and road than was required for the traffic offered. The finances of IWT operators had been seriously affected, partly by the condition of the rivers and partly by railway competition.
The Memorandum traced the gradual depletion of the discharge of the Ganges, partly as a result of the increased off-take of water for irrigation in the closing decades of the 19th century---and the resulting silting up of the rivers and the reduction of navigable depth in the upper reaches of both rivers. The deterioration had been progressive and by this time, ‘the practicable limit of operation during the low water season, even with feeder craft, was Barhaj on the Gogra and Buxar on the Ganges’. This affected IWT in three ways. First, transit time was increased as a result of frequent groundings; secondly, the reduction of navigable depth for seven or eight months of the year had reduced the earning lift per flotilla by nearly 40%; and thirdly, low water season transhipment at the principal rail/river junction at Manihari had become almost impossible. Moreover the Companies had had to spend Rs. 4 or Rs. 5 lakhs annually on river conservancy, of which less than one sixth was paid by the Governments concerned.
Railway competition was very formidable. The railway lines along the north and south banks of the Ganges touched the rivers at 34 points. They then joined a network ‘serving the entire hinterland and connecting with rail services to all parts of India’. The effect of the advantage of railways in speed per hour was aggravated by the fact that the mileages by river were much greater than those by rail. The rail mileage from Calcutta to Buxar, for example, was 404, whereas that by river---except in the short season when the Bhagirathi was open was 1,012. Traders naturally preferred the quicker route and it was impossible for the IWT operators to lower their rates sufficiently to attract traffic from the railways, except in the case of certain bulk commodities such as grain and salt. In general IWT rates were necessarily higher than those on the railway.
If those concerned in the Governments of India and Bihar had studied the well reasoned report by Surie in 1952, this elaborate statement of the Joint Companies’ case would not have been necessary, but very little attention seems to have been paid to that report. The Memorandum necessarily arrived at the same conclusion as Surie had done---namely, that economic operation of IWT on the Ganges was impracticable and that competition between rail, river and road in the region was indeed wasteful.
The Joint Companies nevertheless recognised that there were a number of stations on the Ganges which had no ready access to road or rail transport and they therefore proposed to continue operating an internal service in Bihar, between Rajmahal and Paleza Ghat on the Gogra, with a subsidiary feeder service between Patna and Buxar on the Ganges.
The Bihar Ministers concerned with these matters---perhaps more interested in political considerations than in hard economic facts---were unresponsive to the Companies’ arguments and the matter was referred to Delhi. At meetings there in December 1956, the Companies were asked if they would continue the Ganges-Gogra services for 1957. They replied that they would be willing to do so on certain conditions. The most important of those conditions were, first that the Government of Bihar would guarantee the movement of 60,000 maunds annually from Bihar to Assam; secondly, that freight rates between Bihar and Assam should be increased; and thirdly, that the Companies should be allowed to retrench personnel where necessary. Under the influence of the Union concerned, the Bihar Government were not prepared to accept these reasonable conditions and the only outcome of these negotiations was the usual government device of appointing a Bihar Advisory Committee to deal with IWT matters. The Joint Companies perforce agreed to continue the services during 1957, but stated categorically that they would not continue beyond the end of that year. The services were in fact closed on 31st December 1957, except for certain vessels then in transit.
After the withdrawal of the Joint Companies, the Government of Bihar considered that there was a serious gap in the internal transport system of the State. They did not wish, however, to operate a government system and they, therefore, considered the possibility of floating a new operating company for this purpose. The Joint Companies were not prepared to participate financially in such a company, but they assisted the Government to the extent of preparing a draft scheme, for the establishment of the Bihar Inland Water Transport Private Ltd. They considered it unlikely that the company could make a profit and therefore suggested that the shares in it should be held by the Government of India and the Government of Bihar, or the Ganga Brahmaputra Water Transport Board. The proposed company would operate a weekly service between Patna and Rajmahal and a weekly feeder service between Patna and Buxar. For these services two vessels could be chartered from the Joint Companies and two pusher units from the Ganga Brahmaputra Water Transport Board. The enthusiasm of the Bihar Government seems to have been damped when they realised that the new company would not only have to be provided with funds for initial expenditure, but would also need a recurring subsidy. They had also come to realise that, from the point of view of transport alone, there was no need for the services envisaged. The accent was on the employment of labour, but by this time the great majority of the employees of the Joint Companies in Bihar had accepted their retrenchment compensation and gone away. No action was taken on the Joint Companies’ plan and the matter was quietly dropped.
Problems on the Brahmaputra
While all these discussions regarding the Ganges service were in progress, consideration was also given by the Joint Companies to the problems of the Brahmaputra. The need for economy was, of course, much in the minds of the Directors, but in the case of the most important change---the closure of Dibrugarh Ghat---it was compelled by geographical rather than economic causes. In 1950 a severe earthquake had seriously disturbed the river bed and it was only with difficulty that contact could be maintained by river with Dibrugarh. In 1954 regular bookings from Dibrugarh Ghat were suspended, but goods for shipment could still be delivered to the Dibrugarh Depot which had been opened in 1951. From the Depot the Joint Companies conveyed the goods by lorry to Desangmukh, some 50 miles down the river. Occasionally the state of the river made it possible to transport goods by shallow draft vessels from Dibrugarh to Desangmukh, but river conditions continued to deteriorate---partly as a result of silting caused by Government’s necessary works of protection against further erosion. It was therefore decided to close Dibrugarh altogether from 15th October 1956. In 1957 the Joint Companies ceased to make lorry deliveries to Desangmukh and left private contractors to undertake that service. Thereafter there was little point in maintaining the Dibrugarh Depot, particularly as teas from the Dibrugarh area were being despatched by rail to Neamati or Pandu. The Depot was closed from 1st April 1958 and it was estimated that a saving of Rs. 3 lakhs would result.
Other measures of economy included the closure of all local and passenger services on the Brahmaputra except that between Tejpur and Silghat. Small feeder services on the upper tributaries of that river were also withdrawn, since the areas affected were now well served by road and rail transport.
Plans for Rehabilitation
There was necessarily a time lag before these measures could take effect and in 1957 the position of the IG was so serious that the Directors thought it worth while to prepare figures showing what the shareholders could expect to receive if the Company went into liquidation. It appeared that 48% of their capital would be lost and that even the payment of the remaining 52% would depend on the remittance of the cash surplus from Pakistan.
In October or November 1957 K. C. Neogy, a well known and respected Member of Parliament, was appointed to coordinate policy with regard to IWT. The representations of the Joint Companies to the Ministry of Transport were forwarded to him and he was sympathetic---but little practical action was taken. By the following year however, the economy measures already described, together with enhancement of rates, had improved the position and the earnings of the two companies exceeded expenditure. In a memorandum submitted to the Government of India in June 1959 the Companies ventured to ‘feel that a sufficient degree of stability is in sight to enable them to look forward again to a planned future’. It was nevertheless clear that even if surpluses were maintained at the 1958 level in succeeding years, they would be quite inadequate to finance even the start of the necessary replacement of the worn out cargo fleet. In a carefully documented study the Memorandum analysed the respective merits of self-propelled carriers and tug-barge flotillas and concluded that the capacities of the two types in a reconstructed main fleet should be 57% and 43% respectively. Similar studies were made for the Cachar feeder services.
Analysis of the cost and required numbers of the two types shewed that the overall cost of fleet rehabilitation would be in the neighbourhood of Rs. 10.64 crores,* spread over ten years. It was estimated that economies resulting from the employment of modern fleets would enable the Companies to Finance about Rs. 6.14 crores of that expenditure itself and indeed with the assistance of bank finance, a start was made on the construction of a new fleet of push flotillas to replace the outmoded sternwheelers on the Cachar Feeder Service. However, external finance would be required to the amount of Rs. 4.50 crores (including Rs. 2.50 crores in foreign exchange) for the next five years, for the construction of the large self-propelled carriers for the Assam service. As it was most unlikely that private investment would be forthcoming for this purpose, a loan of that sum from Government would be needed. This would be in addition to a loan of Rs. 30 lakhs already granted to the IG in 1958. The Companies each therefore sought a new Government loan of Rs. 2.25 crores at interest of 5%, repayment to start in 1964.
The Memorandum is an impressive and indeed masterly document, but it was more than two years before a loan was granted---and by that time the position had grown worse.
During these next two years the Directors had to face two intractable problems---first, that of achieving a financial position which would enable them to rehabilitate the Indian main line fleets; and secondly, that of setting up separate companies for the Pakistan fleet. The two problems were to some extent inter-related, since in seeking a loan from the Government of India---without which the first problem could not be solved---the Companies had to keep in step with that Government’s thinking on the question of separation. It will be convenient to deal first with the problem of rehabilitation.
The Joint Companies now prepared a rehabilitation plan on a less ambitious scale than that envisaged in the 1959 Memorandum. It provided for the construction of 14 diesel-engined self-propelled carriers and 6 harbour tugs, during the years 1960-1964, at a cost of Rs. 5.64 crores. In 1960 the Government of India agreed in principle to grant a loan of Rs. 2 crores---Rs. 1 crore to each company---for this purpose.
Somewhat onerous conditions were attached to the loan. Its amount was to be limited to 60% of the cost of construction of the new vessels; security of 200% of the loan was demanded, mainly in sterling; and payment was only to be made as and when work progressed. In consequence, the Companies found it necessary to curtail the planned pace of the building programme, limiting the initial phase to the first two of the self-propelled carriers only. The loan conditions were to some extent relaxed later, but they remained onerous.
Meantime, the financial difficulties of the Companies continued to grow and with effect from 15th March 1961 freight rates were enhanced by 10% for all goods except foodgrains and Cachar teas. It was hoped that this increase would not only give a reasonable return on capital, but would also provide a surplus for rehabilitation. The Assam Government objected to the enhancement, partly on the grounds of its effect on the economy of the State, but also because they considered it wrong that consumers should pay for rehabilitation. In May 1961 the Government of India therefore appointed a Freight Rates Enquiry Committee and the Companies agreed to limit the enhancement to 6% until the Committee had reported.
The Committee noted that the one-way capacity of the Joint Companies was 1.05 lakh tonnes against 0.69 lakh tonnes for all other operators, but that the Joint Companies’ vessels plied about 25 to 30% under capacity on the downward journey from Assam. The Committee included in its report an analysis of the ages of the Joint Companies’ fleets, which showed that out of the 495 vessels, including flats, only 30.71% were under 30 years old, while over 50% were more than 40 years old.
After a careful study of the whole question, the Committee recommended that the enhancement should be 5%, with effect from 1st July 1961. The award, which was to be in force for two years, was reluctantly accepted by the Companies.
Growing Financial Difficulties
The Companies soon found that the Committee’s assumptions as to earnings and expenditure were not being fulfilled and they asked the Government of India to reconvene the Committee, to consider a further enhancement of rates. For political reasons the Government were not willing to do this immediately.
By 1961 it had become clear that the Companies urgently needed more capital and a fresh chance of achieving this seemed to arise in the same year, when to the surprise of the Directors, the Government of India suggested the formation of a new sterling company, in which Government would participate, to own and operate the Indian services. In the following year, however, Government changed their minds, ostensibly because of the difficulty of valuing the Joint Companies’ assets, but nobody believed that this was the real reason.
In the years 1961 and 1962 the fortunes of the Companies in India were bedevilled by one misfortune after another. In 1961 unusually severe weather conditions on the rivers resulted in the breakdown of 46 vessels in transit. This resulted not only in reduced carrying capacity and loss of traffic, but also in a ‘disturbance of the balance of availability of their craft at the various points along the river’. For some days there was no movement at all into Assam and downward movement was also affected. The traffic carried during the year amounted to 6.18 lakh tonnes as against a figure of 8.18 lakh tonnes estimated by the Committee in its earlier session.
The Strike in Pakistan
In 1962 a serious trouble befell the Joint Companies. A prolonged strike in Pakistan of the crews of Indian Registered vessels undermined their financial position and contributed materially to their ultimate failure in India. In order to understand the background to the strike it is necessary to bear two facts in mind. First, the Companies no longer operated Pakistan services, as we shall see in a later chapter,* since their Pakistan fleets had been transferred to Pakistan River Steamers Ltd. in 1961. The interest of the Companies in Pakistan arose from the fact that their vessels had to pass through that country and that the majority of their crews were Pakistanis. Secondly, in India there were three unions of the Companies’ crews. At one time the Bengal Mariners Union had represented all the afloat personnel, but in the fifties the certificated ranks broke away and formed the Calcutta Mariners’ Fleet Committee. Shortly before the strike the deck ratings also broke away and formed the Inland Mariners’ Union, leaving only the engine room ratings to be represented by the Bengal Mariners’ Union.
Among the senior officials of the Bengal Mariners’ Union was an East Pakistani, Pratabuddin Ahmed, who had close communist affiliations. In March 1962 he was turned out of India and on his return to East Pakistan he registered a new union, the Inland River Transport Employees Union. Pratabuddin followed the usual communist technique of exploiting real or imaginary grievances of the workers and secured sufficient support to be able to raise a ‘fighting fund’. At this stage the East Pakistan Director of Labour cancelled the registration of the IRTWE union on the ground that it could not possibly organise employees of a concern operating in India.
In the meantime Pratabuddin had presented a charter of demands. The most important demand was that the IRTWE Union should be recognised by the Companies, but there were also demands regarding the recruitment and payment of Pakistanis. The Companies at once made it clear that as they did not trade in Pakistan it was impossible for them to recognise a Pakistan union---and indeed the Government of India would have taken strong objection to any such recognition. The Companies were prepared to discuss some of the other demands, though several of them could only be accepted with the approval of the Indian Exchange Control Authorities.
On 7th October 1962 a number of vessels dropped anchor near Chilmari in Pakistan and the crews refused to sail. The strike soon spread and after ten days Indian vessels were anchored at all the main stations in East Pakistan. In the following week it seemed as if negotiations might lead to a suspension of the strike, but they broke down and the strike continued in full force.
It is not necessary to follow in detail the progress of the strike or the wearisome round of discussions between the Joint Companies and the governments of East Pakistan, Pakistan and India. It cannot be said that any of those governments were very helpful, in spite of a good deal of pressure from HMG through their British High Commissioners.
Throughout much of the period of the strike the East Pakistan Government declined to take any positive action towards ending it and argued that it was just a labour dispute, which must be settled between employers and employees. Until late in November the Karachi Government also avoided any effective intervention and even when President Ayub expressed his concern at the prolongation of the strike, his officials made little serious attempt to help. The whole matter had in fact become entangled in the complicated web of Indo-Pakistan politics. It will be remembered that this was the period of the Indo-Chinese War, when an efficient transport system was of the utmost importance to India and cynics believe that Pakistan was not sorry to have the opportunity of adding to India’s difficulties. Whether this view be correct or not, it was certainly believed to be the case by the Government of India. The general attitude of that Government was that they were not prepared to be blackmailed and that it was better to ‘sit the strike out’ than to give in.
This may or may not have been good national policy, but the prolongation of the strike was disastrous for the Joint Companies. Repeated requests to the Government of India for temporary financial help produced no response and when the present writer approached an important member of the Indian Cabinet for a loan for the Companies, he met with the reply---’You are asking me for a loan, so that Pakistan can hold us to ransom’.
In the second half of November the Joint Companies urged on the governments concerned the desirability of setting up a Joint Indo-Pakistan Committee which would deal with all those aspects of the dispute which the Companies could not settle without Exchange Control approval. The Government of India responded favourably to this proposal. The initial reaction of the East Pakistan Government was unhelpful, but late in the month the Pakistan Government began to press East Pakistan to try to bring about a settlement.
At this stage there were signs that the crews were growing weary of the strike and the Joint Companies made fresh efforts at negotiation. On 4th December agreement was reached at last. Its most important points were four in number. First, the demand for payment of 50% of Pakistani crews wages in East Pakistan and the retention by Pakistanis of all posts then held by Pakistanis would be referred to the proposed Committee. Secondly, surplus crews would be eliminated in the course of three years, after which all Pakistani crews would be given permanent employment. Thirdly, the question of payment for the strike period would be referred to arbitration and in the meantime advances equal to the pay for the strike period would be granted. Finally, it was agreed that a Union to represent the Pakistanis would be registered in Calcutta.
On 6th December 1962 a vessel---the Shwebo---sailed from Barisal and the strike was at an end.
There can be little doubt that the dispute could have been settled at an early stage if there had been any real cooperation between the Governments of India and Pakistan and this prolonged strike must be regarded as an unfortunate by-product of ill-will between the two countries.
At the end of the strike the finances of the Joint Companies---and particularly of the IG---were in a very shaky condition. It was estimated that in comparison with the Companies’ pre-strike forecasts, revenue to the amount of Rs. 155.42 lakhs had been lost. As against this, savings on fuel and other charges, together with the estimated revenue from deferred traffic, would be Rs. 56.48 lakhs. The net loss was serious for the two companies whose cash resources were already severely strained.
Formation of Rivers Steam Navigation Company (Holdings) Limited
The RSN Directors had for some time been painfully conscious of the growing difficulties in India, while on the other hand prospects in Pakistan seemed to them reasonably good. It was decided therefore to make arrangements which would facilitate the hiving off of the Pakistan assets if this became desirable. Moreover, at this time the possibility of amalgamating IG and RSN interests in India was also being considered and it was felt that both objects would be facilitated by the formation of a holding company for the RSN. Such a company was, therefore, incorporated on 7th August 1962 under the name ‘Rivers Steam Navigation Company (Holdings) Limited’.
By a scheme of arrangement under section 206 of the Companies Act 1948, shareholders in the RSN were to be allotted all the shares in the new company. The issued share capital of RSN at that time consisted of 25,000 shares of £20 of which 1,483 were fully paid and 23,517 were paid up to the extent of £15 per share. Under the scheme twenty £1 shares in the Holdings Company were allotted for each fully-paid share in RSN, while fifteen shares in Holdings were allotted for every partly-paid share. The scheme became effective from 14th December 1962 and the Holdings Company had an issued capital of £382,415.
In the meantime, the disastrous crew strike having come to an end, the main needs of the Companies were an increase of revenue and some means of recouping their working capital. The first of those problems was referred to the Freight Rates Enquiry Committee which reassembled in December 1962. In a careful report the Committee made three interesting observations. First, in the two years 1961-1962, the traffic carried by the Joint Companies had been only 14.99 lakh tonnes, against the forecast of 17.78 lakh tonnes; secondly, other operators were rapidly increasing their share of the traffic; and thirdly, the opening of the bridge over the Brahmaputra would necessarily boost the volume of road or road-cum-river traffic at the expense of the Companies. The Committee found that if freight rates were not enhanced, profits could be expected to be only about 5.2% on the capital employed and it did not consider this a reasonable return. It therefore recommended an increase of 5% on freight rates, which it was estimated, would give the Companies a return of 11.1% after depreciation, but excluding Managing Agents commission and interest.
The Committee was not empowered to deal expressly with the Companies’ second problem---that of recouping working capital---but it recognised that at the end of 1962 the Companies had practically none and it considered that outside assistance would be necessary to tide the Companies over a difficult period in 1963 and 1964. No such assistance was immediately forthcoming. The RSN had received the first instalment of the Government loan of Rs. 1 crore, but this was specifically earmarked for rehabilitation and, as we have seen, was only fully payable as and when vessels were constructed. Both companies were thus in a difficult position as regards cash flow---and that of the IG was parlous indeed. Macneill and Barry naturally decided that they could not renew their guarantee of the IG overdraft and it became clear that the days of the IG, at least in its existing form in India, were numbered. Liquidation was inevitable unless some outside agency came to the rescue and the question was whether or not the RSN should render that service. As far back as June 1962 the RSN Directors had agreed in principle to help the IG financially and in particularly to finance the building of the first two IG ships included in the rehabilitation programme. At the end of the year they began to consider what further steps should be taken.
At first sight the idea of allowing a rival company to be liquidated might have seemed not unattractive, but the practical arguments against such a view were unanswerable. The strongest of them was that the two companies had now been so closely intertwined that disentanglement would be difficult, if not impossible. Secondly, IG employees had for some years regarded themselves as for all practical purposes servants of the Joint Companies and it was ‘difficult to envisage, for example, RSN ships having uninterrupted passage through Pakistan with some 3,000 disgruntled ex-IG seamen having nothing better to do than raise political and physical agitation against freedom of transit’. Thirdly, the resulting structure of the RSN would have been economically unsound. The Company would have had to bear the existing cost of Ghats, shore establishments and the like for the operation of half the fleets. Fourthly, liquidation itself would have proved difficult. The IG would have needed to sell its ordinary shares in PRS, but this was prohibited by the agreement made with the Government of East Pakistan when PRS was formed. There was also the consideration that the Government of India might react very unfavourably to the liquidation of the IG and the relations of Macneill and Barry with that Government---as well as its standing in the business world---might be adversely affected.
Consideration was therefore given to three schemes for the purchase of the IG assets by RSN. It is not necessary to discuss the respective merits of those schemes in great detail. The first of them provided for the acquisition by RSN of all the Indian assets of the IG, whereas the second and third schemes would have left Rajabagan with the IG. It was eventually decided that RSN should acquire the entire Indian assets of the IG in exchange for 100,000 6% non-cumulative preference shares of £1 fully paid in the RSN. The transfer was duly carried out with effect from 28th February 1963. The only remaining assets of the IG, apart from these preference shares, were its investment in PRS, together with Pakistan securities and London cash.
It must be admitted that the arguments used by the RSN Directors in favour of coming to the rescue of the IG are not wholly convincing and it seems that they were themselves not without reservations as to the future. Within a month of the merger becoming effective, Rivers Holdings decided to take up the option given when it was formed, to purchase the Pakistan interests of RSN at their book value of £1,547,609. The transaction was largely effected through the declaration of a dividend by the RSN, which was then satisfied by the transfer of the Pakistan investments to the Holdings’ Company. However, the quantum of the dividend was so determined that there was an uncovered balance due to the RSN by Rivers Holdings, equivalent to the paid-up value of that Company’s share capital (£382,415). This was for the time being expressed as a loan to Rivers Holdings and apart from this and other modest cash assets in London, the RSN was now left only with its Indian business. The hiving off process was complete.
The prospect which faced the RSN was daunting. With the acquisition of the IG’s Indian interest, the Company was now in possession of a very large fleet, the majority of the vessels of which were so old as to be incapable of being run economically. The first two of the large new self-propelled carriers for the Assam service were on the point of being commissioned, but if the Company was to be saved, the programme for the remainder would need to be accelerated. However, one factor allowed of a note of optimism. Since commencing work on the first two ships, advances in technology had made possible the preparation of a relatively radical new design for the self-propelled carriers. Two technological advances were particularly important---the substitution of modern light gauge steel for the heavier gauges used in the old ships and of greater significance, the adoption of screw propulsion instead of the traditional side paddles used in the first two new vessels.
It will be recalled that the Companies’ experience had long demonstrated that because of the risk of underwater damage, screw propulsion could not replace the paddle wheel for shallow-water operation despite its advantages in propulsive efficiency. However, new inboard-outboard units of German design, specially developed for the Companies, now transformed thinking in this regard. The propellor drives of these units (in essence scaled-up versions of a conventional outboard drive) were mounted on a system of hydraulics which not only allowed of their being retracted from the water for repair when necessary, but also ensured that they automatically sprang clear on striking an underwater obstruction. For the first time therefore, the Companies were able to design vessels round a propulsion system which combined the efficiency of the screw with the ease of maintenance of the paddle wheel.
The impact was potentially dramatic. Elimination of the inordinately heavy paddle wheels and paddle boxes, together with rudders, permitted of noteworthy increases in cargo capacity for a given operating draft, and also afforded much improved operating speeds. Simultaneously, there would be marked economies in both construction and operating costs. The authors of the revised rehabilitation plan went so far as to say that each vessel of the new design would replace five of the old Assam despatch steamers in terms of cargo ton-miles of capacity, reducing operating costs by some 70%.
The immediate consequence of this design change was that the twelve self-propelled carriers still to be built under the original programme, could now be reduced to nine and plans were therefore made for the construction of nine new ships with inboard-outboard drive, at a cost of Rs. 347 lakhs by the end of 1968. It was also considered essential to develop and modernise the Rajabagan dockyard and it was estimated that this would involve additional capital outlay of Rs. 75 lakhs spread over five years.
The planners were convinced that if this programme could be carried out the Company would again become a profitable concern, but the raising of the necessary funds presented a serious problem. It is true that the promised loan of Rs. 1 crore to the IG had been transferred to the RSN, making a total available loan of Rs. 2 crores, but the loan was only payable as and when vessels were completed and mortgaged to Government---and even then payment would only amount to 60% of the cost. The first essential therefore was to inject sufficient priming finance to enable the project to get under way.
To this end, it was arranged that the RSN should bring out Rs. 70 lakhs from England and that this would be matched by a loan from Government, repayable in two years. An agreement between the Company and Government was drawn up and in 1963 the funds were made available, on the strength of which the keels of the first two self-propelled carriers to the new design were laid at Rajabagan. However, in the meantime it had become clear that a complete financial reconstruction of the Company was essential and a new proposal was made to the effect that Rivers Holdings should sell the equity of RSN to various parties better able to contemplate such a venture.
Under the scheme envisaged, Inchcape & Co. and Macneill & Barry Limited would between them purchase 50% of the equity, whilst the most important outside shareholder would be the Nizam of Hyderabad. As a condition of the arrangement, Rivers Holdings would utilise the proceeds so realised towards payment of the debt of £382,415 to RSN, which it had incurred in taking over the Company’s Pakistan assets, and this would help to finance the RSN’s development projects.
At this stage everything went wrong. Although the sale agreement with the outside parties had been signed, it needed the approval of the Government of India and that Government insisted that it should be given the option to purchase as many of the equity shares in RSN as it wished. Government cannot be acquitted of a good deal of vacillation in this matter. At one time, as we have seen, they had desired to participate in a sterling company which would own and operate IWT; a year later they had changed their minds; and now they returned to the policy of participation. The outside parties agreed to this new condition imposed by Government, but trading losses now began to be so heavy that even the finance provided by the proposed transaction would have been insufficient for the Company’s requirements. The sale agreement was therefore cancelled.
The trading results for 1963 and 1964 were, indeed, so disastrous as to destroy any hope for the survival of the Company. In 1963 the nett loss on trading was £560,614 and it must be remembered that this followed a loss of £281,548 in 1962. The 1964 results were even worse. It is generally said that these losses were the result of public loss of confidence in the Joint Companies after the strike of 1962, but this is perhaps an over-simplification. At least three factors contributed to the decline in 1963. In the first place, intensive canvassing by the NE Railway, together with the construction of the Brahmaputra Bridge and the completion of several metre gauge lines, attracted traffic to the railways. Secondly, the improvement of roads and the development of road transport led to much diversion of traffic to the roads. Thirdly, the Tea crop was about 14% down on that of 1962 and the despatch of tea by IWT dropped from 38,83,000 tonnes in 1961-1962 to 34,34,849 tonnes in 1962-1963 and 33,15,992 tonnes in 1963-1964. The overall result was that earnings of the Company, which had been Rs. 6,70,09,122 in the year before the strike were only Rs. 6,00,02,127 in 1963. They were the lowest since 1956---and in the meantime operating costs had increased greatly. Some of the same unfavourable factors operated in 1964 and were made worse by communal disturbances which interrupted traffic in the early part of the year. Moreover, the share of traffic carried by rival IWT operators continued to rise.
The Company had in fact reached the point of no return by early in 1964 and was only kept going for another year by the payment by Rivers Holdings of its outstanding debt on the purchase of the RSN investment in Pakistan---a payment which was made possible as a result of a loan from Inchcape’s subsidiary, Binny & Co. (London) Limited, to the Holdings Company. No similar fortuitous help was available in 1965. Consideration was therefore given to liquidation, but that would have involved heavy retrenchment compensation to employees and moreover, Rivers Holdings would have had to pay the unpaid-up capital of £117,785. In plain terms the Company was worth nothing. Many proposals were put to the Government of India for the provision of further finance, but they were all rejected. In the end it was agreed that Government should take over the equity shares of the RSN for the nominal consideration of £1. The Holdings Company was relieved of its liability for the amount of Rivers shares uncalled-up, but agreed to pay the pensions of Rivers pensioners residing outside India to the extent of £117,785.
The liability for pensions paid outside India in excess of that sum was assumed by the Ganges Transport and Trading Co. Ltd. a wholly-owned subsidiary of Inchcape & Co. Limited. In consideration of its assumption of this liability that company was allotted Ordinary shares of the RSN to the nominal value of Rs. 17.11 lakhs. Macneill & Barry Ltd. also accepted shares of the nominal value of Rs. 30 lakhs in the RSN in settlement of the debt due from the RSN to Macneill & Barry Ltd. The Government was also given an option---in replacement of an earlier option---to purchase the 6% non-cumulative Preference Shares in RSN held by the IG.
The Agreement was signed on 6th February 1965 and took effect immediately.
It is impossible not to regret the disappearance of two British controlled companies which had contributed so greatly to the economic development of north-east India, but there can be no doubt that the reluctant decision of the Directors of RSN to make the best of a bad job in 1965 was fully justified. It is possible to say, with hindsight, that they should have read the writing on the wall at an earlier stage, but nobody could have foreseen the disastrous trading results of 1963 and 1964 or have believed that the Government of India would fail to come to the rescue.
The decline and ultimate failure of the Companies in India must indeed be seen as the result of several factors operating over a period of many years. First, the Second World War made it impossible to carry out the normal programme of repairs and replacements of vessels and left the Companies with ageing fleets. Secondly, the integrated system of transport through north-east India, which the Joint Companies had so long maintained, was completely disrupted by Partition. The passenger services on which so much of the Companies’ prosperity would otherwise have depended became a liability rather than an asset, while the loss of revenue from cargo traffic as a result of Partition made it impossible to provide for the replacement of worn out vessels. Operating costs inevitably rose and the prospects of rehabilitation without Government help became ever more remote. That help, when it came, was too little and too late and hedged about with too many restrictions. The strike of 1962 in Pakistan was a shattering blow and the Companies reeling under it could not face the aggressive competition of state subsidised railways or of other IWT operators.
The end might have been foreseen some years before it came, but it could perhaps not have been averted.
It would be interesting if we could compare the working of the steamers under private enterprise with their operation by the Government. Unfortunately no such comparison is possible, since within eight months of the acquisition of the Company, war broke out between India and Pakistan and frustrated all plans for development. It will be recalled that at the time of the take-over, the RSN had on the stocks at Rajabagan Dockyard the first two of the new class of ships designed for the Assam service, in which so much hope had been placed. Government proposed not only to complete these but to spend substantial sums on a continuing construction programme of this class---and it will be remembered that it was the inability of the Companies to finance such expenditure which led to their downfall. All these plans, however, came to naught.
When hostilities broke out the borders between India and Pakistan were at once closed. About a third of the Indian fleet, which now operated under the Central Inland Water Transport Corporation, was trapped in East Pakistan and seized by the Government of that Province as enemy property---and was not returned when the fighting came to an end. Another third of the fleet was trapped in Assam and unable to pass through Pakistan to Calcutta and most of these vessels were in due course scrapped. When the river route was reopened in 1972 after the secession of Bangladesh, the only remaining elements of the fleet were vessels which had been in Calcutta when war began. These were altogether inadequate for the restoration of the old services and moreover the vast back-up organisation---of cargo stations, conservancy, pilotage and workshops---was no longer in existence. The services which were resumed were mainly restricted to the Calcutta-Bangladesh routes. There were no voyages to Cachar and only an occasional voyage to Assam.
It might reasonably be asked how trade could continue when so many services had been discontinued. The answer would seem to be that railway lines had been doubled and that, as a result of the Chinese invasion, steps had been taken to increase rail capacity and to carry out an extensive programme of road building. We can only ponder what might have eventuated had circumstances allowed of the introduction of the new IWT fleet of self-propelled carriers proposed in the 1960s. To this day, the planners of that project remain convinced that these revolutionary new ships would have transformed the whole concept of transport in north-east India.
The Development of Chalna and Chittagong
Political and economic considerations alike compelled the Government of East Pakistan to seek to divert much of the country’s import and export trade from Calcutta to ports within the Province. At the time of Partition the only port in East Bengal was Chittagong, ‘built between 1899 and 1905, progressively integrated with the Assam Bengal Railway to deal with the tea trade in particular’. At the end of the Second World War the Port had a normal capacity of 900,000 tons and was equipped with 4 ‘produce berths’, a limited amount of storage space, two salt ‘golas’ and an oil mooring berth. It is situated on the notoriously difficult Karnafuli River, which is in constant need of dredging and draining and experts predicted that conditions in the river would progressively deteriorate. The rapid development of Chittagong was nevertheless essential and in 1948 Government sanctioned a short-term plan, which provided for 5 jetties, 2 pontoon jetties, 4 new moorings, 2 oil berths and one salt jetty. In 1949 the problems involved were aggravated by the stoppage of the supply of coal from India by rail and it was necessary to construct ten low-level ramps, for handling, by means of lighters, coal which was being imported from other countries. In spite of all these difficulties the target was achieved and by 1950 the capacity of the port had been increased to 1½ million tons.
There was, however, the difficulty that a sandbar at the estuary of the Karnafuli severely limited the draft at which ocean vessels could enter or leave the port and to overcome this, recourse was had to lighterage between the port area and an anchorage in the roads outside the bar, where incoming vessels were lightened and outgoing vessels topped up. Lighterage was greatly affected by weather conditions and many types of craft, from country boats to steel barges were employed. These operations were successful and provide a good illustration of Pakistan’s determination to make the country self-sufficient.
The Port authorities then embarked on a more ambitious plan which envisaged the construction of seven new jetties, with new transit sheds, two additional bonded warehouses and seven export sheds. It was estimated that on the completion of the plan the port would have a capacity of 3 million tons and it would be possible to anchor 21 ships at a time, as compared with four before Partition. The complexities of the plan were immense. A canal had to be diverted, an electric supply line had to be installed, warehouses and sheds had to be constructed and houses built for the workmen---and all this in an area below high tide level and with a soil so waterlogged that bridges had ‘to be founded on wells or on pile foundations’.
Moreover, most of the material and equipment required for all this work had to be imported and this necessarily placed a great strain on the existing resources of the Port. Completion of the plan took a little longer than had been estimated, but it is to the great credit of those concerned that the target was in fact achieved.
It was, however, clear from the outset that even when Chittagong had been developed to its maximum capacity it would be quite inadequate to handle the international trade of East Pakistan and would fall seriously short in coping with the export of jute, on which the economy of the country so largely depended. It was essential to establish another port.
In considering the location of the new port the authorities had to bear in mind the fact that the Brahmaputra-Ganges-Meghna system of rivers roughly bisects East Pakistan and that trade and traffic were inevitably influenced by the fact that there was no bridge across this great divide. Chittagong was well placed to serve Dacca and Narayanganj, with the hinterland and the Sylhet-Mymensingh area. The new port must obviously be so located that it could serve the western half of the province, the railway system of which was based on Khulna.
Admiralty charts suggested that it might be possible to establish a port on the Pussur River which flows south from Khulna and which is navigable for ocean-going vessels for a considerable distance up its course. Early surveys confirmed this possibility, but it was not until March 1950 that Mr. G. M. Faruque, (Chairman of the Jute Board and later of the Pakistan Industrial Development Corporation) announced the Government’s firm intention to develop one of three possible anchorages in the Pussur River immediately. Faruque had always been a dynamic person, who bothered little about correct chains of authority and he was probably going beyond his brief in fixing a target date for the opening of the anchorage and empowering the Joint Companies to initiate the necessary organisation. He nevertheless provided the impetus required and things moved rapidly. Mr. T. M. Oag, Director of Navigation with the Central Engineering Authority was at once appointed Regional Director of the proposed port and by 28th March it was agreed that the first anchorage should be at the point where the river Mankay enters the Pussur. Representatives of the main ocean shipping lines then visited the area and approved the plan subject to certain conditions. An ad hoc Committee under Oag’s Chairmanship was set up to settle details and in April 1950 it decided to establish four moorings and to construct temporary accommodation for officers and workers. The survey of the river had not yet been sufficiently extended to permit a precise location of the proposed anchorage, but it was considered that the site should probably be between Chalna and Jaymanirgal, ‘as near to Chalna as found practicable, where the channel is known to be deep and wide, with ample room to manoeuvre large ships’. The first anchorage was laid down at Jaymanirgal in December 1950 and almost at once it was visited by the s.s. City of Lyons.
It is not necessary for our purpose to follow the various surveys of possible locations for the Port. In March 1951 a site 1½ miles from Chalna and 19 miles from Khulna was chosen for the Chalna Port---and for reasons which are not clear the original intention to name the port after Jinnah was dropped. Four moorings were now established at Chalna as well as one 4½ miles further south at Mangla---which was regarded as ‘the site best suited by its natural environment and physical features for an ideal anchorage’. Mangla was indeed the site finally chosen, some years later, for the permanent port.
Two factors limited the usefulness of the moorings for a while, the first of them being the gap in communications with the hinterland. The old EB Railway line from Sirajganj and Goalundo to Calcutta had crossed the Indo-Pakistan border at Darsana and had continued within India to Rannaghat, where a branch took off to Jessore and Khulna in Pakistan. It was now necessary to construct a line wholly within Pakistan linking Darsana to Jessore. A metre gauge line was completed at the end of 1950, but it was not for some years that it was converted to broad gauge, thus completing the broad gauge link with the hinterland.
A second difficulty was that until the Port of Chalna and its shore establishments were completed, there were no satisfactory customs facilities. General imports from abroad could therefore not be accepted and it was only possible to deal with imports from Karachi or with imports of ‘commodities which could be checked and appraised on board prior to their discharge, such as jute mill machinery, Government stores and easily assessable articles’. Nevertheless, the total volume of imports in the first full financial year of the Port was 1,29,929 tons.
These imports presented a serious problem to the Joint Companies. A world shortage of ocean shipping, and the absence of shore-based warehouses in Chalna, together with the initial hesitancy of some lines to send their vessels to a new port, often meant that the flats which had brought jute down to the anchorages were detained for long periods and were thus not available to handle imports. To meet this difficulty the Companies introduced a system of regulating jute despatches to Chalna. This system, known as the Pink Ticket System, was disliked by the shippers of jute, but it brought order out of chaos. The Companies also purchased a concrete lighter capable of storing 3,000 tons of jute and stationed at the anchorage as a substitute for land based warehouses.
Gradually all these difficulties were overcome, but as the Port Director observed, the brunt of them was borne by the Joint Companies, which were indeed called on to play a major part in the organisation of the new port. All in all, there was remarkable cooperation between the East Pakistan Government, the Port Administration and the Joint Companies---with only the Railway administration regarding these operations with ill-concealed jealousy.
Workshop Facilities
Although the Joint Companies’ fleets had been split between India and Pakistan in 1951, the Pakistan vessels were still to a great extent dependent on workshop and docking facilities in India. The workshops in Barisal, Khulna, Narayanganj and Fenchuganj had ample capacity for afloat surveys and boiler cleanings, but initially all docking had to be carried out in Calcutta. Even before the division of the fleets the Companies had prepared plans to end this dependence on India, but those plans had envisaged servicing only the Companies’ own vessels. In January 1951 the Government of Pakistan indicated that they were anxious to see facilities provided for all vessels registered in East Pakistan regardless of their ownership.
Mr. Khaleli, Director General of Supply and Development asked the Companies to consider the possibility of floating a Joint Stock Company to take over the Government dockyard at Narayanganj, as well as the Companies’ four workshops and ‘to finance all the development now needed to render East Bengal self-sufficient in the matter of marine workshops’. Government were, he said, prepared to put up 40% of the capital, leaving 60% with the Companies. A little later this suggestion was modified in the sense that the Central Government, the Government of East Pakistan and the Joint Companies should each put up one-third of the total capital of Rs. 3 crores. A few weeks later a further amendment proposed that Government should have 51% of the equity, but management of the new company would be in the hands of the Joint Companies for a guaranteed period of, perhaps, fifteen years. The Joint Companies were not much attracted by the idea of a majority Government shareholding, though this would have the advantage of lessening the amount of capital to be contributed by them---an important point in view of the fact that the RSN alone had already spent over £1 million in building or purchasing new craft for East Pakistan. At this stage the responsibility in this matter was passed over to the newly formed Pakistan Industrial Development and Credit Corporation, which came under the powerful control of Faruque.
Discussion of details as to finance, organisation and materials required for the work lasted for two years and in the meantime the Joint Companies had acquired an Admiralty Floating Dock at Trincomalee for operations at Barisal. At this stage the PIDC decided to set up a shipbuilding and repair yard at Khulna, which would be able to handle all sizes of vessels, though its capacity would only enable the PIDC to undertake part of the total work involved. The plans for a joint venture with Government were, therefore, scrapped and the Joint Companies went ahead with their own scheme. It provided for engineering and ship repair workshops at Barisal and Sonachora capable of fully maintaining and docking the whole of the Joint Companies’ Pakistan fleets, as well as a small floating workshop at Chittagong. The scheme was estimated to cost Rs. 1 crore, spread over ten years, of which the first phase would take care of l/6th of the Joint Companies’ fleets. Work was at once started on this phase.
The Pattern of East Pakistan Trade
Apart from traffic in smalls between the Delta and Chittagong, the trade of East Pakistan had three main branches. First, there was the distribution to Dacca, Narayanganj and other large consuming centres of goods imported through Chalna or Chittagong; secondly, jute and other agricultural produce were carried to those ports for export; thirdly, after trade between India and Pakistan had been resumed, there were exports to Calcutta.
The Import Trade
At Partition East Pakistan was economically undeveloped and had to import practically every kind of commodity---capital equipment, consumer goods and even food. By the early fifties goods could be imported through either Chittagong or Chalna, but in the case of Chalna they had to come in mainly in the form of shiploads of bagged cargoes, since the absence of bonded warehouses and other customs facilities made miscellaneous cargoes unacceptable. Much of the imports through Chalna consisted of food and other essential commodities brought in by the Civil Supplies Department.
The Joint Companies’ main rivals in this traffic were the Taj Mahal Water Transport Company, the Bengal River Service Company, the Pakbay Company (an offshoot of BASS in the Andrew Yule Group) and the East Bengal Railway Flotilla. For reasons which we need not particularise, the Taj Mahal Company had a special ‘pull’ with the Government of East Pakistan, while at the same time it was natural that the Government should give preference to its own Railway Flotilla. The Joint Companies were, in fact, only in a position to compete for the quantity remaining after the Taj Mahal Company and the Railway Flotilla had received the maximum allocation which their space permitted.
Apart from CSD supplies, there was a large block of traffic, consisting mainly of seeds, vegetable oils, piece goods and tobacco imported from Karachi through Chalna by a few of the leading merchants of Khulna. These commodities were despatched by lighter from Chalna to Khulna, whence they were distributed mainly to stations on the North Bengal Railway. For a time the Joint Companies handled all of this traffic and even when the Bengal River Service Company entered into competition, the Joint Companies reduced their rates and were able to retain the traffic. Soon a more formidable difficulty appeared. The Khulna merchants depended on the railways for wagons to the north and they were, therefore, unable to resist pressure to employ the Railway Flotilla from Chalna to Khulna. The Joint Companies countered by still further reducing their rates, but they did not wholly regain this traffic.
Distribution of imports from Chittagong was effected mainly by the Pakistan Eastern Railway and the Joint Companies were at a disadvantage, since merchants tended either to despatch their goods by rail to Dacca or Narayanganj, or to send them by rail to Chandpur, whence they were transported to Jhalakati and other places in the Delta by country boat. In a careful survey of the position in 1954 the Companies’ representatives analysed in detail the advantages enjoyed by country boats. The fact that those boats could deliver direct to the customer’s premises, even when that meant leaving the main rivers, told heavily in their favour. Then again, pilferage, under the watchful eye of the individual manjhi* was far less than on the Companies’ vessels. There were also fewer formalities and claims for loss or damage were settled on the spot.
The Pakistan Eastern Railway now began to compete with the Joint Companies in another way. It purchased a fleet of tugs and barges capable of crossing the Bay of Bengal. In the meantime the Joint Companies had also purchased coastal and sea-going vessels and had constructed a fleet of twelve sea-going flats of 600 tons capacity each, to operate between Chittagong and the inland waterways. The fleet was gainfully employed and did much to supplement the facilities for the transport of goods from Chittagong. It became even more important when some units of the fleet were modified for the carriage of petroleum products in bulk. It is interesting to note that, unlike the Joint Companies, the Pakistan Eastern Railway failed to operate its ocean-going fleet at a profit.
The Export Trade
In the export trade of East Pakistan through Chalna the most important item was jute, and here the Companies’ most serious rival was the Pakbay Company. Andrew Yules were themselves big buyers of jute in East Pakistan and naturally consigned their purchases by their associates, the Pakbay Company. Nevertheless the Joint Companies managed to hold their own and their share of the total carriage of jute to Chalna was generally between 30% and 40%. In the case of other agricultural produce the Companies’ most formidable competitors were the country boats and it was not considered that any practicable lowering of rates would secure much of this traffic.
In the movement of goods to Chittagong for export the Railways were in a dominant position from which the Joint Companies were never able to shift them.
Trade with India
It remains to mention traffic to Calcutta. The volume of traffic to that port---mainly jute---was considerable and for some years after the Agreement between India and Pakistan, the Joint Companies had a good proportion of it. As time passed, however, West Bengal increased its production of jute to such an extent that by the early sixties little import from East Pakistan was required. The ‘sticks’ which had formed a large element in the trade between the two countries ceased to be wanted by India and the demand for cargo space on the Calcutta route dropped considerably. For reasons which we have already discussed the passenger traffic between Pakistan and India also fell off dramatically* and whereas in 1947 and 1948 the Joint Companies in Pakistan had carried 11½ million passengers per annum, by 1960 the figure had fallen to just over 2 million.
Growing Difficulties
In facing competition on several fronts the Joint Companies were much hampered by the initial inefficiency of their own staffs. The wholesale exodus of Hindus from East Pakistan just before and after Partition, left the Province grievously short of trained, educated men and women. Except at top levels, the Joint Companies’ shore staff were new and in many cases not sufficiently educated and alert to cope well with all the problems we have described. In 1953 Messrs. H. W. Wheeler and I. C. McGregor wrote a somewhat scathing report on this subject. They considered that the decline in passenger traffic was largely due to factors within the Companies’ own control. They complained that sub-agents generally showed lack of interest in both passenger and goods traffic, that malpractices were rife, that pilferage had increased and that there was unnecessary loss as a result of rough handling by crews and labour.
This report is perhaps not to be taken too seriously. Senior officers of the company point out that its authors were relatively young and inexperienced and that where their criticisms were just they were stating facts of which the companies were fully aware. The basic difficulty, as we have already stated, was the lack of trained, educated staff after Partition. The Joint Companies did not, however, long acquiesce in the position but embarked on schemes for improving the quality of their staff. Training courses for clerical staff, apprenticeships for workshop operatives and the recruitment of highly educated Bengalis to the officer grades all formed part of a vigorous programme of rehabilitation. These measures soon made their effect felt, but an equally important factor in recovery was the close supervision exercised by senior staff. By 1956 it was evident that there had in fact been an improvement. Although trading conditions were very difficult, the level of earnings as compared with previous years was satisfactory, even when it was discounted to allow for the increase in rates imposed in May.
At the end of the year, however, the Suez crisis, followed by the closure of the Canal, led to a serious dislocation of ocean traffic to South and East Asia. For some months there could be no certainty as to when vessels would arrive at Chalna and Chittagong and as the operation of IWT depended on synchronisation of the arrivals of inland and ocean-going vessels, the entire system was thrown out of gear. This situation prevailed for most of the first half of 1957 and earnings were considerably down. Unfortunately, when ocean shipping began to arrive more regularly slack trading conditions in jute delayed the return to normal. A short strike also made matters worse.
There was also another important adverse factor quite outside the control of the Companies---the high price of coal. Before Partition, East Bengal’s requirements of coal were supplied from India, but thereafter the hostility between the two countries made it unsafe for East Pakistan to depend entirely on that source of supply. More expensive coal was, therefore, imported from Poland and China. The Pool price was then determined by averaging out the cost of imports from all sources and this was the price that the Companies had to pay. The Pakistan Eastern Railway, however, was supplied with cheap Indian coal at cost price. The Companies thus suffered a double blow. Not only were their own costs increased, but in addition their main competitor was given a great advantage over them and was able to charge rates which would otherwise have been uneconomic.
At the same time, because of the decline in the passenger traffic carried by the Joint Companies, three of the most important of the passenger services were responsible for a loss of over Rs. 34,000 per month in that year.
Altogether the position of the Joint Companies at this time was very unhappy and in a careful note to the Chief Minister in 1957 it was stated that the Companies’ operations in Pakistan had produced a deficit of Rs. 20 lakhs in 1957 and this figure was expected to rise to at least Rs. 35 lakhs in 1958.
Very little help from Government was forthcoming and indeed in the mood of East Pakistan at that time it would have been unrealistic to expect much practical assistance. An understandable, though perhaps misguided nationalism---or rather provincialism---began to play an important part in East Pakistan’s economic policy. The Inland Water Transport Authority, set up in 1958, provided a useful instrument for that purpose. The Authority set itself to encourage Bengali enterprise and although this sounds reasonable enough, in practice it meant that a large number of motor launches were licensed for political reasons, without any consideration being given to considerations of safety or efficiency. The new operators were given substantial help, when 400 Gray Marine Engines, provided by the ICA at a nominal price, were made available to them, so that they were able to operate at uneconomic rates. Many of the launches were driven by unqualified persons and they plied for hire in dangerously exposed waters in complete disregard of the provisions of the Inland Mechanically Propelled Vessels Act. Even the local press observed that the launches were death traps and that ‘hardly a month passes when a motor launches does not capsize, causing serious loss of life---the number at times running into three digits’. It was impossible for well organised Inland Water Transport concerns, which meticulously observed safety regulations and ran to fixed timetables, to compete with these reckless operators. Established operators felt, with much justification, that unfair advantage was being given to the newcomers in many ways. In nearly all developing countries, however, nationalist feeling tends to override all other factors and there can be no doubt that the presence of large foreign owned 1WT operators was resented by large sections of the public and regarded by Government as an embarrassment.
Clearly there could be no question of the rehabilitation of the fleets out of revenue---and yet such rehabilitation was essential if the Companies were to survive. They could not long continue to depend on ageing fleets and in 1956 they had drawn up a Development Programme which was estimated to cost Rs. 97.50 lakhs spread over the years 1957-1961. The most important items for which it provided were two passenger/cargo vessels, a main line tug, eight flats, a tanker as well as a number of barges and launches.
The Companies entered into negotiations with the International Bank for Reconstruction and Development for a loan to finance this programme, but nothing came of these talks.
The Formation of Pakistan River Steamers Limited
Although the fleets of the Joint Companies had been physically divided between Pakistan and India in 1951, in the mood of economic nationalism which we have described, it was natural that the Government of East Pakistan should be anxious to see the process of separation carried further. They felt it important that the Pakistan fleets should no longer belong to companies which also operated in India, even though those companies were incorporated in London. The Companies’ officers also felt that their connection with India was resented and often led to their receiving unfavourable treatment from the local administration. There was, indeed, little chance that the Companies would receive the positive support which they needed from Government until separation was carried to its logical conclusion.
Much thought was given by the Directors as to the method by which separation could be achieved and several different schemes were propounded. Under one scheme, known as Simple Separation, the assets of RSN in either India or Pakistan would be transferred to a UK Subsidiary and a similar arrangement would be made by the IG. As an alternative, each Company might have two subsidiaries, one for India and one for Pakistan.
A second scheme, referred to as ‘One Company, One Country’ provided for the formation in each country of a company owned by RSN and IG. Yet a third plan envisaged that one of the Joint Companies would continue to operate in India and would buy the Indian assets of the other company, leaving that other company to operate in Pakistan. While these matters were being considered, the idea of a joint venture with the Government of Pakistan gained prominence and it began to seem as if some form of partnership with Government was essential. At one stage the PIDC expressed considerable interest and a joint venture between that organisation and the Joint Companies was advocated by Faruque. To an outsider it might seem that the Directors delayed too long over deciding for one scheme or another, but the matter was not as simple as that. Any of the schemes would have involved complicated problems of balancing charges---and moreover, any of them would have required the detailed approval of the Government of Pakistan.
While all these matters were being debated the Governments of Pakistan and East Pakistan virtually dictated the policy to be adopted. A Company known as Pakistan River Steamers Limited was formed in Pakistan, in which the Government of Pakistan participated through the agency of the East Pakistan Railway. The Railway Flotilla of tugs and barges was absorbed by the PRS.
Shares in the Company were allotted as shown in the following table and the assets of the Joint Companies were written down to bring them in line with the sale figures at which they were transferred to the new Company.
| Ordinary Shares of Rs. 10 each | Preference Shares of Rs. 10 each | Debenture Stock Nominal Value | |
|---|---|---|---|
| RSN Co. | 10,00,000 | 6,59,817 | 23,96,880 |
| IGN and R. Co. Ltd. | 10,00,000 | 4,90,854 | 23,96,880 |
| Government | 10,00,000 | 3,49,329 | — |
It was agreed that Messrs. Macneill and Kilburn would be appointed Secretaries of the Company for a period of ten years and that the Board would consist of two representatives of each of the Companies and two of the Government. Provision was made for 5,00,000 of the Government shares to be offered to the public later. When the offer was made the public took up only shares to the value of Rs. 56,884 and the balance were allotted to the Pakistan Eastern Railway.
Although agreement was reached in principle and the new company was formally incorporated with a nominal capital in 1959, it was not until 1st January 1961 that the agreement became effective and the Pakistan fleets of the Joint Companies were transferred to the PRS.
The Rehabilitation Plan
Even before the formation of PRS, Macneill and Kilburn, in association with the Directors of PRS, had prepared a detailed plan for the rehabilitation of the Joint Steamer Companies’ fleet. It dealt with inland cargo and passenger vessels as well as with the Chittagong sea-going fleet and the carriage of bulk oil.
In the case of the cargo services the authors of the plan recognised that as far as traffic from Chalna was concerned, IWT in East Pakistan was engaged in comparatively short hauls---and was indeed in the nature of lighterage---and that it was therefore advantageous to use dumb craft rather than self-propelled carriers. The Plan therefore envisaged the phased replacement of 28 aged flats by 60 pusher barges of approximately equal total tonnage, as well as the construction of seven new powered vessels. Of the twelve towing steamers in service, two aged units were to be discarded during the Plan period, and five new tugs were to be built---two as pusher tugs and three as side-cum-pusher tugs.
The high cost of coal had made the passenger vessels uneconomic to run and it was therefore proposed to convert five of them to diesel propulsion. Regard was also had to the fact that the size of the vessels used ‘necessitated a limitation on speed so as to eliminate danger to smaller craft . . . and also to reduce the effect of erosion of banks from the wash of the steamers’. The planners considered that these difficulties could be minimised by the use of hydrofoil and they proposed the construction of three such craft. The Plan also proposed the conversion of four main line towing steamers from coal burning to diesel propulsion.
The Chittagong sea-going fleet did not require much addition or replacement, since the PRS had acquired not only the fleets of the Joint Companies, but also the flotilla of nine tugs and 30 barges formerly owned by the Pakistan Eastern Railway.
On the other hand, considerable additions to the fleet were necessary to cope with the requirements of bulk oil services. Four vessels, with a capacity of about 60,000 tons per annum had been converted for this purpose before the formation of PRS, but it was now estimated that the demand would be not less than 120,000 tons. It was therefore proposed to purchase a suitable second-hand vessel and to order a second tanker from the Karachi shipyard.
The Plan went into great detail and was correlated with the Second Five-Year Plan of the East Pakistan Government. It was to be implemented in the five years 1961-1965 and it was estimated that it would cost Rs. 415 lakhs, of which Rs. 240 lakhs would be in foreign exchange, since steel, machinery and equipment would all have to be imported. PRS would need a loan of this amount for the foreign exchange, but it was reckoned that PRS could meet all local expenditure and could service the loan and repay it in ten years. The rupee expenditure would cover labour costs, and shipyard expenses. The construction of vessels would be carried out in the new shipyard at Khulna.
Further Difficulties
It is impossible not to be impressed with the thoroughness of the Plan and if all had gone as expected PRS would have become a highly profitable concern. All did, in fact, seem to go well for the first few years and profits rose from Rs. 12 lakhs in the first year to Rs. 37 lakhs in 1963, thus permitting payment of dividends of 2%, 4% and 5% in 1961, 1962 and 1963 respectively. These overall results, however, concealed a built-in weakness. The number of passengers carried annually by the Joint Companies in East Pakistan had declined steadily from over 11,000 in the first three years after Partition to just over 2,000 in 1961, and when PRS took over the passenger services they were losing money. As already explained, the old Hindu travelling public had largely disappeared, but even more important factor was the rapid increase in the number of small launches plying. This was one of the few industries into which a man with a relatively small capital could enter and as we have seen, it was politically advantageous to Government to license a large number of operators. Initially they confined their attentions to feeder services, but by 1953 they had moved on to the trunk lines. By 1964 there were five daily launch services from Dacca to Khulna, four from Dacca to Barisal and more than twenty daily services between Dacca and Chandpur. A similar situation prevailed on the Narayanganj-Goalundo route. These services competed successfully with the PRS and more than one officer of PRS took the view that they were better suited to conditions in East Pakistan than the large vessels of PRS. This view was confirmed by the experience of the East Pakistan Inland Transport Corporation, which also operated large, modern vessels without success.
Some of the PRS passenger services were abandoned, but any curtailment was limited by the terms of the Agreement made in Rawalpindi when PRS was formed. Minute 5 of that Agreement laid down that ‘as the Rupee Company is a public utility concern, it is expected that it will plan to run its services so as to cover all the water transport routes considered essential in the national interest so long as the Rupee Company is able to make a reasonable profit’. For three years, therefore, PRS was obliged to continue operating the passenger services at a loss since that loss was counterbalanced by the profit on the cargo services. In 1964 the overall position changed dramatically. Overall profits were negligible and it was clear that there would be substantial trading losses in the following years. The PRS Board therefore considered themselves relieved of the obligation imposed by Minute 5. In practice, however, any serious reduction of the passenger services would require Government approval and although the compulsion to buy expensive China coal made prospects worse for 1965, PRS contented itself for a time with closing certain very uneconomic routes.
In 1964 the loss on the passenger services was just over Rs. 19 lakhs and in 1965 it was reckoned that the cargo services had subsidised the passenger services to the extent of Rs. 70 lakhs since the formation of PRS. This could not be allowed to continue, particularly as there was a heavy overall loss in 1965. In January 1966 the PRS Board resolved to seek the permission of Government to close the passenger services. This caused consternation in official circles and after much argument Government agreed to pay a subsidy, later fixed at Rs. 8 lakhs, in consideration of PRS continuing the services throughout 1966. At this stage a proposal was made for the formation of a streamlined, subsidised subsidiary of PRS to handle the passenger services. This proposal came to nothing and the argument continued as to the amount of the subsidy. For 1967 it was fixed at Rs. 5 lakhs.
In February 1968 the Government of East Pakistan declined to renew the subsidy and left PRS free to take what action it considered necessary with regard to the passenger services. The Board decided to retain only two passenger services and to close the rest with effect from 1st August 1968. This soon led to a public outcry and to pressure by MPA’s and MNA’s and Government eventually agreed to grant a subsidy of Rs. 18.50 lakhs up to 31st July 1969. Various adjustments were subsequently made and in the end subsidies of Rs. 11.80 lakhs, Rs. 11.70 lakhs and Rs. 12 lakhs were paid for 1968, 1969 and 1970 respectively. Thanks to these subsidies there were small trading profits in those years, but there was a considerable backlog of losses carried forward and PRS was not even able to pay the preference dividends.
Although the passenger services were the principal cause of anxiety in this period, cargo services continued to suffer from the adverse factors which were at work in the period before the formation of PRS. They have already been described and need only be briefly mentioned. First, there was the strong position of certain rival services to obtain a disproportionate share of the transport of goods imported by the Civil Supplies Department. It had been thought that once PRS had been formed as a rupee company that difficulty would disappear, but that did not prove to be the case. Although there was not much positive anti-foreign feeling, nationalism was very strong and it was politically dangerous for Government to shew favour to a company in which two-thirds of the equity was foreign owned.
Secondly, a growing proportion of imports through Chalna was only transported by ITW to Khulna, whence they were distributed by rail. The resulting replacement of long haul by short haul traffic necessarily affected profits adversely.
Thirdly, there were increases in the tax or fuel oil and in the price of coal.
Finally, IWT passenger carrying capacity in Bangladesh had continued to increase. Not only had the policy of freely licensing new private operators remained in force, but the EPITS had also placed new vessels on some routes a fleet originally intended for lighterage at Chittagong was placed on inland routes.
Disinvestment
A very detailed report drawn up by M. and K. in 1965 forecast a distinct improvement by 1968, but it was necessarily based on assumptions some of which were questionable. The Directors of the Joint Companies could feel no confidence that a profitable future lay ahead and in 1964 they began to consider the possibility of disinvestment in PRS. Several difficulties had to be faced. In the first place the Rawalpindi Agreement prevented them from disposing of their shares in PRS before 31st December 1971. This proviso could, of course, be waived by Government and there was the hope that, in view of prevailing sentiment against foreign ownership or control of public utilities, Government would approve of disinvestment by the Companies. One possible purchaser might be the Government of East Pakistan, but in spite of the sentiment just mentioned, the policy of that Government at time favoured disinvestment in industry. Where Government agencies, such as the P1DC had invested in industry, the investment was regarded only as a temporary expedient until disinvestment was possible. There was also the consideration that the financial position of the East Pakistan Government was precarious.
As far as possible private purchasers were concerned, future prospects were too uncertain to be attractive.
A second difficulty was uncertainty as to whether or not any sale proceeds would be remittable to UK. In 1954, in order to attract foreign investment, the Government of Pakistan had announced that, subject to certain conditions, investors after that date would be allowed to withdraw their investment. As time passed there was a tendency to interpret this announcement in the negative sense that investment before 1954 could not be withdrawn. Nevertheless enquiries from officials in 1964 elicited the information that under certain conditions capital could be repatriated if a concern was closed completely. Government approval to such repatriation would be required and it seemed likely that better terms could be obtained in a deal with Government if the Companies did not seek to repatriate their capital. The Directors nevertheless attached importance to the right to bring their capital home.
In spite of these obstacles, future prospects were considered so uncertain that at a meeting of some of the Directors of the Joint Companies with the Dacca Chairman of M. and K., it was decided in principle to seek disinvestment. The timing of the submission of such a proposal was obviously important and although informal soundings were taken in Dacca, some delay seemed necessary when an IWT Enquiry Committee was set up under the Chairmanship of Commander R. N. Bajwa. It was not until 15th July 1967 that the matter was put on a more formal basis in a memorandum submitted by two London Directors to the Secretary of the Department of the East Pakistan Government concerned.
It is not necessary to follow in detail the seemingly endless discussions, formal and informal, with Ministers and officials in Dacca, which followed this proposal. The most important of them were those between representatives of the London shareholders and the Finance Minister, Dr. M. N. Huda. He was sympathetic from the outset and fully recognised that Public Companies must put their shareholders interests first. Nevertheless, in 1967---presumably because of the general policy of the Government---he was not in favour of increasing Government’s stake in PRS.
In 1968 two developments took place. The first was the recognition by the Finance Minister of the right of the Company to close the passenger services. The second event of importance was the preparation by a former Chairman of PRS of a careful survey of the position and prospects of PRS. He concluded that if the subsidy were continued at its current rate, there would be a net revenue surplus in 1969 and 1970, but that it would be unwise to rely indefinitely on this form of assistance. An alternative would be the reorganisation of PRS, with a considerable curtailment of the passenger services and a 10% increase in freight rates.
Thorough and useful though this report was, it did not deflect the London Directors from their determination to disinvest---nor was it intended to do so---but the matter did not appear to be as urgent as had been thought. In January 1969 London representatives again met Dr. Huda in Dacca. At that meeting, although Dr. Huda thought that it would be better if the purchase were made by a private partner, he was much less unfavourably disposed to the idea of purchase by Government than at the earlier meetings and he undertook to put the proposal to the Cabinet, since ‘he supposed that sooner or later, the Government would have to take over the private shares in PRS’.
There was then some slightly unreal skirmishing about the question of price, but this was left for later negotiation. Throughout these discussions the London Directors were careful not to make remittability of the proceeds a pre-requisite to the sale, but on the other hand not to preclude themselves from applying for a remittance when the sale was concluded.
The London Directors were also at this time, with Dr. Huda’s concurrence, examing the possibility of sale to third parties. One East Pakistani and two West Pakistanis expressed interest and made detailed enquiries, but no concrete result followed. In any case, it is doubtful if the East Pakistan Government would have agreed to a purchase by West Pakistanis.
If Dr. Huda had remained in office it is possible that a sale to the Government of East Pakistan might have been negotiated, but any hopes of this were dashed by political developments in March 1969. The riots in Dacca combined with other facts to bring about the replacement of Field Marshal Ayub Khan by Field Marshal Yaya Khan. Stern repression by the Martial Law Authorities followed. The Ministers in East Pakistan were then replaced by ‘hard line’ generals who were too preoccupied with the problems of law and order to give attention to IWT---and some of them would in any case not have understood the economic issues involved. The whole question of purchase remained in abeyance until the secession of Bangladesh in 1971 and the establishment of a government under Sheikh Mujibur Rahman. That Government was firmly committed to the policies of the Awami League, which included the nationalisation of many industries and on 26th March 1972 the assets and liabilities of PRS (which had been renamed Bangladesh River Steamers Ltd.) were transferred to the Bangladesh Inland Water Corporation.
Now that PRS had been nationalised, protracted discussions took place as to the compensation to be paid and the procedure followed was somewhat unusual. The Corporation did not take over the shares, but the assets and liabilities of PRS and one would have expected the compensation to be paid to PRS rather than to the shareholders. The Government of Bangladesh decided, however, that compensation would be paid direct to the sterling shareholders---i.e. to the IG and RSN (Holdings). In 1976 the Government provisionally valued the Ordinary and Preference shares of the Companies at the equivalent of £465,417 and £532,466 in the case of the IG and RSN (Holdings) respectively. Twenty per cent of the compensation was paid during 1975 and a further 30% in 1977. The balance was paid in June 1978, without any further discussion as to finalisation of the provisional assessment.
The Joint Companies were never furnished with details as to the valuation, but in view of the fact that payment was prompt and in sterling, the Directors decided to accept it. The Debentures of PRS were not included in these valuations and were the subject of separate negotiations, as a result of which the Directors agreed to accept 75% of their face value in settlement.
There is always scope for argument as to the fairness of compensation paid when nationalisation takes place, but it must be said that in comparison with other developing countries, Bangladesh has behaved well in this matter.
Certain items remained outstanding. The Companies had securities in Pakistan but the Government of Pakistan refused even to allow the interest on those securities to be remitted to the UK. There was no justification for this refusal, but it has not up to now been possible to persuade the Government to take a reasonable view. There were also securities in Bangladesh, but after the secession of Bangladesh, neither Pakistan nor Bangladesh would accept responsibility for payment of interest or of any sale price.
Neither of these outstanding matters was sufficiently important to prevent the Companies from taking decisions as to their own future. In the case of the IG it was to the advantage of the shareholders to go into voluntary liquidation. Mr. Andrew Hamilton of Viney Merretts, the London firm of Accountants, was appointed liquidator and a first distribution of 43p per share has been made. The shareholders have in fact fared better than seemed likely at any time after the breakdown of the attempt to sell the Company to the Government of East Pakistan before the secession of Bangladesh.
The case of the Rivers Holdings was somewhat more complicated. Several parties appeared at one time to be interested in buying the Company for the sake of its accumulated losses for purposes of Capital Gains and Income Tax. The Company, however, had a contingent liability in respect of the loan granted by Binny & Co. (London) Limited in 1964. Gray Dawes, who had subsequently taken over this loan, had waived the interest for so long as the Company remained unprofitable, but in the changed circumstances that condition would no longer be satisfied and all the interested parties except the Inchcape Family Trust decided not to proceed with offers. An arrangement was then made with Gray Dawes by which the Company paid a lump sum of £53,000 in full settlement of the claim for interest. The Inchcape Family Investment Trust then agreed to buy the shares in Rivers Holdings for 50p per share, subject to the receipt by the Company of the compensation for the PRS Debentures. In March 1979 the second instalment of that compensation was received and the Family Trust then revised its offer in the sense that 45p per share would be paid immediately, the remaining 5p being paid when the final instalment was received. This offer was accepted and the shares passed to the Family Trust. The Company had for a considerable time been kept going by the help of the Inchcape Group and it is satisfactory, therefore, that in its final stage it should have passed into Inchcape family hands.
The termination of the activities of the IG and the RSN can truly be said to mark the end of an era---a period in which British enterprise transformed Assam from a jungle infested by wild beasts to a prosperous Province of India and contributed much to the development of the economy of north-east India. In these processes the Joint Companies played an indispensable part and all who have been concerned with them can look back with great pride on a long tradition of service to the old undivided India.
It is now nearly sixty years since the present writer travelled on one of the Companies’ ships on his way to join his first station in the Indian Civil Service. Since then he has often been a passenger on vessels whose very names bring back echoes of the past and he has made many friends amongst those responsible for the operations of the Companies. He has also learned to have a great respect for the masters and serangs on whom so much depended and for the crews who so often faced danger on the vast rivers of Bengal. It is, therefore, with sadness that he gives a last salute to the Joint Companies and to all their employees, of all ranks.
Mainline Services
Feeder Services
Despatch Services (Express Cargo-Passenger)
Mainline (Cargo) Services
Main Line (Passenger-Mail) Services
Feeder Services
Through Services with Railways
Through Services with Roadways