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Railway Rates in Re 032634 MBP
Railway Rates in Re 032634 MBP
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STUDIES IN INDIAN ECONOMICS
EDITED BY
C. N. VAKIL
UNIVERSITY PROFESSOR OF ECONOMICS, BOMBAY
STUDIES IN INDIAN ECONOMICS
A series of volumes dealing with the Economic history and
problems
of Modern India
EDITED BY
C. N. VAKIL
UNIVERSITY PROFESSOR OF ECONOMICS, BOMBAY
and M. A. Mulky.
BY
R. D. TIWARI, M.A., LL.B.
EDITED BY
C. N. VAKIL
UNIVERSITY PROFESSOR OF ECONOMICS, BOMBAY
BOMBAY, )
lonafide research.
Some interest has b^n aroused in more times in
tfpent
railway problems, chiefly in connection to be
wit^|^iflges
introduced under the new constitution. The provision for a
Bombay C. N. VAKIL.
University of
f
15th January 1937.
9 )
CONTENTS
Page
EDITOR'S PREFACE v
CHAPTER I
CHAPTER II
Page
cotton mills : rates on raw cotton. Rates on mill stores.
Rates on piece goods. Conclusion.
CHAPTER III
WOOLLEN INDUSTRY 88
Basis of railway rates.Analytical study of railway rates
policy. Cawnpore mills rates on raw wool. Rates on
:
CHAPTER IV
CEMENT 122
Evolution of the Indian cement industry. Its organisa-
Page
CHAPTER V
GOAL ICO
CHAPTER VI
SUGAR 201
Railway rates policy. Basis of railway rateson sugar.
The basis of rates charged on jagree and molasses. The
on sugarcane. Railway rates in the pre-war
basis of rates
CHAPTER VII
Page
analysed. Railway classification. Current rates on the
N. W. Railway. Pre-war rates compared. The higher
incidence of rates on internal traffic. Rates on the E. I.
Railway during the year 1932. Rates on E. I. Railway
and N. W. Railway compared. Relative position of pre-
war and current rates. Rates on the 0. R, R. Section.
Rates on the N. W. Railway to Howrah. Rates on the
G. I. P. Railway. Preferential rates. Pre-war rates com-
pared. Higher level of rates on the G. I. P. Railway.
Rates on the B. B. & C. I. Railway. Pre-war rates, Current
rates to internal centres. Flour-milling industry. Tariff
CHAPTER VIII
PAPER 283
CHAPTER IX
INDEX. 331
CHAPTER I
2
railways in the leading industrial countries .
Working of the
Indian railways are no exception to this general rule.
The preponderant proportion of constant costs reveals the
essential characteristic of the railway industry which pervades the
entire rate policy. Railroad operation is subject to decreasing
costs. Doubtless expenses increase with increase in traffic, but not
in direct proportion. A part of the total expenses does not increase
and the other part increases proportionately with the traffic,
at all,
while the expenses in the residual category, which form the bulk,
8
occupy an intermediate position This shows the enormous .
x to deal with 1,000,000 units of traffic, 5,000,000 units will cost not
5x, but ix * (x X 5x) 3x.
"
Vide, The Elements of Railway Economics ". p. ,50.
THEORETICAL BASIS OF RATES AND FARES 3
though not full, to defray the capital costs. The rates thus charged
are known as exceptional or special rates, which we shall presently
examine. This brings to relief the fact that railway industry is
2
subject to decreasing costs or increasing returns until the
maximum operating capacity of the plant is reached.
' '
1. The term prime cost is here used in the usual sense of the special
cost of the traffic, meaning the cost which would have been saved if the
an exception.
Another equally important and a yet more controversial
feature of the railway industry may now be studied. It_jg_gome
time^said that railway industry is essentially one of joint costs.
The expenses of the railway service are incurred jointly and most
aptly illustrate the production of a number of commodities by a
1
single plant simultaneously at joint and indistinguishable costs.
The classical economists illustrated this principle by the example
of the joint production of wool and mutton beef, hide and ;
for the plant were the only expense incurred in rendering the
service the case would be one completely of joint cost. There are,
2. Vide, Supra.
3. Vide, Supra.
4. Vide, Principles of Economics, Vol. I, p, 221.
THEORETICAL BASIS OF BATES AND FARES 7
the extra expenditure incurred especially for any one item of the
1
joint product is extremely small"
With due deference may, however, be submitted that the
it
1
if the other were not wanted or used at all. Thus, there is
1
ail of the G. I. P. catered only for first wd
.second class passenger
traffic7tilTasTale~as"I331, and the Frontier Mail follows the same
practice even to-day. It follows, therefore that the most essential
differentiating characteristic of railroad transport is that the
services it provides are not physically inevitable that is, the ;
railway service. If, for example, facilities for passenger traffic are
increased, it does not follow that those for goods traffic are pari
passu increased or if the travelling facilities for first class
:
passengers are increased it does not inevitably follow that those for
passenger traffic.
Further, the transport services provided by a railroad unlike
the production of several commodities by a single great plant
simultaneously, at joint and indistinguishable cost none of which
can conceivably be produced alone, can be varied according to the
traffic requirements, and to an extent limited only by the demand,
after the line began to work no goods traffic was offered, but on
the contrary, passenger traffic came beyond all expectations of the
railway authorities. Faced with this most difficult situation, the
railway manager can readily adjust himself to the changed con-
ditions.Necessary readjustments can be made in the plant, and the
transport facilities for passengers can be increased without at the
same time increasing the facilities for goods traffic. This elasti-
city would hardly be feasible if the railway facilities for goods and
passengers were joint products. In the case of joint product-
tion, say mutton, wool and skin, the increase in the output of one
one of the joint products fails to fetch a price, there being almost
no demand for it, the total cost would remain unaltered. This is
of course an extreme case but nevertheless true and is not in-
frequently met with in the industrial field. For instance, molasses,
which is a bye-product of sugar, produced in some of the Hawaiian
Sugar Factories, was actually thrown away, there being no
demand for it nay, they had to incur some cost even in throwing
it away.Sugar and molasses are joint products and therefore the
production of the former necessarily implies the production of the
latter. Further, it should be pointed out that the production of
molasses does not involve any costs, distinct from those necessary
for sugar, and if it did the Hawaiian Sugar Factories, referred to
above, would never have cared to incur such expense when there
was no demand for it per contra, they would have endeavoured
;
This view point seems to be more in accord with the true nature of
the railway industry, and hence we accept the view taken by
Professor Pigou that joint supply does not prevail in railway
transport in a fundamental and general way as is supposed by
1
some writers.
1. Supra, p. 265.
2. Vide, "Principles of Economics" Vol. II pp. 4045.
THEORETICAL BASIS OF KATES AND PARES 13
petition were allowed between two points 'A' and *B' ) the railway
rates would be determined by the separate competitive costs
"
of each kind of service. It is generally agreed," says Professor
"
Pigou, that, except in so far as the transport services sold to one
set of purchasers are supplied jointly with those sold to another
set, simple competition would tend to bring about a system of uni-
1*
form rates per ton-mile for similar services." The rates for
similar services would be so arranged that the demand and supply
price would coincide and a separate charge would be made if
;
2. Supra, p. 267.
14 BAILWAY KATES AND PARES
cost or will cost him. After calculating his cost and having
made due allowance for his own personal remuneration and for
THEORETICAL BASIS OF BATES AND FARES 15
service ?cannot
It be gainsaid that the cost of service must
necessarily loom large in the manager's eyes, because he has to see
that not only should the receipts be adequate enough to defray the
total expenses incurred in running the undertaking but that
sufficient surplus is left to cover the interest charges on the capital
invested.
the fixed charges and very few of the operating expenses can be
assigned, except rather arbitrarily, to the various services. The
costs are incapable of definite allocation. The cargo of a single
freight train consists of a medley of commodities. To allocate
the costs, thus incurred, to individual articles, from amongst
numerous which have acquired different place
articles carried,
R-3
18 RAILWAY KATES AND FABES
1 '
set back. Not only would the rigid application of the cost of
service' principle hinder all transportation of low grade traffic;
it would also prevent any development of long distance traffic, and
ultimately spell the ruin of the country. Even the equity of the
principle, as applicable to railways, is more apparent than real.
Cheap things and of common use ought to be charged less than the
1
capacity to the merchant or manufacturer. This great
obligation upon the carriers shows the delicacy of the task of
fixing rates. In fact rates have to be constantly modified
in order to keep pace with theever changing conditions of the
country. So, on examining the goods or passenger tariffs of
railroads in advanced countries we find that they frequently
deviate from the cost of service principle. The cost of service
favours a part of the traffic at the expense of the rest. Even if by
the cost of service is meant average costs, it would be impracticable
as well as inequitable to base rates on average cost which fluctuate
company, but with this important difference that while it has the
strongest interest in protecting its established industries against ruinous
competition from abroad, it may desire to share in some degree in their
development and prosperity by way of reward.
Ripley, "Railway Rates and Regulation."
2. Sakolski, p. 5.
3. The fact that the railroads operate under the principle of joint costs,
as well as of decreasing costs, renders difficult the application of cost of
1
general perferably the former.
taxation, If both direct and
indirect benefits to the community resulting from a transport
service do not cover the cost, it should not be undertaken. *
4
to obtrude itself automatically .
1. "All the must among them coverall the expenses and leave,
rates
rate. Inter te, the rates must be so adjusted that each item of traffic
bears its fair share of the total cost of the entire railway service."
W. M. Ac worth, p. 74.
the proportionate share of the total costs, were to be the sole test
of the utility of carriage, a very valuable part of modern commerce
would not have grown to any considerable magnitude, because the
place utility created by transport and measured in direct money
THEORETICAL BASIS OF RATES AND PARES 23
"
iron horse ". It has been rightly said that cost of carriage is a
function of the rates, not the rates of the costs. No doubt, dis-
crimination confers very wide powers on the traffic manager,
because the gap between a rate which is averagely profitable
and a rate which is only just better than no rate at all is a
very wide one and therefore the aid of State regulation is sought
"
lestthe railway should use the powers indiscretely. I am
"
therefore confirmed, observed Profersor Edgeworth "in the
deduction that discrimination accompanied with a moderate control
is likely to be better, both for the customers and the monopolist,
1
than monopoly forbidden to discriminate" The value of
2
service principle is a very important form of discrimination ,
System. Here the rich contribute of their share to help the poor.
Public interest is best served under this arrangement and at the
same time the railway plant is also fully utilised. The com-
munity, therefore, gets more service on the differential rate
schedule than from the uniform rates. In short, the value of
service principle promotes flexibility of rates, high utilisation of
railway plant and economy in its operation.
The value of the service principle as a guide to railway
policy is potential of immense benefit to the community, where
it isjustly and cautiously applied and where the rates are con-
tinually adjusted to changing economic conditions. It is best
adapted for a dynamic society. It renders wonderful help to the
key industries which would have little chance to survive if the
rate structure were based on purely cost of service principle,
Important industries like salt, iron and coal are flourishing to-day
because of the differential rates quoted to them. The articles
which these industries cater for are generally light and bulky j
26 RAILWAY RATES AND FARES
may not materially affect the volume of traffic but all the same it
traffic is slightly different from the case noted above. In the case
of articles, which are necessaries of life, having inelastic demand,
like sugar, coal, food grains, etc., a limited increase in rates will
1
not readily restrict the consumption of the commodity , so that
whereas the traffic would remain unaltered, the receipts would
record an appreciable increase. Thus, in the case of necessaries of
life, an increased freight rate is apt to become a charge upon the
upon it. Thus, what the traffic will bear may mean anything.
capable of being raised still higher if the demand for the com-
modity is inelastic. Even a rate apportioned to the full extent
of the ability of the article to bear it is bound to be extortionate.
What company compels the shipper to pay, by taking an
a railway
unfair advantage of his weak position, cannot in fairness be
attributed to the ability of the shipper to pay it. For instance,
the shipper whose factory is located in a certain place is no longer
free to accept or reject a given rate ;
he is committed to the task.
Railroads try to absorb all the place value created. Here charging
what the traffic will bear is interpreted as charging all that the
traffic will bear.No doubt, this tendency is checked by com-
petition, but does not offer complete protection to shippers and
it
lying between these two extremes, one must give due consider-
ation to the cost of service to the carrier and the competitive
conditions under which the service is performed, the value of the
service to the shipper, the value of the article, and its importance
to the industrial progress of the society. The interests of the
carrier, the individual shipper, and the general public must be
" 399.
1. Vide, Principles of Economics", Vol. II, p.
2. Without any prejudice to the problem of granting transport subsidy
to national industries.
p. 227.
32 RAILWAY RATES AND FARES
complex, and the transport service, which caters for these complex
wants, has become more complex. However, with the help of
scientific methods of cost accounting and more accurate railway
stimulus to efficiency. They nerve the shrewd and the alert and
weed out the inefficient. So the State in America, in order to
keep the railroad authorities alertand efficient allows fair
only
profits to those corporations which are under efficient and
honest management. In other words, the State so regulates the
rates and fares charged on the railways as would yield a return on
the capital expenditure just enough to attract necessary investment
under honest, efficient and economical management. This brings
to one most important characteristic of American railroad
relief
both to the public and the carrier, in as much as the rate regulation
is free from the gambles of the party-politics and imparts certainty,
an essential condition for the progress of trade and industry.
return on the capital. In fact the Act has liberated the railway
companies of the State control, yet the change has been little short
of full nationalisation of railways. This is explained by the fact
"
that section 20 of the Act establishes a Court styled the Railway
Rates Tribunal ", vested with wide permanent jurisdiction in
regard to railway charges.
"
The English Act fixes the standard revenue ", a revenue
which a company with efficient and economical working and
1
management would yield, based upon the revenue of 1913. The
Railway Rates Tribunal, an essentially judicial body, is made
responsible to so fix the standard rates as would yield the standard
revenue. In event, however, of the net revenue increasing sub-
stantially above the standard, eighty percent, of the surplus was
CONCLUSION
This is, in short, the problem of railway rates. The task of
fixing a reasonable rate is at once most delicate and difficult ;
COTTON
Raw cotton for transport by rail, has been sub-divided into cotton
full-pressed, half-pressed and loose. Taking up cotton full-pressed,
we find that in the General Classification of Goods, it is classified as
*
1. The Tariff runs: 'Over the G. I. P. Section this rate supercedes the
cally they must be able to provide better and more prompt service
;
which raises the cost of haulage slightly, but it should be the aim of
railway authorities to combat the physical difficulties, overcome
the disadvantages by scientific improvements and efficient operation
of the lines. The action of the Railway Board in authorising a
higher scale of rates on this line cannot be justified. A railroad to
be efficient must be able to quote lower rates and carry maximum
amount of traffic. Efficiency and lower rates help inter se.
Efficient working means the utilisation of the maximum carrying
capacity of the plant and lower operating rates. Maximum
utilisation of the plant and lower operating ratio help the railways
in developing traffic and tapping new sources which further help to
lower the operating ratio. The G.I.P. Railway which had the
good fortune of tapping the most fertile tracts should not have
COTTON 39
slept over in lethargy, thinking that traffic will come ; per contra,
itshould have tried to develop its cotton tracts. This step-motherly
attitude is being more resented now that the G.I.P. is owned and
managed by the State. It is now supposed to be worked by the
State for the benefit of the country and not for profits. We shall
therefore, proceed to examine the rates charged on cotton on this
line and their effects on the development of the industry. It shall
for a distance of 520 miles is Us. 1-11-5, but from Akola for
363 miles the rate is Rs. 1-14-9. Again from Kamgaon for 341
is higher than that from Akola.
miles the rate Similarly the
ratesfrom Amraoti, Murtijapur, Dhamangaon, Pulgaon and Hingan-
ghat, are higher than the rates from Nagpur and Wardha. The rate
from Nagpur works out at 633 pie per maund per mile, inclusive of
terminal and other charges and the rate from Wardha at *77 pie
per maund per mile inclusive of all other charges. Therefore,
the rates from Murtijapur, Dhamangaon, Pulgaon and Hinganghat
deserve a little more scrutiny. From Hinganghat for 493 miles
the rate is Rs. 2-0-1, but for a smaller distance of 386 miles from
Murtijapur, the rate is Rs. 2-0-8. The rate from Murtijapur works
out at 1 pie per maund per mile plus 6 pies. It will thus bo
seen that the rates on the G. I. P. Railway are always higher than
1 pie per maund per mile except where competition has forced
down the rates. Here the competition is with B. N. Railway which
carries cotton to Howrah.
Mr. Ghose while studying freight on cotton was confronted
1
with the same anomalies on the G. I. P. Railway in 1917 They .
f
l. See Mr. Ghose, S. C.- "Monograph on Indian Railway Rates,"pp,215-18
42 RAILWAY &AMS AND FA&ES
are of the year 1917. This being the only book dealing with
railway rates available to us and the reluctance of the railway
authorities to help us in the matter we shall accept these rates
for comparative study whenever necessary. Some of the important
cotton despatching stations on the G. I. P. Railway and the rates
therefrom are given below :
Mates to Bombay
(i) either the B. N. Railway should cancel its special rate from
Nagpur, or (ii) the G. I. P. Railway should raise its rates from
Nagpur to the same level as those from the intermediate stations
and lose thereby a part of its traffic, or (iii) it should at least reduce
the rates from all intermediate stations on the line to the level of
the Nagpur He, however, gave up his last, and the most
rate.
"
important proposal on the ground that it is doubtful whether this
will effect any reduction in the prices of a commodity like cotton
which fetches at the despatching stations in Berar Rs. 20 to Rs. 27
per maund, (if there is any reduction in the price at all the loss in
1
the railway freight will be more than 40 per cent) ". He, therefore,
advocated the increase of rates on both the G. I. P., and B. N. Railway,
as an escape from the impasse.
We submit that the remedy proposed was far from being effica-
cious. Though it would be
deny the idle to
fluctuations in the prices
of cotton, it cannot be accepted that the reductions in rates would
not have been properly availed of by the producers and the
consumers. Though the middlemen may speculate, the producers
and consumers proper protect themselves against the vagaries of
market and unhealthy speculation. The marketing of cotton is
highly organised and the big exporting firms as well as the managing
agents of the cotton mills have their wide stretched network of
agencies which study the conditions and make purchases on the
spot, and through the help of hedge contracts eliminate the
uncertainty of speculative fluctuations. The Japanese exporting
firms, for instance, have a highly efficient marketing organisation
by more than 60 per cent. Apart from these high increases we find
that the general increase in rates has been more than 30 per cent,
except in the rate from Khandwa which has been raised by 23 2 per
cent. only. Thus, the rates have been increased varying from
about 30 per cent, to 98 per cent.; they are excessive and anomalous.
quoted at present from Navsari works out at about -70 pie per
maund per mile. The maximum rate authorised for the 4th,
class is 62 pie per maund per mile to which terminal and other
charges have to be added. It is clear, therefore, that the maximum
rate is being quoted from Navsari. The rate from Broach is still
more interesting. In 1914 the rate was 4-1 per maund or '24
as.
pie per maund per mile. It was raised in 1916 to as. 4-6 or '267
pie per maund per mile and in 1919 to as. 8-2 or *485 pie per
maund per mile. The rate quoted at present is as. 11-5 per
maund or 678 pie per mile. It follows, therefore, that the B. B. &
C. I. Eailway has raised its rates on cotton to the maximum
authorised limit.
from Itola for 234 miles was Rs. 0-6-11. Thus the difference
between the two was more than double. During and after the
Great War, railways resorted to agreements and combination so that
those lines which quoted lower rates hithereto raised the level of
their rates. The B. B. & C. I. Railway, therefore, followed the
same policy and raised its rates twice, in 1916 and 1919. The
changes in rates from some stations were as follows :
present rates and cannot help repeating once again that the increase
has been very high. Of course it is difficult to accept that in view of
rapid rise in prices during and after the war, which had substantially
raised the working expenses, the B. B. & C. I. Railway should, as a
matter of justice, have enhanced its rates to maintain its efficiency.
If the pre-war level of rates was a paying one, there was no reason
why the B. B. & C. I. Railway should have raised the level of its
rates so high as to bring it in line with that of the G.
I. P. Railway.
prices of cotton were soaring, but to-day the rates are affecting the
cultivator adversely and need to be immediately revised. It is
of rates.
This was the position in 1932. Now the position has radically
changed. The railway authorities seem to have been shaken from
their traditional conservatism in matters of rate making by the
severe trade depression and the consequent necessity for better
efficiency and economy in transport costs. Railway rates have,
therefore, been substantially reduced as will be seen from the
following table :
Rs. a. p. Rs. a. p.
863 Rohtak 2 8 2 11
576 Multan City 1 13
265
9 296
2
744 Shahpur 10 10
685 Lyallapur Jn. 235 298
652 Montgomery 2 1 8 2 7 11
727 Ferozpur City 2 57 261
788 Gujrat 2 86 253
806 Sialkot Jn. 298 2 9 1
755 Lahore Jn. 270 249
788 Amritsar Jn. 289
It will be seen in the above table that the distance over which
cotton has to be carried before it reaches the port of Karachi for
export is greater as
compared with that from cotton tracts on the
"
1. The caprice <rf the Indus," aptly remarked the Director of Agriculture,
"has governed the country like an absolute despot. For the first
Rr-7
50 RAILWAY RATES AM) FARES
The increase in rates, as can be seen from the table, has been on
the averages about 80 per cent. No doubt this has been a very
heavy increase. It could be justified during the boom period, but in
normal times, not to talk of the present trade slump and catastrophic
fall in prices, it is questionable. The maxima as prescribed by the
Government were based view of the then existing price level and
in
the necessity for rehabilitating the railway system which was
starved during the war. Besides, it was the upper limit to be
reached only in times of need and not a normal feature of the
policy.
From the foregoing discussion it follows that the rates before
the War were lower on the B. B. & C. I. Railway as compared with
the rates of the N. W. and G. I. P. Railways, but the combination
amongst the railways after the outbreak of the War, and the rise of
prices led to an increase in rates so that the rate level on all the
railways was equalised, except on the G. I. P. Railway which has a
higher maxima. The increase in rates were stabilised at a higher
level in 1922, and continue to this day. The rates charged are
almost the maximum authorised. The Policy pursued needs a
radical revision on national lines.
The railway freight on cotton has been examined and the
necessity of its revision stressed. We have reserved the discussion
of rates on the cotton, both indigenous and imported, consumed by
the cotton mills within the country, to which we shall presently
turn our attention. The study of Indian cotton industry has for
Convenience been subdivided into two broad divisions, raw cotton
$nd local mill industry. But the division is primarily one of
COTTON 51
This table brings out clearly the important features of the rates
policy pursued by the G. L P. Railway. The rates, as can be seen,
are anomalous and preferential. Freight from Bombay to Jalgaon
for 261 miles is Re. 1-3-1, and to Amalner for 296 miles it is
Re. 1-0~4. The higher rate for a longer distance is justified on the
plea of alternative rate and the competition of the B. B. & C. I.
by the G. I. P. Railway from the port, help the imports more than
the Bombay industry proper, because, as will be seen later, the
cloth produced by the Bombay mills has to face the competition of
Cawnpore mills, because they have to pay Rs. 2-4-2 per maund
by way of railway freight although it is a concession rate whereas
their rivals are immune from the charge. This freight concession
is more useful only on those piece-goods which do not compete with
the manufactures of tlie local mills. Thus, Bombay mills are able to
Delhi
Amritsar
Cawnpore
Lucknow
Nagpur
Howrah
Shalimar
Madras
Bangalore
It will be seen from the above table that in the pre-war years,
the railways rarely quoted Owner's risk rates most of the rates ;
were Railway risk. This was a serious drawback of the then rates
policy. Fortunately this defect was removed after the rates were
Stabilised in 1922, and alternative O.R. rates were also quoted.
These O.R. rates, however, are generally higher than the pre-war
R.R. rates. When we compare the rate from Bombay to Madras
which was Re. 0-14-0 O.R. in 1913, and Rs. 2-2-3 to-day, the
increase amounts to about 144 per cent. This is indeed a great
handicap to the indigenous mill industry. It has to be noted that
Such a high increase has been effected in spite of the alternative sea
route available to Bombay mills. It seems that the railways did
not quote a lower rate here because the importers have no interest
in this rate they directly import at Madras. The study of rates
;
dominate the railway policy. The increase in R.R. rates has also
been more than 60 per cent. This was not felt in the boom period.
But to-day when the mills are working on an irreducible minimum
of profits the reduction in rates would be of great help to the
industry. The the prices cloth further strengthen the
fall in
of
AHMEDABAD MILLS
Next to Bombay Ahmedabad
is the most important centre of
freight.
transport charge depends, inter alia, upon the market price it fetches
and therefore the policy of charging to-day the same freight rate
which was fixed during the boom period can hardly be justified
when the price level is taken into consideration. Secondly, as can
be seen from the preceding table, the incidence of rates charged on
Indian industries is higher than that on the importers. It will be
recalled that the rates on raw cotton moving to the ports is lower
by 6 pies per maund when booked at 0. E., but the internal traffic
more than one line do not get the advantage of the telescopic
schedule on the total distance traversed. Railways, in their rate-
making follow an individualistic policy and like to be treated as
separate entities. This is quite clear from the rates quoted above.
We notice that both the railways charge the traffic irrespective of
the total distance travelled. Here of course the result of this
individualistic policy is not so serious because the rates quoted are
not telescopic, but it has to be noted that due to this vicious policy
both the trade in raw cotton as well as the cotton mill industry is
seriously handicapped. Further, the rates charged are almost the
maximum authorised by the Government. This policy is obviously
detrimental to the development of long distance traffic even purely ;
Dyes 13 4 12 3
Soda 5 10
bring them on a level equal to, if not lower than, the pre-war level.
The finished goods of the Ahmedabad mills are consumed in
Gujarat, but a greater part of the total output is despatched to
important towns throughout India. As the consuming markets are
mostly at a great distance from the mills the freight charged by the
railways comes to play a very prominent part in determining the
competitive capacity of the goods. Further, as the piece-goods turned
out by the mills are generally of superior quality they have to
stand the competition of the imported goods and the cost of railway
transport insome cases shuts out the market totally while in others
it imposes a heavy tax upon the industry. This foreign competition
assumes serious forms in port towns and in markets in the vicinity
of ports. Besides, the importers have an advantage over the internal
enquiries.
62 BAILWAY BATES AND FARES
shouldered the entire cost right from their inception to the present
day. The policy needs a corrective on national lines.
We shall attest the truth of the preceding remarks by specific
instances. Ahmedabad mills send their goods to following
important markets :
pre-war year.
Rates for piece-goods from Ahmedabad to :
It will be seen that the increase in some cases has been very
great. The rate to Bombay on piece-goods booked from Ahmedabad
was as. 11-1 at R.R., and to-day the rate is Rs. 1-1-5 per maund at
O.R. The increase as shown in the above table is further raised
when we take into consideration the difference in risk. It is
Cotton is the principal raw material and coal and mill stores
come next in order of importance. As regards coal supplies the
mills get their requirements from Iksaria and Ballarsha. We shall
have to discuss this question in a separate chapter but it should
be mentioned here that the railways have lowered rates on coal from
COMOtf 65
time to time though the policy pursued has been too conservative
and the reduction inadequate. Halting and half-hearted maasures
have been the sine qua non of the Indian railway policy in general.
Apart from this, the rates on cotton booked to the mills have
been frequently complained of. We shall, therefore, examine the
rates on raw cotton and mill stores in the present chapter. The
rates on cotton (raw) full-pressed booked to Sholapur have been as
1
follows :
anomalies and reduced the rates so that the mills have now been
placed in a better position in respect of raw cotton. This action of
the authorities is commendable. In face of these reductions
the continuance of the rate from Bombay to Sholapur at
Es. 1-8-1 is ridiculous and it is hoped that this will also be
goon reduced because it violates the differential clause. The
aforesaid reductions are due mainly to the reductions of the N. W.
Railway, though the G. I. P. Railway has also reduced its share to
H-9
66 RAILWAY RATES AND FARES
MILL STORES
The Sholapur mills, as previously referred to, get their stores
from Bombay and the freight charged per maund is submitted
below :
Lubg. Oils 10 11 10 11 10 11 10 11 10 11
Sago Flour 10 11 10 11 10 11 10 11 10 11
Drums Dyes 15 7 15 7 15 7 15 7 10 11
As can be seen from the table all the different kinds of stores
are treated on the same footing and quoted equal rates. This is
indeed anomalous. It would be interesting to examine these rates
charged higher rate of Rs. 0-15-7. To class dyes and Epsom salt
together is anomalous. Besides the policy of charging higher rates
on Epsom salt than on Tallow is questionable. The difference in
value of dyes and Epsom salt is considerable and therefore, the
rates charged should differ. In short, it is necessary that the rates
Should be revised.
Tallow
Farina
Epsom salt
Machinery
Lubg. oils
Sago Flour
Dyes
COTTON 67
the Sholapur mills produce at a lower cost they will sell at a lower
price due to industrial competition and the benefit will go to the
community. This will result in increased demand for piece-goods,
especially for Sholapur production, and the mills will be able to
lower their cost per unit by adding to their output. This will
benefit the railways as well, because they will be able to get better
f. o. r. mill
site. Besides, from their business experience they
found that the consumers in Northern India preferred to purchase
the goods of Sholapur mills when the prices of similar competing
goods were equal. Because of the higher freight from Sholapur,
cloth merchants in the upcountry markets were forced to make
their purchases at Bombay.
The G. I. P. Railway contended, per contra, that they were
charging maximum rates except when forced by competition.
They said that there are competitive routes from all the three
centres Madras, Bombay and Sholapur to Amritsar and Delhi,
and therefore the rates were adjusted accordingly. Lower rates
were quoted because of the alternative sea-cum-rail route and
neutralised the geographical advantage of Sholapur being near the
market. They further argued that the reduced rates from Madras
1. Vide, Case No, XIY and'_XVl.
70 \ RAILWAY RATES AND FARES
COTTOtf 71
way rates from Bombay and Madras to Delhi and Amritsar were more
2
favourable than those from Sholapur to those places. The rate
per maund from Sholapur to Delhi for traffic booked to Amritsar
was Rs. 3-6-6 whereas for Delhi proper it was Rs. 4-7-0. For the
same market when goods were booked from Bombay the rate
charged was Rs. 2-9-3, whereas Sholapur manufactures paid Rs.
4-0-7. Thus, apart from other advantages the Sholapur mills were
handicapped to the extent of 57% as against their Bombay compe-
coarser goods were charged a higher rate than the finer goods.
This is attributed to the fact that railways do not distinguish
between the two and charge according to weight.
"
1. The whole piece-goods traffic of India in 1926-27 was 8678 million
over 1788 yards were imported whether be
yards of which a little it
2. Supra. P. 7.
"
1. For dates of sowing and picking cotton see Pearse, A, S. The Cotton
Industry of India," p. 49.
R-10
74 RAILWAY KATES AND FAKES
by the Nagpur Mills for their raw cotton supplies. It will be seen
that even from the stations which are in the vicinity of Nagpur,
like Warclha, Hinganghat, Dhamangaon, Warora and Amraoti, the
rates in the post-war period have been heavily raised, the percen-
tage of increase varying from 50 to 76. While discussing the rates
on raw cotton, it will be recalled, we noticed the anomalies in
rating in the pre-war period which were removed by raising rates
from all those stations where formerly they were lower. This w as r
foreign importers.
The increase in freight for other varities of cotton has been
distance from 602 miles to 503 miles being used and still the rate
is
charged is higher by 62 per cent. The Gadag and Hubli rate has
been raised still higher in spite of the reduction in mileage to be
traversed. From Gadag (via Hotgi and Manmad) the freight
charged was Rs. 2-2-4 for 904 miles in 1914, and to-day via
Ballarsha for 580 miles the freight charged is Rs. 3-1-1, an increase
of about 91 per cent, for the distance lower by about 40 per cent,
Similarly, from Hubli for 946 miles ( via Hotgi and Manmad) the
rate in 1914 was Rs. 1-9-7 and to-day for 616 miles the rate is
Us. 3-2-11, an increase of about 209 per cent. The rate from
COTTON 75
rate has been raised to Rs. 3-9-1 for 915 miles ( via Jalarpet and
Ballarsha ), an increase of about 153 per cent, notwithstanding the
lower distance over which the tonnage has to be hauled. Thus, not
only is the indigenous industry deprived of the advantage of tho
shorter route in form of lower rate but the rates have been raised
to a very high pitch.
Cotton is the most important- raw material of the mills and
the heavy freight charge levied by the railways is vitally affecting
the textile industry. Reduced demand for cloth due to industrial
depression, growing unemployment and catastrophic fall in the
prices of agricultural produce which has seriously impaired the
purchasing power of the agricultural class, and the fall pari passu
in the cotton prices press the necessity for the reduction in railway
1913-14 1930-31.
Cost. Frei3 k t .
PREFERENTIAL RATES.
In the selection of the above rates the primary object is to
the rate to Cuttack for 814 miles was Rs. 0-11-3, to Shalimar for
701 miles it was Rs. 0-11-8, and to Wadi Bundar for 520 miles
Rs. 0-11-8. Instances of preferential rates can be multiplied ;
rates have been equalised. The general level of rates has risen
though preferential rates have been eliminated. Thus, the rates to
Bilaspur,Wadi Bundar, Sholapur, Midnapur, Madras, Shalimar
and Cuttack have been doubled in some cases and trebled in others.
This high increase in freights has restricted the markets of
indigenous mills. Besides, the anomalies in rating still persist.
Whereas Wadi Bundar, where ghats have to be traversed, the
to
freight Rs.
is 1-11-10 for 520 miles, to Sholapur for 553 miles
the rate charged is Rs. 2-11-8. The traffic to Sholapur is therefore
blocked. Here, too, it should be noted that the rate to Wadi
Bundar kept at Rs. 1-11-10, though
is it has been raised
by about 137 per cent, over the pre-war level, to meet the
78 EAILWAY KATES AND FARES
ports to internal markets, so that the local mills find the importer
1
a formidable competitor even in these markets This baneful .
through their agents from the cotton growing tracts during the
harvesting season and keep the stock for the whole year, others
depend primarily upon the Bombay market for their supplies. There
is a considerable difference, therefore, in the de facto incidence of
railway freight when one or the other of the two systems of cotton
purchase are resorted to. If cotton is purchased from the producing
centres the railway freights tabulated above are applicable, but if
COTTON 81
K-ll
82 RAILWAY RATES AND
Commodity Hate
Rs. a. p.
Soda 10 1
Dyes 1 4
Sulphuric acid,
Hydrochloric acid
)
)
242
China Clay 10 4
Packing Paper 11 2
relatively lower level. When these rates are compared with those
charged to Nagpur, we find that even though the latter is nearer to
BATES ON PIECE-GOODS
1. We have been informed that on wagon loads Rs. 1-8-0 per maund is
traffic than to and from the port towns the telescopic schedule
Rate per
Es. a. p- Es. a. p.
(602*) 503 Umri (Via 179 1 15 10 .47 .76 61.70 *01d route
Ballarsha) via Manmad.
'
Old Routes,
CHAPTER III
WOOLLEN INDUSTRY
collecting centre, the mills draw their supplies from Tibet, Persia,
1
Afghanistan, Central India and Australia Australian wool .
2
different things Finer varieties
. of goods are manufactured with
Australian wool and coarser varieties with Indian wool. Coarser
"
varieties are larger in quantity. If you take the quantity that
"
is made out of the Indian wool," added Mr. Lilley, it is between
which is considerably lower than the class rate which works out to
be Rs. 2-1-3 per maund at R. R. In this connection it will be
noted that the E. I. R. quotes lower rates only at 0. R. because at
R. R. the difference between the actual and the class rate is
wool and higher price, the rate of Re. 1-9-1 per maund at
its
The
natural disadvantage in respect of the primary raw
material, wool, should not, however, be overlooked. The distance
over which raw wool has to be carried is a great disadvantage
because it raises the prices of the raw wool. This can be overcome
by offering reduced rates from the wool markets to internal mills.
The railway authorities, especially the N. W. R,, should see that
the rates are suitably adjusted, so as to stimulate manufacture of
wool within the country as far as possible, without, at the same
time, adversely affecting their own interests, for the aim of all
transportation is annihilation of distance,
rates lower than those paid by some other mills, like those of
Baroda, Mysore, etc. Besides, the Cawnpore Woollen Mills have
an efficient system of purchase of raw wool, which helps the mills to
1
get their wool supplies at cheaper prices than those of other mills .
Furthermore, in the markets in Northern India they have acquired
a virtual monopoly both in the purchase of raw materials and the
marketing of finished products, so that the railway rates are
easily shifted over to the consumer. Again, the goods manu-
factured by them, being of superior quality as compared with
those of other Indian mills, the incidence of railway rates is still
lower. Besides, the railways give better response to their requests
for suitable adjustments, because they are a big customer. Hence
when we analyse the evidence tendered by the representatives of
the British India Corporation before the different commissions, we
find no serious complaint made against the rates policy. In short,
therefore, their organised purchase of raw wool and better selling
system, coupled with the varied and relatively larger output, enables
them to compete better alike with the importers and the internal
producres, and the railway authorities have helped them throughout
by making suitable rate adjustments whenever a proper case has
been made out for the same.
India, they have come to acquire better hold on the markets in U. P.,
Rs. a. p. Rs. a. p.
1982. 1935.
Soda ash ( alkali ) 01010 01010
Glauber Salt and Caustic Soda 12 9 12 9
Machinery parts 12 4
These are special reduced rates and when the distance and
value of respective articles are taken into account the nature of
concession offered becomes clear. The rates are quite reasonable.
As regards the conditions of wagon loads it has already been
pointed out that the British India Corporation, having the managing
agency of both Cawnpore Woollen Mills and New Egerton
Woollen Mills at Dhariwal, is able to take full advantage of these
wagon load conditions. Some
instances will better explain the
advantage conferred by the reduced rates offered by the railway
authorities. For example, the rate on soda ash (alkali) at 0. R.
(W/300 L ;) is Re. 0-10-10, whereas at R. R. on actual weight it
;
comes to Re. 1-6-5 \ On colours, paints and dyes, (Div. B.) rate
charged at R. R. is Rs. 2-4-2, but at 0. R. reduced rate of
Re. 1-8-5 per maund is offered
2
A . still lower rate is quoted on
wagon loads which, as referred to above, works out at Re. 1-4-0
per maund. Similarly, on machinery parts the R. R. rate is
Rs. 2-4-0 per maund, but the reduced rate at 0. R. is Re. 1-8-5.
A still lower rate is offered on wagon loads at Re. 0-12-4 per maund.
Thus it is clear that substantially lower rates are available to
woollen mills at Cawnpore, especially at wagon loads. But
it has to be noted that these reduced rates are offered only from
FINISHED PRODUCTS
It has already been mentioned that the Cawnpore Woollen
Mills Co. has a well-organised sales department and efficient
agency system. Railway rates on woollen piece-goods to some
more important centres work out as follows :
BLANKETS
A reference has been made before to the effect that blankets
are also manufactured at Cawnpore. In fact, Messrs. Baijnath
Balmukund Woollen Mills concentrate largely on the manufacture
of blankets, and supply blankets to the Government and Public
1
bodies . The Cawnpore Woollen Mills also manufacture blankets.
872 Poona 2 14 1
mills in the Presidency. In 1929 there were only three such mills
working in the Presidency. During the latter period of 1929 one
of these mills with a paid up capital of Rs. 13 lakhs went into
liquidation. No new mills were started. Thus, in the year
1
1931 only two mills were working as they were in 1930 ." The
industry is passing through difficult times, and with the exception
of a few, almost all the woollen mills are incurring heavy losses. In
view of these conditions, it is incumbent on the railway authorities
to revise their rates on blankets. Besides, offering reduced
rates at 0. R., special station-to-station rates should be quoted
from different mills to more important consuming markets. We
shall presently discuss the marketing facilities of the other mills.
R-13
98 RAILWAY RATES AffD FARES
R & K. E. I. N. W. Total
Rs. a. p. Rs. a. p.
K. R. 040 B. & N. W.
D. H. 10 7 E. I. R.
T. C. 004 N. W.
E. B. 031
Total 4
Es. a. p. Es. a. p.
EATES ON STOEES
Karachi being the nearest port, the rates on stores and other
auxiliary raw materials used by the mills work out as follows
Machinery parts 1 13 4 14 1
RATES OK PIECE-GOODS
now review the rates on piece-goods manufactured by
Let us
the Mill, In the preceding section it was pointed out that the
Dhariwal Mills is one of the most important mills in India and
distributes its products throughout the country. The railway rates
Rs. a. p. Rs. a, p.
Amritsar 027 Patna 2 14 7
Ambala 10 1 Howrah 371
Lahore 044 Bhopal 279
Delhi 109 Nagpur 398
Agra 180 Ahmedabad 2 10 11
Cawnpore 1 14 9 Baroda 2 14 2
Lucknow 1 13 7 Bombay 3 1 10
Allahabad 230 Madras 666
Benares 253 Bangalore City 6 10 3
Rawalpindi 13 4 10 10
Peshawar City 129 15 3
Amritsar 029 020
Ambala City 10 1 083
Lahore 044 035
Delhi 109 13 7
Karachi 2 11 1 1 7 11
BAEODA
1
At Baroda there is a woollen mill known as the Maharani
Woollen Mills, manufacturing woollen cloth and blankets. This
mill was started in 1922 and during the decade it had to pass
through several adverse circumstances. The problem of transport
costs has attracted the attention of the Managing Agents and
strenuous endeavours are made to economise in this direction.
We shall, therefore, review in brief the position in respect of
railway rates affecting this concern,
KAW MATERIALS
It will be recalled that the more important centres of raw
Bombay 14 3 Bikaner 1 12 3
seems that the supply of wool from the nearer sources is not
Sufficient for their requirements, or that other factors like prices,
quality of the material, etc. have a better sway. Similarly, the rate
I. NOW in liquidation.
102 RAILWAY RATES AND PARES
charged from Multan is Rs. 3-3-9 per maund. These rates seem
to be prohibitive.
and thence by rail from Bombay to Baroda, the total freight charge
is less than that when the traffic is carried by all rail route from
Kalimpong to Baroda.
104 BAILWAY BATES AND FABElS
Lubricating oils 10 1
Glauber salt 9 10
Soda Ash 093
Small machinery parts 10 1
goods from the port of Calcutta, or from any other port as a matter
of fact, to upcountry consuming markets, lika Dibrugarh, Tinsukia,
etc., than from Baroda, because of the size of the consignment,
R-14
106 RAILWAY BATES AND FARES
RAW WOOL
For indigenous wool also Bombay is a good market, because
here gravitates wool right from Bikaner in the North, and Kathia-
war in the West, to Khandesh and Mysore in the South. Kaihvay
ratesdo affect the price of raw wool, but it is very difficult to
precisely evaluate the effect. The mills, it is learnt, make their
purchase of raw wool in the city itself, and have no agency system
of purchase as is the case with the Cawnpore and Dhariwal Woollen
mills. The mills can get adequate quantities of raw-wool, because
as aforesaid Bombay attracts raw wool from distant centres for
527 Marwar 1 8 11 R. R.
681 Beawar 1 12
697 Jaipur 217
885 Eissar 267
1059 Fazilka 289
840 Cawnpore 242
840 238 O.R.
838 Agra 289 R.R.
443 Raiclmr 1 11 5 O.R.
443 Via Raichur 160 W/300 L.
rates, are available for the former class of goods, the latter
in the treatment and the rates quoted. How the industry is affected
by the rates policy thus pursued will, perhaps, be better understood
108 EAILWAY BATES AND FABES
520 Nagpur 1 11 10 1 11 10
353 Khandwa 176 133
616 Jubbulpore 2 10 3 2 10
1223 Howrah 199 199
521 Bhopal 1 4 15 1 11 11
702 Jhansi 270 253
839 Cawnpore 242 242
763 Gwalior 10
2 11 285
838 Agra 289 289
868 Muttra 2 7 11 2 7 11
957 New Delhi 2 10 3 2 10 3
RAW MATERIALS
The Thana Mills purchase their raw materials at Bombay and
import direct from foreign countries and hence their position is
similar to those of the Bombay Mills, except that they have to pay
transport charges from Bombay to Thana. The mills transport
their raw materials from Bombay to the mill site at Thana through
their own motor lorries. Therefore, the question of railway
transport does not arise.
r
Miles Station to Rate Miles Station to Kate
in the case of Thana, when from other centres like Bombay and
Cawnpore the rate comes to be Rs. 1-11-10 and Rs. 1-13-5 per
maund, for 250 and 561 miles respectively. Similarly the rate to
Jubbulpore is unduly high, because when the rate is Rs. 2-3-7
to Bangalore for 673 miles, it is unfair to charge Re. 3-2-1 for 595
miles. The Shalimar rate is adjusted according to Bombay rate.
maund for 616 miles, but from Thana the rate is Rs. 3-2-1 for
595 miles. These instances show how higher rates are levied for
shorter distances. Again to Bhopal, Jhansi, Cawnpore, etc., the
ratesfrom Thana are higher than those from Bombay, even
though the distance in the former case is lower than that from
the latter.
R-16
114 RAILWAY RATES AND FARES
Es. a. p.
Jalarpet 057
Guntur 100
Bezwada 181
Nellore 16 11
Poona 214
Shalimar Waltaire 200
Ahmednagar Via Raich ur 292
Bombay Poona 201
Ahmedabad ,, Hogli and Dadar 2 12 7
Baroda 294
Ajmer Poona and Dadar 478
Cawnpore ,, 560
Delhi Bellarshah 4 10 4
Nagpur 338
Amritsar Bellarehah and New Delhi 512
Peshawar 60 11
Madras 12 6
of the mills are concerned, the question of rates obviously does not
come to the fore; but it does assume a relatively greater importance,
when more distant markets are catered for. It may be pointed
out that woollen goods are largely consumed in cold climes, and
therefore the mills, of necessity, have to cater for distant market?.
Woollen goods are not in great demand in the Madras Presidency,
because of the climate, and whatever demand exists is generally
for finer classes of goods which is supplied by the imports.
Therefore, in the first place the demand for woollen piece-goods
in the Presidency, such as are manufactured by the Indian Woollen
mills, is considerably limited, and secondly, there is the compe-
tition of the other mills and of the imports as well. This compe-
tition increases in intensity in more distant markets as noted in the
one of the three woollen mills located at Bangalore shifts its plant
to Madras, the stepwould prove beneficial to the Indian woollen
industry in general and the mill so shifting in particular. The
present difficulties of the Bangalore woollen mills are therefore
due to the location of tho mills, the limited extent of the markets
and the internal competition,
116 RAILWAY BATES AND FARES
COTTAGE MANUFACTURES
BLANKETS
The Manufacture of blankets is scattered over the whole
country because admirably adapted to the needs of the
it is
shown that science can serve alike the rich and the poor, and
therefore, we find to-day, that the blanket?, turned out with the
CARPETS
1. Vide, A. W. Pirn's
Monograph.
on the Industrial Survey of the Agra District
2. Vide, Report
118 BAILWAY BATES AND PARES
1. Ibid, P. 132.
2. Vide, Report of the Industrial Survey of Mirzapur District, p. SI.
WOOLLEN INDUSTR* 119
Rs. a. p. Es. a. p.
industry is faced with. Enough has been said about the defects in
the organisation of the industry as an important cause of the present
difficultieswith special reference to railway rates. It cannot be
gainsaid that this question needs a more detailed examination which
the limited scope of the present chapter could not permit.
But, the rates policy has several defects which we have pointed
out in the foregoing pages, and its effects on the woollen mills
severally have been dealt with. These defects in the rate structure,
which were ignored when the industry was relatively prosperous,
are more seriously felt now that the industry has fallen on evil
days. To-day even a slight relief which could be offered to the
industry would have its own value. We shall, therefore, outline
in brief the suggestions which may be helpful to the industry.
SUGGESTIONS
CEMENT
EVOLUTION OF THE INDIAN CEMENT INDUSTRY
As
a result of the outbreak of the world war, the output of the
above companies came under the control of the Indian Munitions
Board in 1915, and very little cement from these factories was
available for works other than Government during 1915 to 1919.
Besides, due to the shortage of shipping facilities the imports of
foreign cement also received a setback and the prices began to
mount up, and rose as high as Rs. 250 per ton. The prices paid by
the Government to the Indian cement factories, whose output they
had controlled, ranged from Rs. 42-8-0, to Rs. 70 per ton, while
during the same period imported cement cost from Rs. 80 to Rs. 250
per ton. It will, therefore, be seen that the establishment of this
industry, just at the beginning of the war, saved the country an
enormous sum in the cost of an essential item of war supplies.
was far short of the actual and potential demand for cement in
the country. This belief was fostered by pronouncements from
CEMENT 123
1
official circle^. The existing cement companies therefore took
steps to increase their output, a number of fresh companies in
addition were floated, and works constructed to meet the anticipat-
ed enhanced demand, so that in 1923 the productive capacity rose
approximately to 600,000 tons, with a capital investment of about
2
4/5 crores of rupees.Thus, the industry recorded a very rapid
development and the productive capacity outstripped the demand
for cement in India. The Indian Cement Company whose manag.
ing agents are Messrs. Tata Sons, Ltd., opened another factory at
Banmore, known as the Gwalior Cement Company, and under the
same managing agency a third cement company was floated
under the name of the Shahabad Cement Company. Therefore
Tata Sons alono have three cement factories working at different
centres which will come for detailed reference later. Thus, the
growth of the cement industry during the post-war boom, during
1919 to 1923, was at once rapid and remarkable.
1 . "After the war when the works at present in abeyance will be continued
the requirements will be greater than ever the output of these
factories being very much short of the present demand even, it will
obviously not suffice for future requirements and there is still room for
additional works in other parts of India."
from O.P. is used for boilers, but its quality being low Jharia coal is
brought from a distance of about 500 miles for kilns. The factory
therefore, is relatively better situated in respect of coal supply.
The more important markets of the factory are Bombay and
Calcutta both of which are equidistant from the factory, about
650 miles.
"
I. Capital ", December 1931.
126 RAILWAY RATES AND FARES
1
the actual cost of coal rose to Rs. 30 per ton delivered at Works.
This was because the coal which formerly used to have rail-cum-sea
route to Porbundar was forced to the alternative rail route for the
entire distance. With the resumption of rail-cum-sea route the
transport charges have fallen again and to-day the freight is about
Rs. 14-8-0 per ton from Bengal. It is clear, therefore, that the
ports. The raw materials used are limestone, clay and gypsum.
The first two are drawn from local quarries situated within 2 miles;
limestone is blasted by means of gunpowder and then loaded by
hand drawn to the factory by steam
into the trucks, the truck being
locomotives and clay
; dug from the
is pits and transported to the
factory in a similar manner. Gypsum is obtained from Navanagar
State which is situated from the factory at a distance of about 40
miles. The relative cost per ton of the raw materials in the year
1923 was as follows :
ton for Bengal coal. Later, however, the rail-cum-sea route and
the reductions in railway rates on coal lowered the cost of
transport.
C. P. and Rs. 20-0-0 per ton for Bengal coal, f.o.r. Banmore. Of
was Rs. 6-11-0 and Rs. 10-8-0 per
this cost, the railway freight
ton respectively. Now, of course, both the prices of coal and
freight thereon have been reduced, but it would be idle to deny
that the factory, in common with others, suffers from the natural
disadvantage of being distant from the coalfields.
the factory, and the last is brought from Dandot in the Salt Range
about 250 miles away. The coal requirements of the factory are
drawn primarily from the Bengal coalfields, at a distance of about
1250 miles and the freight paid amounted to about Rs. 15 per ton
in 1925. A small quantity of coal is also obtained from the
Makerwal collieries which are only about 125 miles off entailing
freight of about Rs. 5 per ton, but high floods of the river Indus
coupled with other circumstances make the supply of the coal
from this source uncertain. This factory, therefore, has a great
disadvantage in coal supply due to its remote location from
the Bengal coalfields.
required only to tie the sack. The factory has cost more than
Es. 80 lakhs to build and equip and the plant has recently 'been
doubled. This company manufactures "Kohtas" cement and
"Rohtacrete rapid hardening cement".
that "the primary remedy for the complaint from which the
industry is suffering lies in the hands of the manufacturers them-
selves. and prices are low, simply because there
Costs are high,
are two many factories, and it is within the power of cement
companies to reduce this state of affairs to-morrow if they choose
to do so. If they are unable to come to an agreement and prefer
to pursue a policy of mutual extermination, the remedy will
3
automatically be applied by economic forces."
In order to realise the nature of the problem before the
industry, we shall in the first place outline the wastes in transport
costs involved, and the higher railway freights which the cement
Rs. a. p. Rs.
Bombay 16 8 C6
Calcutta 11 62
Madras 30 81
Karachi 28 4 79
Rangoon 25 76
1
far below this. But even assuming that the highest price could be
realised, the figures indicate that the factories would have to suffer
loss in almost all the markets, except Calcutta, varying from Rs. 2
per ton in Bombay to Rs. 17 per ton in Madras. Except Calcutta,
other markets were therefore uneconomic for this group of factories.
Besides, the relative disadvantage in respect of freight charge, under
which the factories worked as compared with their foreign
competitors, becomes manifest when we recollect that British
cement paid only Rs. 12 per ton by way of freight charge to Indian
ports, as against the heavy freight paid by the Indian factories.
We have thus established the fact that the freight charge was a
serious item, due partly to the geographical location of the factories
and partly to the internal competition.
The anomalies in rates policy may now be analysed. The
freight from C. P. Cement companies to Bombay worked out
as under :
cheaper than land transport, one cannot help thinking that railway
freight on cement was high and restricted the marketing area of
Indian factories. One of the reasons for the high freights can be
traced to the individualistic tendencies of the Indian railways
already raferred In quoting telescopic rates Indian railways
to.
take into consideration not the total distance over which the
consignment has to travel, but the distance of each individual line
covered separately. Thus, for instance, the cement despatched
from the C. P, Portland Cement Company's siding to Bombay had
to pass, before 1925, on the E. I. Railway over 67 miles, and
thereafter on the G.
P. Railway over 616 miles, the freight
I.
charge being Rs. 4-13-0 in the former case and Rs. 10-0-0 in the
latter. The G. I. P. Railway rate was based on 'G' telescopic
owing to the great distance from the factory to the markets and the
number of railway lines over which the consignment has to travel.
1
higher freight charges. This was economically feasible because, ,
have to get from Bengal, the entire journey being on the railways,
This diversion of traffic from rail-cum-sea route to entire land rout
had doubled the cost of coal. In the Karachi market, however,
their position was more secure in respect of competition from
internal factories, because in this case they could secure cheap
coastal shipping facilities in marketing their output.
Besides the competition of internal factories, there was the
competition of importers in the port towns, because they could
land their cargo directly from the ship without having to pay any
railway freight. We shall analyse this point later. The importers
undoubtedly had to pay an import duty of 15 per cent, ad valorem,
which worked out at about Rs. 9 per ton, but this disadvantage was
neutralised by the cheaper sea freight they had to pay, which for
British cement, was about Rs. 12 per ton landed at port. The Indian
factories per contra had to pay higher freight, except in the case of
a few which were better situated. Further, due to lack of adequate
coastal shipping facilities, the factories could not exploit the natural
1
Freight Rates: pic per maundper mile
The rate is Rs. 0-4.0 The rate is based on The rate is based on 'G'
per mile per one metre *H' telescopic schedule:- telescopic schedule :
which the traffic has to pass, each having a different rate basis. The
schedule rates of the B. B. & C. I. and the G. I. P. Railways
similarly fail to reveal the real difficulties of the industry because
the lower freights quoted on long distance traffic, say of 400 miles
and over, could not be enjoyed by the consignment shipped from
Porbundar destined to some station on the G. I. P. Railway in
C. P. or Berar, because the total distance travelled was on
numerous lines, each charging the freight for the distance travelled
on its own line irrespective of the other lines. No wonder then,
Rs. a. p. Rs. a. p.
Ajmer 15 12 U 12
Ahmedabad 11 8 910
Nagpur 26 8 13 4
Surat 13 4 5 10 10
Poona 14 4 440
The table clearly shows the peculiarities of railway rates policy
and the advantageous position of the import traffic. Cement
despatched from Porbundar to Ahmedabad has to pay higher
freight than that from Bombay to Ahmedabad because former in the
case the consignment has to travel over the Porbundar, Gondal and
Bhavanagar State Railways before it reaches Wadhwan, from where
it is taken over by the B. B. & C. I. Railway to be carried over to
From Wah to. Per ton. From Karachi to. Per ton.
Rs. a. p: &* P-
8. -
Vide, Evidence Volume of Tariff Board Report.
CEMENT 143
Company. It can be seen that this was an unwise policy for the
Gwalior Cement Company to pursue, because Khirgi being nearer
to the Punjab factory it could despatch cement at a freight ofab out
Rs. 9 per ton, whereas from Gwalior the freight paid was about
R0. 22 per ton. It involved a waste of Rs. 13 per ton by way of
POSITION SUMMARISED
possessed by the industry has been made good and noted the causes
of the unfortunate condition the industry had fallen in. 1 The
remedies proposed by the Board, therefore, deserve a detailed
consideration we propose to review them seriatim in so far as
;
thought of, but it was rejected on the plea that this would mfcan
a special favour to this industry when other industries were equally
in need of a reduction in coal freight. The necessity of a general
reduction in railway freight on coal was pressed in unequivocal
terms. The Board was convinced that the question of the cost
of coal was the end in view was a rapid industrial develop-
vital if
BOUNTY SUGGESTED
Reviewing the internal competition between the cement
factories, theBoard held that it was essentially a temporary phase.
We have already discussed this point in the earliar portion of the
chapter, and therefore we pass on to another issue. The problem
of foreign competition was examined and it was held that the
to come to some understanding and not cut each other's throats." Vide
Evidence Vol. P. 102.
R-19
146 RAILWAY RATES AND FARES
The G. L P. Railway*
Former Freight based on 'G' tele- Present Freight based on C/0 telesco-
scopic schedule: pie schedule:
1932
1 to 100 miles 0*24 pie 1 to 75 miles 0*30 pie.
101 200 0-20 75 400 0*170 *
1. The freights are in pie per maund per mile. The conditions for
carriage are the same in both the cases, viz., in full wagon loads at
owner's risk, charges calculated on the carrying capacity of the wagon
used, loading and unloading to be done by senders and consignees.
150 RAILWAY RATES AND FARES
THE E. I. RAILWAY
To take up the freight on the E. I. R, we note the following
alterations in the schedule :
1932
Former Schedule <
C '
: Present Schedule C\N:
per mile which was formerly available over 300 miles is now for
the distance over 400 miles. Short distance traffic, however, has
received some concession. This has special significance to-day
because long leads have been as far as possible eliminated. Special
station-to station rates to Howrah below these schedule rates are
be at the
quoted from the cement factories and they continue to
Bame level with a few minor alterations. For instance, cement
booked from Katni to Howrah was charged a special rate of
Es. 0-7-0 per maund in 1925 and the present freight is just the same.
Rs. 0-2-3 per maund be added, so that the total freight is not
is to
the freight is Rs. 0-5-0 per maund as against Rs. 0-4-0 per
maund in 1925. The Japala factory has thus been materially
affected in the Calcutta market in which it has the greatest
stake. Apart from this what we want to show is that there has
been no material change in freight since 1925, and that to port
towns rates below the schedule are quoted as usual.
THE B. N. RAILWAY
The changes in the schedule rates on the B. N. Railway may
be briefly reviewed. We quote below the schedules :
19S2
Former Freight Schedule. Present Freight Schedule.
Ito 100 miles ... "30 pie. Ito 75 miles ... 0*38 pie.
Plus 101 to 300 ... 0-20 Plus 76 to 300 ... 0-20
301 to 600 ... 0-18 301 and above ... 0*10
Over 600 ... 0-15
benefits for long distances and imposes heavier charge for the short
distance shipments. Nevertheless the reduction has proved helpful
to the industry in its huge task of popularising the use of cement
in the country.
THE N. W, RAILWAY
The N. W. Railway has adopted C/N schedule as in the case of
the E. I. Railway. But for the Punjab Cement Works situated on
its line, special station-to-station rates, lower than the schedule
1
rates, are quoted. We submit below freights to a few important
stations to show the nature of concession granted to the factory:
2
Railway Freight ex Works to the undermentioned stations.
railway systems over which the traffic has to pass before reaching
the consuming markets. The principal markets of the factory
are in Southern India, rightfrom the Deccan and the
South of Bombay to the Nizam's Dominions, the Mysore State
and the Madras Presidency, The Principal railways with which
this factory has to deal are the Nizam's State Eailway, the M.& S.M.
Railway and the South Indian Railway. Each railway has a
different basis of freight charge. The N. G. S. Railway formerly
quoted a class rate but now they have adopted a Schedule rate,
based on the following :
For first 75 miles ... 0'38 pie per maund per mile
Plus 76 to 300 ... 0-20
Above 300 ... 0-10
For first 300 miles 0'38 pie per maund per mile
Plus 301 to 400 0-30
401 600 0-20
601 600 0-125
601 700 0*115
Above 700 0-10
For first 100 miles .,, 0*38 pie per maund per mile
Plui 151 to 250 ... 0-250 ,.
freight for the 100 miles was at 0*24 pie per maund per mile, but
first
in the'present schedule the freight for the first 75 miles is at 0*30 pie
1, Ports being linked more directly with the internal centres importers
can better avail of the telescopic rates and the indigenous industries
have to bear the brunt*
CEMENT 1ST
Us. a. p. Rs. a. p.
Gujrat ... 55 52
Central India ... 55 52 8
Rajputana ... 55 52 8
Sind ... 57 55
Karachi ... 50 48
Baluchistan, Quetta ... 67 8 62 8
Delhi ... 55 52 8
GROWTH IN CONSUMPTION
This efficiency in the organisation of the industry and the
resulting reduction in prices augurs well for the future. In India
the consumption of cement being very low, only about 5 Ib*,
per head as against 600 Ibs. per head in U. S. A., 400 Ibs. in U. K,
and about 350 France, the prospects for further growth in
Ibs. in
the market are immense the field only needs a proper ploughing,
;
SUMMARY OF CONCLUSIONS
(1) The Indian Cement Factories possess great natural
advantages raw materials are in the
; vicinity of the factories and
also the markets to some extent.
and gas is rapidly increasing, but they have not as yet assumed a
1. Since the coal traffic Ahmedabad has to pass over more than
passing to
one railway from the coal-fields to Howrah there is one line and from
Bombay to Ahmedabad there is another railway, taking the sea route*
it does not get the benefit of the through calculated on the total
distance traversed on the railways, The case is similar even when the
total distance is traversed on land alone. Tariff Board, Evidence
Vol. II, P, 148-49,
COAL 161
the output nearly doubled itself within the next five years. This
closes our survey of the coal industry in the nineteenth century.
the E. R.,
I. which was the only line serving the coal fields, drew
the attention of the Government as well as the business community.
It was found that the E. I. R. could not provide adequate facilities
for the traffic, which had increased and was promising to increase
further. Therefore, the B. N. R. was allowed an independent
access to the Jharia coalfields by the construction of their branch
line from Midnapur to Jharia. The entrance of the B. N. R. into
the Jharia coalfields gave a good stimulus to the Indian coal
industry, because the sole monopoly of the E. I. R. was checked
and the much needed competition came in. As the demand for
coal was increasing, the Government made a further reduction in
2
rates in 1902. The following reduced rates were introduced:
Pie per maund
per mile.
'
Benares
Cawnpore
Delhi
Lahore
Bombay
Karachi
COAL 165
Rs. 5-15-0 in 1907; for Karachi Bombay and Lahore the reduction
was 50,48 and 41 per cent. The railways profited both as the
consumers and carriers of coal. The quantity of coal used on
railways increased by about 40 per cent., within three years after
1
1905. Besides, the traffic gave a prompt response to every
successive reduction in rates, thereby augmenting the net earnings
of the railways.
prices of coal were gradually falling and also the railway freight.
The prices of coal which fell gradually from Rs. 4-0-0 per ton
in 1899, to Rs. 3-8-0 in 1905 record a sudden and substantial rise in
1906 from Rs. 3-8-0 to Rs. 4-10-0, a rise of about 30 per cent. This
rise in prices, recorded in the year 1906, increased further in the
following year, and in the year 1909 the average price was Rs. 6-12-0,
nearly double of that in the year 1905, The growth in the coal
industry, which was fostered by low prices, was checked by this rise.
Indian industries suffered from the scarcity of coal, and foreign
markets, in which India was one of the several suppliers of coal,
were lost. Markets in the Far East and Ceylon took to Australian
and Natal coal. In order to appreciate the extent of rise in prices at
requirements.
the prices of Bengal coal prevalent then which account for the
substitution of foreign coal for Bengal coal.
export, but the change has been to the disadvantage of the Indian
industry. The importsof foreign coal which were 3 '2 lakhs of
tons in 1910 doubled themselves in 1913, whereas our exports of
coal dwindled from 9-9 lakhs of tons in 1909 to 7-6 lakhs of tons
in 1913. This was a very serious feature of the coal industry. The
imports of coal were shared by South Africa, Japan Australia and
the United Kingdom, but the most noteworthy fact was that African
coal acquired a strong hold in the Indian market, its imports having
increased from about 18 thousand tons in 1910 to about 246 thousand
tons in 1913, due primarily to rebates on the export coal granted by
the African Government, which we shall discuss in detail later.
The imports of the bounty-fed African coal later assumed a far more
serious character and became a menace to the Indian industry.
Further, the fall in the export trade from about 10 lakhs of tons
in 1910 to about 6 lakhs of tons in 1914, and the consequent
loss of foreign markets placed a very formidable obstacle in the
growth of our coal industry. Indian collieries found it difficult to
regain their hold on these markets. The increase in the demand
of coal in the home market was of course met primarily by
internal production, but the loss of foreign markets was detrimental
to the interests of the coal industry. This weakness, was
however,
not seriously felt, because of the increasing demand for coal in the
internal markets. "An increase in the absorptive capacity of the
Indian market, however, fully compensated for the decline in
exports and the increase in imports". With the progress of
industrialisation in India the demand for coal was increasing
rapidly, because the alternative sources of power were limited. The
use of electricity for industrial purposes was almost unknown.
Foreign competition, therefore, caused no serious injury for the
time being. The average prices of Bengal coal f. mines had
o, r. at
risen to Ks. 6-8-0 in 1913, and Rs. 7-5-0 in 1914. But the adverse
effects of the loss of foreign markets, in long run, cannot be denied.
With the outbreak of the Great War conditions became
abnormal. Communications between the countries were cut off
resulting in the dislocation of trade and commerce. In the belliger-
ent countries national resources were pooled together and directed
towards the railitary operations; India had also to share the
burden. Tbe prosecution of the war meant considerable strain on
transportfacilities, both internal and external. The insufficiency
and insecurity of ocean transport hindered her import and export
168 HAILWAY BATES AND FARES
about 20 per cent over the record of the previous year. There is
no gainsaying, therefore, that the war accelerated the production of
coal in India, The War, in fact, gave the long cherished protection
and stimulus to Indian industries, which the Government of
India had been too reluctant to accede. Under the stress of war
and pressing military requirments, several new industries were
set on foot, and the old ones were given adequate help by the
Munitions Board. The Munitons Board admirably carried out the
task entrusted to it and demonstrated India's potentialities for
Industrial production.
ENHANCEMENT IN RATES
As the figures show, both the tonnage and the earnings there-
froin have increased ; the increase in the total tonnage in 1918-19
over the year 1913-14 was about 53 per cent., whereas the increase
in earnings over thesame period was about 60 per cent. We also
note that after the increase in rates in 1916, the traffic received a
setback, and the rise in tonnage which had been gradual and
steady right from the year 1913-14, was interrupted and fell from
about 224 lakhs of tons in 1916-17 to about 218 lakhs of tons in
1917-18. But the earnings recorded a from about 800 lakhs
rise
in 1916-17 to about 827 lakhs in 1917-18. Thus we find that the
railways got higher earnings with lower tonnage. This was
prejudicial to the interests of the industry. But the difficulties of
the industry did not end here, and in the year 1919-20, after the
cessation of the war, we find both the tonnage and earnings
port facilities.
difficult.
discuss later.
and August of that year submitted his report on the best means
in
of securing greater economy in the production and consumption of
coal. Thereupon the Government of India appointed a Coalfields'
Committee in January 1920, under a resolution which indicated
that the Government of India had for some time under consider-
ation the question of devising means of reducing the large avoidable
waste of coal known to occur at the Raniganj and Jharia coalfields.
This was due mainly to difficult methods of extraction, resulting in
2, Coalfields Committee
174 RAILWAY RATES AND FARES
equipment, the raising of the rates for the carriage of coal is one of
the most important issues. The existing rates were fixed some 15
years ago, when the working expenses were very much lower than
they are now. They were barely remunerative and at the present
time do not cover cost of carriage. Moreover, the absence of
shipping in the first instance and later the high cost of sea freights
has forced nearly the whole of the trans-Indian coal to rail, with
the result that nearly half the broad-gauge goods stock of the
.country is locked up in this traffic. The existing rates, therefore,
amount on the public for the benefit of one section of the
to a tax
1. "Railway Board Letter No. 345/T/16 dated Simla, the 12th of November
1919.
COAL 175
Us* a. p. Rs. a. p.
469 Gawnpore 610 660
739 Delhi 7 15 860
978 Amritsar 9 10 10 3
1011 Lahore 9 15 10 8
1407 Karachi City 13 5 13 14
173 Howrah 340 380
164 Titaghur 320 360
Jt will be seen from the foregoing table that the distant consuming
markets had to bear a higher incidence. Thus, whereas markets
like Howrah and Titaghur had to pay an increase of only i as. per
176 RAILWAY HATES AND FARES
April, 1920, the railway companies pressed for higher rates. It still
states : The Government of India are most reluctant now that the
war is over to embark upon further schemes involving restrictions
on trade, but they are aware that the general trade of the country is
being gravely hampered by the difficulty of moving produce and
that many of the industries of India, especially the small industries,
1
have suffered severely from the difficulty of obtaining coaP. But
the Government is to be blamed for yielding to the dictations of the
railway companies, even though apparently against their will,
"
because the rates were increased a second time in 1921. After a
"
careful consideration," runs the letter of the Railway Board, the
Government of India have approved of the introduction of the
following revised scale for the carriage of public coal with effect
from the 1st April 1921 :
Milea
per mile
For the first 200 miles . 0*15
Plus for 201 to 300 miles ... 0'13
Plus for 301 to 700 ... 0*07
Plus for 701 miles and beyond ... 0*06 ,,
R-23
178 RAILWAY RATES AND PARES
reached its highest point, and it is the effect of this severe plight which
is still writ large on the present depressed state of the trade.
consequent decline.
expansion in the demand for coal after the war resulted in a very
heavy strain on the capacity of the railways in 1919 and 1920. So
large a proportion of the wagon supply of the country was taken up
by coal traffic that trade in general was greatly hampered and many,
especially the smaller industries of India were suffering severely
1
from the difficulty of obtaining coal." It is obvious that as a large
proportion of wagons was being taken up by the coal trade to the
detriment of general commercial interests, and that even with this
supply the total requirements of coal trade were not met, it was all
the more necessary for the Government to increase the wagon
supply and afford thereby an adequate accommodation. Transport
facilites ought to have kept pace with the growing needs of trade
and industries. But this was not to be. The Coal trade was denied
all justice.
2. Compiled from the Supplement to the Indian Trade Journal, 1929, p. 27*
180 RAILWAY BATES AND PARES
1
in increasing quantities The cumulative effects of these adverse
.
itself. The increased coal traffic was due to rising internal demand
for coal,
"
1, A very large user of Bengal coal states that there has been marked
'improvement in the quality of the Bengal coal supplies since the Board
came into being." Burma.
"The shipment certificate and the supervision of your Board have
given satisfactory results." Singapore.
"The coal received from India is found to be highly satisfactory in
every way." Hongkong.
"
In the opinion of the Chamber your Board is fulfilling an important
function in a most efficient manner." Northern India.
R-24
186 EAILWAY EATES AND FARES
The result is that the demand for wagons on the coalfields reaches
its maximum, at a time when the demand for wagons to move all
other traffic is at its heaviest. It is during the busy season that
inadequacy and irregulaiity of wagon supply is more acutely felt.
This is the most difficult problem that the railways, especially the
E. I. and B. N. Railways, have to solve.
and (ii) during the slack season over various rilways." This
resolution, notwithstanding the opposition of the official benches,
was carried without being taken to a division, but it failed to
receive Government assent. Needless to mention that this high-
188 BAILWAT KATES AND FARES
1
grant of rebate on export coal further stimulated the traffic.
This prompt response of the traffic to much-needed reduction in
rates falsified the assumption of the Government that the rates
1. On grade coal shipped under certificate from the Coal Grading Board,
a rebate of 37i per cent, on actual freight paid was granted, while on
coal non-graded and not covered by any certificate from the Coal
Grading Board the rebate was 25 per cent, of the actual freight paid.
190 RAILWAY BATES AND FARES
.of cheap coal in the industrial and economic life of the country
and in the interests of the Indian coal trade it is imperative
that there should be a substantial reduction in the present rates
1
of railway freight on coal and coke." They also demanded a
reduction of railway freight on fuel and oil and the resolution
"
ran as follows: That in view of the fact that liquid fuel,
Furnace and Diesel Oil are largely used in industrial concerns and
public utility undertakings equivalent with coal, it is reasonable
that railway freight on such oilshould be reduced correspondingly
with any reduction that may be made in the freight on coal and
3
coke."
REDUCTION IN RATES
The Railway Member introducing the budget for 1929-30
announced a further reduction in rates for long distance traffic to be
put into force from 1st June 1929. In this connection, it is
interesting to note his remarks on the traffic results after the re-
"
duction of rates in 1926. To quote him in extenso : the last
reduction in our coal rates was made in 1926, and the have results
been such encourage us to take another step in the same
as to
direction. On the E. I. R., the tonnage carried for distances over
400 miles was 31 per cent, more in 1927-28 than it was two years
earlier, and the earnings 33 per cent. more. It is a very significant
fact that the earnings on long distance public coal should show a
portrayed below :
The then existing scale of rates for coal, coke, and patent fuel
carried for distances exceeding 400 miles were :
The reduced scale of rates for coal, coke and patent fuel
carried for distances exceeding 400 miles was :
On this new basis the rates from Jharia field work out as
follows :
Bombay ... 13 12 12 6
Karachi ... 15 13 H
Ahmedabad ... 13 2 11 11
R-25
194 RAILWAY BATES AND FARES
the authorities have with one stroke neutralised the reductions both
"of 1926 and 1929, acceded to after strong public agitation, so that
today the freight position is not very dissimilar to that during
1922-25. This action of the Government must be deplored, more
so because it came at a time when the industries in general and
the coal industry in particular were in the grip of the most
serious depression the world has ever witnessed. The argu-
ments advanced by the Railway Member in support of the enhance-
ment in rates a de facto outrage on Indian trade and Indus-
"
tries are instructive. He argues, On the revenue side we have
endeavoured to alleviate our
by making certain
difficulties
less serious than it is. I have long held the view that it is in the
interest of the railways to keep coal freights at the lowest level
commercially possible, because cheap coal is essential to industrial
and even with the addition made, our coal freights still remain at a
1
very low level." The Railway Member admits that 'it is in the
interests of the railways tokeep coal freights at the lowest level
commercially possible; per contra, the policy pursued is a most
striking negation of the admission recorded. He seeks relief in
the old argument, exploded long since, that the traffic flows on and
therefore the rates are such as the traffic can bear, or in other words,
the rates are reasonable. The volume of traffic offers only a partial
justification of the rate schedule. We have discussed this issue at
length elsewhere, and therefore to avoid repetition it would be
sufficient for the present to note that there was no justification
for this sort of railway policy. On the contrary, the traffic
statistics from 1926-27 to 1929-30, referred to above, prove the
hollowness of this argument. It will bo recalled that the Govern-
ment had offered strong opposition to the public demand for
reduction in rates after 1922 on a similar plea and the subsequent
developments falsified the underlying assumption. A repetition of
the same mistaken policy and the unwillingness to learn from the
past experience, hardly leaves any doubt as to the nature of the
railway policy pursued and its effects on the development of our
trade and industry.
The figures of production for the last few years given below
clearly show that the condition of the coal industry grew from bad
to worse.
Production of Coal
Year. Tons.
1930 23,803,048
1931 21,716,435
1932 19,679,154
1933 20,153,387
1934 19,789,163
prices of all grades of coal have recorded a steep fall. For instance,
super Jharia coal prices have fallen from Es. 4-12-0 in 1932-33 to
Rs. 4-2-0 in 1933-34, and Rs. 3-0-0 in 1934-35. Prices of other varie-
ties have likewise declined and become unremunerative to the pro-
ducers. The critical condition of the industry has caused a great deal
tons. The total imports of coal have also increased from 34,800
tons in 1932-33 to 56,315 tons in 1933-34. Iron and brass foundries
consumed about 4-8 million tons of coal in 1931, but in 1933 they
took only about 4 million tons, apart from the usual expectations of
increase in demand. The demand for bunker coal has also fallen.
the smaller colliery owners are quoting prices much below the real
cost of production. In their attempt to push the cost of
production still lower, they are increasing their output and exploit-
ing only the upper seams of the mines. This method of working
the mines is obviously wasteful and against the true national
interests, because the most valuable seams are thus being per-
SUGGESTIONS
SUGAB
The national importance of the Indian sugar industr}' has
been generally accepted. It has two aspects, agricultural and
industrial. India being primarily an agricultural country, the
cultivation of sugar holds a very prominent place in its economy.
It the most important and perhaps the only cash crop in the
is
*
The figures represent lakhs,
R-2G
202 RAILWAY RATES AND PARES
originating on their own lines, the B.B. & C.I. has to depend upon
the traffic it gets from other lines. This fact is important as it
vitally affects the rates policy. Again, the traffic carried and the
earnings therefrom, as indicated in the table, show the importance
of the traffic to the line concerned.
Barabanki
068054
095
13 9
Samastipur
111 Basti 4 11 038
194 Padrauna 079 061
We thus find a striking change in the rates policy, distinct
from the policy pursued by the other railways. The B. & N. W. R.
quotes, rates lower than class rates even on shorter- hauls, .as for
instance, over a distance of 111 miles, from Basti to Barabanki. It
higher rates is all the greater. But the B. & N. W. R. does not do
so* of the railway authorities is commendable in the
and the action
interests of both the shippers and the railway. The B. & N. W. R.
has the greater number of sugar factories on its lines, both in the
U. P. and Bihar, and it is to the advantage of the railway to foster
these concerns by giving cheap and efficient transport facilities.
These rates will be discussed later, but at this stage from the
review of the general basis of rates charged on sugar on the
different railways, it can be
without fear of contradiction, that
said,
the B. & N. W. R. charges relatively lower rates even over shorter
distances. This statement can be further illustrated by comparing
the rates charged on the G. I. P. R., which charges 2nd. class rate
at R. R, on sugar, irrespective of the size of the consignment or
the distances traversed.
as follows ;
L Vide, p. 386,
STOAR
1 to 150 miles ,., ... 0*14 pie per maund per mile
Plus Over 150 0-11
(b) To, from and via Cawnpore (B. B, & C. I. R.), except when
booked from Rawatpur,
(c) From and via Allahabad city, for traffic from stations on
the Benares-Allahabad section of the B. & N. W. R. to
Howrah.
The B. B. & C. L
C/D schedule rate, having a
R. charges
uniform 0'25 pie per maund per mile, at 0. R.,
basis of charge of
and forcibly brought out the defects of the policy with suggestions
for its improvement. Therefore, before we take up the analysis of
R-27
210 RAILWAY HATES AND FARES
that the burden of the rateswould have fallen upon the profits of the
importers, and the Indian railways would have thereby added to
their receipts. Thus, not only was the railway income lost, but
the position of the foreign industry in the Indian market was also
strengthened. This is a further instance of the penalty which
India has had to pay for company management of railways,
because the companies, being assured of their financial stability,
cared but little about the effects of their rates policy upon the
present case, looking at the nature of the traffic and the transport
facilities available. Indian imports being primarily of manu-
factured products, their ability to bear the transport charge is ipso
facto higher,and therefore, there is no necessity for offering lower
rates on the imported traffic which would come to the railways
automatically. It may be said that the higher railway freight
which the importers would pay might be shifted to the consumers,
and thus the burden of rates would ultimately fall upon the Indian
consumers of the imported manufactured products. This is
doubtless true, but only in the long run. This, however, should
not deter the Indian railways from levying the necessary transport
charges upon the imported traffic. The detailed discussion of this
issue isbeyond the purview of the present thesis, but it may be
pointed out that the railways can and should with adequate
higher transport charges on the imported traffic,
justification levy
wherever it can bear the charge, because this would bring adequate
revenue to the railways, and at the same time afford much needed
protection to the indigenous trade and industry against foreign
competition. In other words, in the case of imported traffic, the
ability to bear the transport charge must be requisitioned to the
maximum. This should be done particularly because the imported
traffic enjoys better railway facilities in numerous other ways,
as compared with the internal traffic besides, it is relatively high-
;
1
railway authorities themselves. For a clearer understanding of
the nature of the concession granted on the imported traffic, a
concrete case may be taken up. At the scale rate applicable on the
E. I, K., the charge on sugar from Howrah to Sutna for 615 miles
would have been Es. 0-12-0 per maund, but a special rate of
Rs. 0-8-11 was quoted for the same on actual weight, whereas if
railways because the traffic in white sugar was moving mostly from
the ports. Its effects on the Indian white sugar industry is
from Bombay to Jubbulporo, for 616 miles, was Rs. 0-8-10 per
maund on the same line against Rs. 0-12-10 to Sohagpur, for
494 miles. Thus, the truth is that railway companies fostered
imported sugar traffic contrary to all rational principles of rate-
making. The policy was suicidal both to their own revenues and to
the indigenous industry. These are, in short, the striking features
3
of the rates policy as pursued in the pre-war era.
CALCUTTA PORT
Let us start with the Calcutta port and study the movement of
imported sugar traffic. It may be pointed out that the hinterland
of this port extends from Assam on one side, to the Punjab and
the Central Provinces on the other. It serves as a gate for inward
and outward movements of merchandise of this vast territory.
The movement of traffic to and from Calcutta port shows that the
hinterland extends on the north- easb to Assam, to C. P. on
the south-west, the eastern parts of the Punjab and the
whole of the Gangetic plain comprising the Provinces of Bengal,
Bihar and Orissa and the U. P. The imports of the port, which are
So disproportionate to its exports, consists, mainly of cotton goods,
iron and steel, machinery, sugar and oil. For the present, we shall
be concerned primarily with the import trade in sugar.
Import statistics reveal interesting peculiarities. There has
been a steady growth of imports of sugar up to 1929-30, except for
the year 1927-28 when they received a slight set back. When the
figures of 1913-14 are compared with those of 1929-30, the increase
recorded comes out to be more than double, for, whereas in the
former year Calcutta imported 177,941 tons of sugar, in the latter
year imports rose to 368,969 tons. The value of imports, however,
shows a slightly different tone, due to fluctuations in the price
level. But after 1929-30 the imports have gradually dwindled, due
to the increase in the output of local sugar factories, under the
scheme of discriminating protection. This should not be taken to
mean that the imports have ceased, for even to-day, notwithstand-
ing the heavy protective import duty, the imports have some hold
on the markets in the vicinity of the ports. At the same time, it
cannot be denied that the growth in the output of internal sugar
factories has changed the nature of distribution and of the transport
only one, and therefore the following analysis of railway rates and
the competition inter se of imported and indigenous white sugar has
to be taken with this limitation. It will also be recollected,
CALCUTTA MARKET
The city of Calcutta with its suburbs, which consume the
largest amount of white sugar, and the area of about 150 miles
in the vicinity, monopolised primarily by the imported sugar,
is
2
mile, less than fir^t class rate. Therefore, in Calcutta and its
suburbs the imported sugar has the advantage of 10 annas per
maund over the indigenous sugar. But the Ganga Deshi Sugar
Mill in fact does not export to Calcutta, because it finds it
present would be
it interesting to note the freight to OnHowrah.
the B. & N. W,R., on which most of the factories are situated, the
traffic moves via Mokameh Ghat, and thereafter it is transhipped
supplying the Calcutta market, because it has to pay only Rs. 0-5-1
per maund, which comes to Rs. 0-13-4 to Howrah, when the E. I. R.
share is added to it. Next comes the Bihar Sugar Works, Pachrukhi,
in the Saran district, which pays Rs. 0-6-4 to via Mokameh Ghat,
or Rs. C-14-5 per maund to Howrah. Third comes the New Savan
Sugar Factory, Savan, Chapra district, which pays Rs. 0-15-0 per
maund to Howrah. Other factories have to pay a very high freight
charge. The point to note is that with the development of the
production of white sugar within the country, by the erection of
new factories under the present scheme of protection, unless some
new sugar factories are established nearer Calcutta, the aforesaid
factories will be relatively in a better position to supply the
Calcutta market, which, needless to add, is most important for
white sugar in that part of the country. We do not forget that
this sort ofplanned distribution, which the aforesaid statement
implies, will be feasible only after the distribution of the total
sugar production of the country has been centralised. This is a
very important point which will be discussed at a later stage ;
suffice it to note for the present that the
supply of sugar to
Calcutta market should be carefully studied.
P 9fi
218 RAILWAY BATES AND FARES
Tonnage Tonnage
Factory Stations carried Factory Stations carried
Maunds Maunds
Bhatni 395 Ghughli 1,362
Mairwa 33 Marhowrah 1,404
Saran 174 Gudah Siding 3,986
Pachrukhi 84 Chakia 21,381
TamkohiRoad 874 Lohat Siding 8,910
Padrauna 102 Tarsari 4,286
Lakshmiganj 4,280 Minor Stations 8,391
The traffic from different stations varies with the distance and also
the freight charged. These traffic statistics substantiate the statement
about the relative position which the factories occupy in respect of
railway rates in supplying the Calcutta market, made in the
preceding section. For instance, the suggesion that the Champaran
Sugar Factory at Chakia is most advantageously located for
supplying the markets in question, is strikingly demonstrated by
the above statistics, the despatches amounting to 21,381 maunds.
A similar
advantage is enjoyed by this factory in respect of the
other markets in the same direction. This is not enough. We have
to analyse the position of imported and internal sugar in this part
of the country. This issue is somewhat complicated. In the
following table an attempt is made to present the position in
respect of some of the more important markets.
Stations to
(Vuh Ghat) *
Rs a. Bs.
p. a. p.
Patna Junction ... ... 078 0126
Gaya ...... 8
10 10 11
Gomoh ... ... 12 073
1
internal traffic and the rates charged thereon, with the rates
charged on the import traffic from Howrah. Therefore, of the
I, Similar is the situation about the supplies of cement from the Indian
Cement Factories to Calcutta market, but the problem of distribution
has been successfully solved by the industry.
statement :
Quantity
Mileage Stations from despatched
(maunds)
Ks. a. p.
182 Basti ... 25 075
131 Sardarnagar ... 141 058
99 Bhatni ... 9,719 046
117 Mairwa ... 3,040 052
135 Pachrukhi ... 1,555 105
130 Savan ... 612 057
170 TamkuhiRoad ... 278 6 11
173 Lakshmlganj ... 321 072
225 Chakia ... 419 8 11
429 Howrah ... ... 15 8
by the preceding table. As Bhatni has to pay only Rs. 0-4-6 per
maund, being only 99 miles from Benares, it supplies the largest
amount of sugar. Mairwa comes as a very bad second, partly
because it has to pay a slightly higher rate. As against the
imported sugar, the sugar factories at Sardarnagar, Bhatni, Mairwa
Pachrukhi and Savan have freight advantage of about 10 to 11
annas per maund.
SUGAR 221
Rs. a. p.
Basti ... 1,761 090
Sardarnagar ... 4,335 075
Gauribazar ... 6,495
Bhatni ... 17,161
Mairwa ... 14,546
Savan ... 6,054 075
Pachrukhi ... 22,571 077
Tamkukhi Road ... 378
Padrauna ... 838 091
Lakshmiganj ... 1,750 089
Ghughli ... 2,352 8 10
Marhowrah ... 14,489
Chakia ... 7,126
Lohat Siding ... 1,366 Oil 3
Howrah ... ... 127
* These are
special rates at 0. R.
Station from
^faundl **ate per Maund
Rs. a. p.
Rs. a.
93 Basti 601 043 p.
1
miles. The above four illustrations, selected from the factory zone,
and the sugar traffic carried from the different sugar factories
demonstrate the transport advantage possessed by the internal sugar
factories, as against imported sugar, and the part indigenous factory
sugar plays in the supply of white sugar in this area. In the light
of the statistics adverted to above, it would be no exaggeration to
say that imported sugar does not find a market here, and if it does,
the market must be very restricted and specialised. It should be
noted that the 1st class rate on sugar quoted by the E. I. R. when
the consignment travels over more than 600 miles, adversely affects
the Indian white sugar industry by stimulating the penetration of
imported sugar at reduced rates. It has often been suggested that
the imported traffic does not need any such inducement in the form
of reduced rates, and therefore, to help the deficit budgets and
depleted railway finances these needless concessions must be the
2
first to be removed.
Before we close our review of the E. I. R. rates policy, it would
be interesting to examine a few more typical markets like Cawnpore
and Barabanki. These markets are important for several reasons.
Cawnpore is recognised as the central sugar mart of the country.
Being located in the centre of the United Provinces, which is also
1. Mr. Dale's evidence before the T.B., as the Manager of Savan Refining
Company, may be noted with interest in this connection. He says ;
"People who use sugar manufactured in India are not very keen on
buying imported sugar because they think there is animal charcoal in it.
They would rather buy gur, if the price of Indian made sugar goes up.
The imported sugar comes in generally when the mill sugar is over. Take
Savan or Pachruki for instance. While we have our sugar for sale there
isno Java sugar coming into Savan. We keep our prices at the Calcutta
"
rate plus freightand we sell as far as we can locally.
Vide T. B. Evidence, Vol. II, P. 119.
2. It can hardly bedoubted that the imported traffic in white sugar would
continue unabated even after the concessions in question are withdrawn.
Therefore the continuance of these needless concessions, in face of a
surcharge of 15 per cent, on coal freights, refute the contention of the
Railway Member advanced in support of his action, that "on this occasion
circumstances left no alternative."
The point to note is, as has already been referred to, that the
charged.
Station
Tonnage t.o Tonnage iia Rate per maund
from Maunds
Basti 993
Sardarnagar 5,103
Gaunbazar 525
Bbatni 1,608
Mairwa 504
Savan 417
Pacbrukhi 1,207
Tdmkubi Road 4,837
Padrauna 5,736
Lakshmiganj 1,486
Gbugbli 1,085
Marhowrah 808
Cbakia 1,694
Lohat Siding 732
Tara Sarai 417
Hpwrah
R-29
226 RAILWAY BATES AND FARES
CONCLUSIONS
BOMBAY TORT
Bombay is the next port of importance. It has an extensive
feeding area which adds to its prosperity, albeit of late Karachi and
Kathiawar ports have attracted a portion of its traffic. The more
important part of the hinterland includes Bombay Presidency
( excluding Sind ), C. P. and Berar, a part of the Nizam's Territory,
we have been able to gather from our study. The Belapur factory,
1
be it noted, produces only 3 to 4 thousand tons of sugar annually ,
insufficient. Let us, then, have a table portraying the rates charged
on the G. I. P. from Bombay to the more important consuming
Station to
Khandwa
Nagpur
Ujjain
Gwalior
Dholpur
Agra
Cawnpore
232 RAILWAY BATES AND PARES
There are some very interesting trends of the rates policy and
how it affects our trade and industries. The contrast between the
class and special station-to-station rates from Bombay is interesting,
and much more so when it is noted that most of the class rates are
adjusted class rates. It will be seen that whereas to Agra, for
838 miles, the rate is Rs. 1-11-9 per maund, to Cawnpore for
almost the same distance Rs. 1-8-6 is charged. This most
obvious inconsistency is due to the competition of the E. I. R., or
in other words port competition. The E. I. R. charges Rs. 1-9-2
and Rs. 1-4-8 per maund from Howrah to Agra and Cawnpore
respectively. In order, therefore, to attract the traffic, passing
from Calcutta port to these markets, to Bombay port, these
Rs. a. p. Rs. a. p.
138
433
Jhansi .056 15 10
319
314
Bhopal 11
11 8
10
Ujjain Juhhulpore
198 Gwalior 077 561 Nagpur 1 3 7
274 Agra 10 3 375 Itarsi 13 10
304 Muttra 089 233 Bina 8 10
The foregoing table shows only some of the centres from which
the reduced rates are offered. The traffic from the factories in
Northern India, including Bihar, is routed via Allahabad city and
Naini, the share of the G. I. P. in the total charge being Re. 0-14-0
per maund. The E. I. R. share is 7 pies per maund, and the rest
being of the B. & N. W. Railway. The action of the G. I. P.
Railway is really commendable because, these reduced rates help
the indigenous sugar in competing with the imported sugar in
Bombay. The concession thus offered is very substantial, as will
be evidentif the class rates are taken into account, which operated
internal sugar industry becomes clear, when we note the rate from
moving from the internal factories to ports, but station- to- station
rates are also offered to consuming centres other than Bombay.
For instance, from Cawnpore the following station-to- station rates
are offered :
Rs. a. p. Rs. a. p.
Ujjain 118 12 8
Marwar 112 12 8
Chitorgarh 1 10 3 13
Ajmer 143 10 3
Before we pass on
the distribution of sugar
to discuss
imported from Karachi may be interesting to note the extent of
it
increase in rates that has taken place since the war on the B. B.
& C. I. We have here a few rates which give a rough idea of
the extent of increase :
Agra Fort 15 13 10
Fatehpur Sikri 15 5 14 3
Muttra Junction 15 13 10
n.
Katun
.. .
to
Actual
m&
Rs. a. p. Rs.
1st Class
Kate
a. p.
c . ..
Statwnto
.
Rs.
^
Actual
a. p.
1st Class
Saft
Rs. a. p.
Saharanpur 190 1 10 6 Delhi 18 198 1
recalled that for traffic over distance lower than 750 miles, second
class rate is charged. Local sugar factories have therefore to pay
second class rates. Besides, these rates are not determined purely
by distance, for whereas to Ambala City, for a distance of 843
miles, Rs. 1-8-9 per mannd are charged, the rate to Sirhind, for
844 miles, is Rs. 1-9-9, though the difference is only of one mile.
The differential clause is however observed. But when we note the
rate to Khanna which is Rs. 1-10-2 per maund for 833 miles, we
find that the differential clause is not observed ; for the shorter
distance the higher rate is charged.
BareillyCity 1 7 10 Haldwani 1 9
Bhojeepura 1 7 11 Hargaon 170
Carewganj 179 Lakhimpur Kheri '172
Chandni Chawki 1 9 2 Pilibhifc 1 8 3
These rates are also due to port competition, but the relieving
feature in this case is that similar rates are also available for traffic
moving from these stations to Karachi.
But, as has been already noted, lower rates in question are quoted
to meet the port competition. A
striking fact to note is
still more
"
1. Rates for 1917 are taken from Mr. S. 0. Ghose'a Monograph <m
Indian Railway Rates, "
p. 417.
R.31
242 RAILWAY RATES AND FARES
striking features. One fact which stands out and may be subjected
to strong comment is the policy of the E. I. R., in quoting lower
weight and wagon loads. This, as has been pointed out, is common
with the B. B. and C. I. and N. W. Railways as well, and therefore
this defect in rates policy is not peculiar to this line. But the
E. I. R. is more to blame because the moving from Howrah
traffic
the C.P. and Berar, a little over 3 million acres. The total increase
in the acreage has been about 2 million acres during the last decade,
from 30 million acres in 1920 to 32 million acres in 1931.
This increase fades into insignificance when compared with the
increase in Canada from 18 million acres to 26 million acres, in
1. Vide Report.
WHEAT AND WHEAT-FLOUR 247
somewhat higher price for the May shipment than he does for the
June shipment, and again the June price is slightly higher than
July after that prices become more even. It was stated to the
;
Committee that as the exporter can afford to pay for the above
1
three months shipment, he can in turn afford and does pay a
higher price to the owner up-country in India for deliveries in
thesemonths "- 1 It is very doubtful as to whether the actual
producers of wheat get any share in these higher prices, except that
under economic pressure they are reluctantly made to part with
their produce.
taxes and other expenses. Between May and July prices of grains
in the local markets are generally low, and the chances of the
cultivators taking advantage of the higher prices offered by the
closely linked with the quotations of the port towns, and they in
turn are affected by the conditions of world trade. It would
1. Compiled from the Report of Railway Board : 1930-31 ; Vol. II. p. 164.
R.32
250 RAILWAY RATES AND FARES
1. Sir James Wilson has made very interesting calculations on this point,
in hia Memorandum referred to by S. C. '
Ghose, "Monograph,* pp. 304-05.
WHEAT AND WHEAT-FLOUR 251
RAILWAY CLASSIFICATION
Wheat in the Indian Railways, General Classification of Goods,
is classed grains and pulses, which includes Bajree, Barley,
as
Beans- parched, Black gram, Dhal, Gram, Jowari, Maize, Moong,
Mussoor, Mutt, Oats, Rice, Toor, Wheat, etc., at first class railway
risk. In actual practice, however, railways quote special schedule
rates. The N. W. Railway quotes C/B schedule for distances
less than 233 miles, the basis of charge being 0*333 pie per
maund per mile. On distance of 233 miles C/K telescopic
schedule rate is charged. This basis of charge is as follows :
101 miles C/B schedule rate, the basis of charge being 0*333
at
pie per maund per mile and for distances above 101 miles at
;
The B. B. &
Railway charges the schedule rates similar
C. I.
This being a long distance traffic the rates per mile are lower
than those charged on the internal traffic. Here an interesting
question arises as to whether these rates help the flow of traffic
to ports, and thereby enable Indian wheat to regain the foreign
markets it has lost. Before the war, India was the most
1
important supplier to Great Britain more than 60 per cent, of
,
949 MeerutCity 81 99 11 7
934 Muzaffarnagar 7 10 10 11 4
898 Saharanpur 76 9 10 11 1
843 Ambala 81 10 3 12 7
806 Ludhiana 98 10 10 12 9
802 Jullunder City 10 4 11 3 12 9
788 Amritsar 10 6 11 6 12 7
755 Lahore 10 11 2 12 3
575 MultanCity 76 93 10 7
685 Lyallpur 93 10 5 11 8
299 Sukkur 46 6 10 7 10
721 Sargodha 99 10 10 12
711 StnglaHill 96 10 8 11 11
653 Qojra 89 10 1 11 4
727 Ferozepur 90 10 3 12
WHEAT AND WHEAT-FLOUR 255
The foregoing rates throw good light on the nature of the rates
policy. Let us analyse the rates in 1912. Whereas the rate from
Meerut City was annas 8-1 for a distance of 949 miles, from
Amritsar annas 10-6 were charged for 788 miles. It appears, how-
ever, that lower rates were quoted from Meerut, Muzaffarnagar
and Saharanpur to meet the competition from the E. I. R. to
Calcutta. But when we push our analysis further, even the
local rates show a preferential tone. For instance, from Ambala,
for 843 miles, the rate was annas 8-1, from Ludhiana, for a
shorter distance of 806 miles the rate was annas 9-8, and from
Jullunder and Amritsar for still shorter hauls the rate was higher.
This was due to the competition of the E. I. R. These lower rates
on the competitive traffic helped the export of wheat, but the
result of this competition was that rates on non-competitive traffic
had to be raised, and thus, whereas the traffic from some centres
was given stimulus, that from others received a setback. This was
not in the interests of the community. Besides, the difference in
rates was appreciable, and therefore the consequences were more
mischievous. The rate, for instance, from Saharanpur for 898 miles
was annas 7-6, and from Amritsar for 788 miles, the rate was
annas 10-6, the difference being of as. 3 per maund irrespective of
the longer length of haul. Saharanpur, therefore, due to its location
on the junction of the E. I. and N. W. Railways was able to
procure this preferential treatment in relation to a centre like
Amritsar, notwithstanding the longer distance over which the
ti'affic had to travel, the distance to Karachi and Calcutta
being
898 and 938 miles respectively. Thus, even though Amritsar is
Located nearer to Karachi port it had to pay higher freight charge.
Here the N. W. R. might argue that if they had not quoted lower
rates from these competitive points, the traffic would have passed
on to the E. I. R. This additional traffic carried
at lower rates
the rival line, and if lower rates were quoted they had enough
justification. But from the nature of reduction offered, it becomes
clear that the competition between the two lines must have been
intense. Competition in itself is not bad, per contra, it is a motive
power of an economic society in its dynamic state; but when
256 RAILWAY BATES AND PARES
more than one line, and therefore, the incidence of freight charge
becomes still heavier. Let us illustrate the point. Suppose, for
instance, wheat from Jullunder, Ludhiana and Ambala is required
for local consumption at Cawnpore, Agra or Allahabad. Here the
WHEAT AND WHEAT-FLOUR 257
traffichas to pass over more than one line and although the system
is the same, because all the railways concerned are State-owned and
State-managed, the telescopic rates levied are calculated not on the
basis of the total distance travelled, but on that of the individual
lines separately. The result is that the incidence of rates is raised
on the internal traffic.
rate is as. 12-7. The table submitted below shows the nature of
railway freight charged on local traffic in 1913 and 1932.
those paid by the port traffic. This would substantially help the
flour-milling industry.
Out of the total wheat traffic of about 4 lakhs of tons booked
on the E. I. R. in 1911, about 3-2 lakhs of tons were consigned to
Howrah and Khidderpore Docks 1 part for local consumption and
,
on the E. I. R., for 718 miles, is as. 9-7, the difference between the
two being of as. 1-9 per maund in favour of the latter. This is a
substantial difference, especially when the traffic moves in bulk.
Again, while from Multan City to Karachi, for 575 miles, the
N. W. R. charges10-7 per maund, the E. I. R. charges only as.
as.
8-4 from Khaga Howrah, for 564 miles, the difference being of
to
about as. 2-3 per maund. A similar difference in the incidence of
freight charged is maintained even for shorter distances. For
instance, the rate charged on the N. W. R. from Sukkur to Karachi,
for 299 miles, is as. 7-10, while the E. I. R, charges as. 6-0 from
Gaya to Howrah, for 292 miles.
on the 0. R. R., because the two lines were worked separately then.
Despatching stations on the E. L E.
Distance Station Rates per Maund
1011 1917 103S
a. p. a, p. a. p.
219 Sahebganj 34 37 49
332 PatnaCity 48 4 11 66
411 Buxar 53 59 71
564 Khaga 53 6 10 84
633 Cawnpore 53 6 10 89
818 Farukhabad 6 10 8 10 10 5
8C4 Hathras 69 89 10 4
823 Aligarh 6 11 8 11 10 6
854 KhurjaCity 72 90 10 9
889 Ghaziabad Junction 75 93 11
WHEAT AND WHEAT-FLOUR 261
667 Madhoganj 64 83 92
718 Shahjahanpur 68 87 97
762 Bareilly 6 11 87 10
835 Chandausi 73 93 10 4
881 Moradabad 76 94 10 5
568 RaiBareli 5 11 7 10 84
The basis of these rates from the competitive points is similar
lines, both the N. W. and the G. I. P., have a higher basis of charge.
Therefore, the E. I. R. can easily attract traffic without having to
resort to the manipulation of rates.
Barabanki 10 7 12 2 12 11
10 9 12 4 13 3
Behraragbat
10 12 7 13 10
Madhoganj
10 13 1 14 1
Shahjehanpur
Bareily
10 H 10 11 13 3
Chandausi 10 2 12 1 13 3
Moradabad 10 9 11 11 13
Rai Bareily 10 12 7 13 1
262 RAILWAY RATES AND FARES
1011 1917
a. p. a. a. p.
p.
Barabanki 06 11 1 11 JO
Behramghat 97 10 11 Jl 10
Madhoganj 97 11 fi 12 6
'Shahjahanpur 9 11 116 13 11
RaiBareli 97 11 2 11 8
Azamgsrh 40 38 78
Bfthraioh 57 3 10 95
Ballia 31 40 71
Balrampur 57 40 97
Ba*ti 45 41 86
Chauri Chaura 311 43 82
Chupra 22 43 65
Darbhanga 22 51 73
Ghazipur City 2 10
51
45 73
Gonda 311 90
Gorakhpur 43 40 S3
*
AtO. R.: W./400; L
WHEAT AND WHEAT-FLOUR 263
Ly/illpur 3 1
Singla Hill \
Ambala City \ ^ \\ Hatizabad i 32
Kajpura Junction J Gojra j
shows that the railways had hitherto failed to gauge the magnitude
WHEAT AKD WHEAT-FLOUR 265
Distance Station
C75 Katni Marwara
&Via
654 Saugor
839 Cawnpore
520 Nagpur
472 Wardha
493 Hinganghat
616 Jubbulpore
702 Damoh
583 Gotegaon
From the foregoing table it will be seen that in some cases the
ratesquoted are station-to-station rates, and in others schedule rates.
This is so because from some stations, station-to-station rates, lower
than the schedule rates are quoted. It will be seen that the station-
to-station rates carry considerable concessions as compared with the
schedule Thus, for instance, the special rate quoted from
rates.
as. 8-5, whereas the schedule rate would be as. 12-11, Here, too
the special rate carries a concession of about 30 per cent. Similarly
the other station-to-station rates are also lower than the schedule
rates ; the extent of concession in individual cases varies. From
some important wheat despatching stations to Bombay, however,
station-to-station rates are not quoted and hence the schedule
rates are applicable as given above.
PREFERENTIAL RATES
noted, the traders are concerned more with the relative level of
rates than with the absolute one, and therefore these rates deserve
a detailed consideration. That "Bombay is a very important market
for wheat produced in the Central Provinces can hardly be gainsaid.
Mr. Ghose found that of the total wheat traffic of about 87 '5 lakhs
s. 12-11, whereas from Cawnpore, for 839 miles, it is only 'as. 10-8,
,nd from Jubbulpore as. 9-0. Again, the rate from Damoh, for
02 miles, is as. 11-9, while Gotegaon has to pay as. 11-3 for
>83 miles, Even the Gotegaon rate appears to be preferential when
ompared with the rate charged from Kareli.
Let us then analyse the possible causes of this apparently
referential rating. The Cawnpore-Bombay rate seems to have
>een fixed inview of the Cawnpore- Howrah rate which is as. 8-9.
fyom Nagpur a lower rate is quoted because of the alter-
tative route on the B. N. R. to Calcutta. These lower rates
re, thus, due to port competition. This assumption is further
trengthened when the rates charged from Hinganghat and
Vardha are taken into account. The rates charged increase as the
istance between the Nagpur Junction and the despatching stations
ncreases, i.e., the rates change inversely with the probability
fcompetition from the B. N. R. Similarly, the rate quoted from
ubbulpore has been affected by the competition of the E. I. R. via
sTaini, and the B. N. R. rates charged from Saugor and Damoh are
ikewise affected by the competition of the alternative route on
tie B. N. R. and the E. I. R. From the aforesaid review, therefore,
b follows that the G. has quoted special station-to-station
I. P. R.
ates, lower than the schedule rates, only from the competitive
ioints. But this inter-railway competition places serious handicap
n the traffic from the non-competitive points.
from Saugor and Gotegaon the increase in rates amounts to as. 3-4
and as. 3-6 respectively.
From the review of rates in 1917 and 1932 it is clear that the
provided that the rates do not fall below the minimum. This
1
practice prevailed in 1911 and is being continued to this day, as
,
Of the minor changes introduced after the war, one which may
be noted is the adjustment of rates from Shahpura to Harda and
1
of traffic. These disparities have been removed, as will be seen
from the foregoing rates. Since 1934, station-to-station rates from
Kareli, Banapura group of stations have been totally discontinued.
indeed, a very important point, and it is difficult for us, with the
"
1. Sec Ghose's Monograph/' p. 320
270 RAILWAY RATES AKD FARES
give a much needed relief to the wheat trade hardly needs any
emphasis. The consumers of wheat at Bombay and the shippers
PRE-WAR RATES
Before the war, due in no small measure to the intense and
often cut-throat competition inter se of the different railway
system in the country, the B. B. & C. I. also quoted competitive
low rates to Bombay port from distant centres, to have a share in
the competitive traffic. But as will be shown presently, the
reduced rates offered by this railway were only such as compe-
tition warranted, and do not show a medly of disparities as in the
case of the G. I. P. This was presumably due to the greater powers
of regulation in respect of port traffic possessed by the Government
1
over the B. B. & C. I. under their contract The fact, however,
.
Dwelling on the powers Mr. Gliose lemirks "In the case of Karachi, a
:
special provision has been made in the B. B. & C. I. R., Contract that the
Railway Board may at any time require the B. B. & C. I. R., to quote
over that railway sjstem such rates in respect of the conveyance of
passengers and goods to and from both the ports of Bombay and
Karachi as to secure the carriage of trade to and from such ports on
equal terms, and it is further provided that the Railway Board may
require the quotation of a rate from stations of consignment to
destination whether the route entirely over the undertaking, or
is
whether the route is only partly over the undertaking. The B. B. &
C. I. R., have also in respect of traflic originating on their metre gauge
system, to quote the same rate to Karachi via the J. B. R. and the
N. W. and to accept mileage division of rates and are not allowed to
R.,
charge block rates to Karachi, but this is the only instance where such a
As will be seen, the rates given above are not completely free
x
from disparities , but this does not refute the claim of relative
evenness. Before, however, the disparities are discussed it is
Baroda and Ajmer are the three most important wheat milling as
well as consuming centres on the B. B. & C. I. R., and their wheat
supply is drawn from the Punjab and the C. P., although there
are other areas as well which send wheat in some quantities.
Besides, these centres will best illustrate the characteristic features
-
of the rates policy as affecting the internal traffic. The table given
below shows the rates charged from the more important wheat
producing 'districts in the Punjab.
R. 3fi
274 RAILWAY BATES AND FARES
Station from To
Baroda Oodhra Ahmedalad Nadiad
Rate Rate Rate Rate
Amraoti 13 4 14 7 15 14 3
Akola 11 10 13 1 13 6 12 9
Kagpur 102 115 1 1 10 111
Khandwa 10 1 090 10 10 10 4
that certain countries take only to the one or the other. The flour
milling industry of the United Kingdom aptly illustrates this
economic tendency.
WHEAT AND WHEAT-FLOtft 275
TARIFF PROTECTION
But in this connection it should not be overlooked that there
isan essential difference in the technique of the two processes ;
every State.
INDIAN FLOUR MILLING INDUSTRY
SCHEDULE RATES
Schedule rates, lower than the second class rates, are quoted by
the more important railways. The N. W. R. quotes C/B schedule
1. Under the present classification of goods which contains ten classes, the
rates on flour at owner's risk, having a uniform basis of -333 pie per
maund per mile, irrespective of the length of the journey, a rate
similar to that charged on grains for distance of less than 233 miles
on the same line. The E. I. R. charges C/M schedule rate, at
1
owner's risk. The G. I. P, and the B. B. & C. I. charge C/B/C/J
schedule rate at owner's risk, referred to above.
The B. N. R. charges C/H schedule rate at owner's risk, the
basis of charge being as follows :
STATION-TO-STATION KATES.
These schedule rates are applicable on the flour traffic
The most striking feature of the above rates is that they are
quoted from the competitive points. No doubt the towns referred
to are important centres of flour milling industry, and as such
the reduced rates facilitate the movement of traffic to the ports,
*Plus a 'transhipment charge of two pies per maund, when traffic is booked
fronvG. I. P. R. stations and via.
1. For the basis of charge refer to the rates on wheat adverted to above.
On wagon loads, however, still lower rates are charged. C/B schedule
rate is quoted, at 0. R. for distances less than 233 miles, and for longer
distances C]K schedule, at 0. R.
2. These rates are applicable on wagon loads: C/300-B. G. C/200 M. G..
O.K.
278 RAILWAY RATES AND FARES
via Ghaziabad :
Hate per N W. R. E. I. R.
From To Maitnd
a. p. a. p. a. p.
Ambala City Cawnpore 8 11 39 62
,, Aligarh 65 3 11 26
Ferozepur Cawnpore 12 9 71 68
These rates are indeed very useful for the movement of
internal traffic, and therefore the necessity for the extension of
similar rates on a more liberal scale is urged in the interest of
trade and industries. Recently some changes have been made.
Station-to-station rates are now available from Patiala and Amritsar
to Cawnpore, but the rate from Ambala City to Cawnpore has
been raised from Rs. 0-8-11 to Rs. 0-9-9 per maund.
Recently the rates from Agra, New Delhi, Hathras city and
Cawnpore have been raised. The freight from Agra has been raised
from Re. 0-11-1 to Re. 0-14-0 per maund. The rate from New
Delhi has been raised from Re. 0-11-7 to Re. 0-12-4. Similarly,
rates from Ilathras and Cawnpore have been raised to Re. 0-13-8
and Re. 0-14-4 respectively.
2
The Current Rates for Flour
These rates when compared with the pre-war rates show the
extent of increase that has taken place. The incidence has doubt-
less increased considerably, especially on the
traffic which passes
over more than one Of course the rates that we have collected
line.
are for the local traffic only, but from the higher incidence of rates
per maund per mile, which the traffic for lower distance has to
bear, we can safely draw the conclusion as stated above. The
pre-war rates were as follows :
from as. 3-10 to as. 6-6. It will be seen that other rates have also
recorded a similar increase, the precise percentage varying with
the distance traversed. Rates have been nearly doubled, except
for longer distances. These rates may have had enough justification
in 1919, or 1921, the prices had raisen to the peak 1 levels, but
when
at present these rates place a very heavy tax upon the people,
It has been remarked, and not without justification, that after the
close of the war, Indian railways were permitted to raise their rates
much above the level warranted by the situation, with the result
that railways, like the industries receiving more than necessary
expenses have risen steadily, even though prices have been falling.
The raising of rates has had an undesirable protective effect so that
to-day the railways are unwilling to lower their rates and strongly
any claim made out for their reduction. This faulty measure,
resist
with feverish haste, when rehabilitation had become a
initiated
mania with the belligerent countries, of whom India was one, has
plunged the entire railway system of the country into the whirl-
pool of inefficiency, of which rising working expenses and falling
revenue receipts are the symptoms. At the initial stages, these
higher rates did in fact temporarily swell up the receipts, as they
synchronised with the rise in prices, but the curtain of delusion
was soon With a turn in the business activity, the burden
lifted.
of railway rateswas felt, and as the industrial depression gathered
Strength, the complaints from the trade and industries became
more frequent. But the railways stuck to the old rates, with the
result traffic dwindled and with it the receipts. This is the
vicious circle which makes the task of re-organising our railway
policy at once essential and more difficult.
CONCLUSIONS
PAPER
THE IMPORTANCE AND SCOPE OF THE STUDY
In chapter we shall study the organisation of paper
this
the total output has fluctuated from year to year, except during the
war, when it steadily rose from about 17 thousand tons to about
2
23 thousand tons.
The industry far from making any progress has barely
maintained itself. This unfavourable position of the industry
20 per cent ; and Brown Badamis and News about 30 per cent.
These are, however, only general figures and hence subject to alteration
according to the demand of the market.
Vide T. B, Report on Paper Industry, Evidence Vol. I, p. 241.
2, Ibid,, p, 241.
PAPER 285
pp.
241*42.
284 RAILWAY RATES AND FARES
the total output has fluctuated from year to year, except during the
war, when it steadily rose from about 17 thousand tons to about
2
23 thousand tons.
The industry far from making any progress has barely
maintained itself. This unfavourable position of the industry
20 per cent and Brown Badamis and News about 30 per cent.
;
These are, however, only general figures and hence subject to alteration
according to the demand of the market.
Vide T. B, Report on Paper Industry, Evidence Vol. I, p. 241,
2, Ibid,, p, 241.
PAPER 285
different kindsand the remedy can only come with the expansion of
the industry. Also the Government Departments require large number
of the different kinds," Tariff Board Report on Paper Industry, Vo. I,
241-42.
pp.
286 RAILWAY RATES AND FARES
and waste paper were collected from the important centres within
the country and the wood pulp was imported.
The auxiliary raw materials used by the mills and their
6
approximate annual consumption was as under :
1. Ibid, p. 243.
2. Ibid, p. 243.
3. The royalty is paid on the following scale :
Western Circle Re 14-3-1 ; (per ton). Nepal Rs, 8-0-0. per ton.
6, Ibid. p. 246.
PAPER 287
1
Most of these materials were also purchased locally.
2
Badamis, Browns etc., and the aggregate annual output varied
,
The primary raw materials used by the mills are grass, jute,
4
rags, hemp, waste paper and imported pulp. Of these raw
1. Ibid. p. 247.
2. The average proportion of the different varieties was as follows :
materials, grass and wood pulp are by far the most important and
constitute about 75 per cent, of the total supply of raw materials
required. So far as wood pulp is concerned, railway rates are not
important, because imported from foreign
it is countries, and rail
1. Ibid, p. 134.
PAPER 289
Per cent.
White Printings ... . 38-14
"Writings 24-64
Blottinga 1.92
Unbleached, etc. 772
Antiques 5-27
Azure Laid 0.28
Coloured 0.47
Badami, etc. 21-46
Ibid, p. 468.
2. Ibid, pp, 469-70.
R.37
230 BAJLWAY BATES AND FABES
Badamis and Brown, about 30 per cent whites, and 20 per cent
miscellaneous.
The primary raw
materials used by the mills are rags, hemp,
and waste paper. According to the present rate of
jute, sabai grass
output the average annual consumption of different raw materials
is sabai grass 1,125 tons, rags 1,110 tons ; hemp 637 tons, jute 555
tons, and waste paper about 210 tons. These primary raw materials
are drawn from the United Provinces, the Punjab, Rajputana, the
Central Provinces, the Nepal Gunj Forests, the Kheri Forests, and
the Dehra Dun Forests, the distance to be traversed varying from
10 500 miles. Contractors are employed to collect the raw
to
1. Ibid, p. 472.
2. Ibid, pp. 34-35.
3. Ibid. p. 36.
PAPER 291
The Deccan Paper Mills Company was formed in 1885 and the
Mill, which is situated at Mundhwa adjoining the Hadapsar Railway
Station, about 5 miles from Poona, commenced manufacture by the
end of 1887, having a capacity of about 1,700 tons per year. The
Mill manufactures various kinds of paper such as ledge and azure
laid, superior and ordinary white writings, and printings, coloured
papers, badami printings, white and brown cartridge, and
wrappings. Of the total output the percentage of different grades
in the pre-war period was azure laid, writing wove, and cream
:
per cent ; white cartridge and badami 3 per cent; brown 11 per cent.
Since 1914 the proportion has been : azure laid and cream laid 15
per cent; white printing 34 per cent; badami printing 39 per cent;
coloured printing 2 per cent; brown 10 per cent. Thus, there has
been a remarkable change in the production of the different grades
of paper. The change is obviously due to the nature of the demand
and the foreign competition. Badamis are seemingly more in
demand and therefore the output has been raised from 3 per cent,
to 39 per cent. But the most important fact to be noted in this case
is that the progress of the mill has not been steady and its aggregate
The primary raw materials used by the mills are rags, imported
pulp, gunny, hemp, old ropes and waste paper the precise ;
per ton at pitsmouth, plus Rs. 9-7-0 per ton as railway freight
and thelatter costs Rs. 11-8-0 per ton pitsmouth, plus Rs. 16-13-0 as
2
railway rates.
2, Ibid. p. 665,
PAPER 293
clearly brings out that the former area more costly, since the
is
railway freight is more than treble than that from the Sahebgunj
area. The variations in railway freight paid by the mills can be
2
seen from the statement given below :
9
Early Late
Areas 1913-14 1920 1022 1924 1924
Western Circle ... Nil 8 1 10 11 9 11 8 1
and a royalty of about Rs. 1,77,500 per year has to be paid for the
same. It seems that the Company acquired this area, because
during the War production had received a marked stimulus, and
therefore competition among the mills for Sabai grass, which was
thp most important raw material known then, increased. Besides,
the price of imported pulp had risen considerably. The radius
was therefore enlarged to have an adequate supply of raw mate-
rials assured. The mills had increased their consumption of grass
from 17,283 tons in 1914 to 21,400 tons in 1923-24 and that of
wood pulp had actually declined from 6,952 tons to 3,964 tons
4
during the same period. Sabai grass was being increasingly
utilised and therefore the mills had to get their supplies from
Western Circle areas. That was, however, an abnormal period.
The continuance of the same cost can have little justification
to-day, with the return to more stable economic conditions, and
much less so in future. Above all, it may be said that the mills
drawing the supplies of their raw materials from such distant areas
Tons
have no future. There are, however, other grass fields, besides the
Western Circle areas, which are nearer the mills, and the output
extracted from them is as follows:
1. Ibid, p. 337-38.
2. Ibid, p. 134.
296 RAILWAY RATES AND FARES
this primary raw material would not go up, even if the manufac-
ture was confined to its present limits. In short, the quantity of
Sabai grass that can be made commercially available is restricted.
"
The Upper India Couper Mills use Sabai grass and rags in
almost equal quantities in addition to jute, hemp and waste paper.
Rags and the raw materials other than Sabai grass are collected from
the more important towns like Cawnpore, Hathras, Muttra, Aligarh,
Delhi, Meerut, Ambala, Khurja, Muzaffarnagar, Bulandshahar,
Ferozabad, Ghaziabad, Benares, Allahabad, etc. These materials
are collected by the agents. But the supply of rags and hemp,
even though cheaper than grass, cannot be relied upon since the
sources are scattered over a very wide area. Mr. Nabi-Ulla was
1
right in saying that the supply was precarious. Therefore, the
future expansion of the mill cannot be based on rags and hemp
as the primary raw materials, although they will continue to
aid production.
1. Ibid, p. 83~
PAPER 297
Total ... 39 13 1
"""
1. Ibid, p. 499,
R.38
298 RAILWAY RATES AND FARES
a material for paper making, the Indian paper industry would have
been relegated to an insignificant position. Thanks to the labours
of Messrs. Sindall and Raitt, Indian has become a pioneer in a most
important branch of paper making. Though, paper made from
creep into the finished paper, whereas there is no such fear in the
case of bamboo. In view of this, bamboo is expected to prove a
cheaper raw material for paper manufacture than sabai grass. The
present cost of bamboo, which is slightly above Rs. 55 a ton is
expected to fall substantially in future with a better and fuller
working of the mill. The
Board found that as the annual
Tariff
extraction of bamboo from the Kasalong reserve was comparatively
small the cost of extraction was high. Even so the cost delivered
at Naihati in 1923-24: was lower by about Rs. 5 a ton than the averge
cost of grass delivered at either the Ranigunj or the Titaghur mills
in that year. Therefore, the Board held that given time and
perseverance, the Company will succeed in bringing down the
cost substantially. Thus, bamboo offers good prospects for future
development, and there is good ground for hoping that the paper
industry based on bamboo will ultimately be able to do away with
protection.
PRESENT POSITION
mills, but their capacity as well as the actual output has increased
appreciably. There has been no change in the equipment of the
factories of the Titaghur Mills Company and the Bengal Paper
Mills Company, in as much as they still have four machines each,
as they had in 1925, although there have been some minor changes
in the technique. Similarly, the Upper India Couper Paper Mills
Company has continued its operations with two machines without
the second report in 1931, which is the latest available, the capacity
1
has risen to 45,000 tons a year an increase of about 12,600 tons, due
,
Us. a. p.
1 to 100 miles ... ... 043
Plus 101 to 200 ... ... 033
Above 200 ... ... 026
The L/W schedule has a slightly higher basis of charge.
Per 4'Wheeled wagon
per mile.
Rs. as. p.
1 to 100 miles ... ... 060
Plus 101 to 200 ... ... 040
Above 200 ... ... 030
The R. & K. Railway charges C/B schedule rate, at 0. R. on
wagon loads (W/120), on a uniform basis of 0'333 pie per maund
per mile.
2. Rags
Next to grass another important raw material used by the
Indian paper mills is rags which we shall presently study. Rags are
classified as 1st. class railway risk in the General Classification of
Goods. Some railways, however, quote lower rates when the
traffic is booked at owner's risk in wagon loads. The B. B, & 0. 1.
Railway quotes C/B and C/J schedule rates when traffic is booked
in wagon loads (W/200 B. G., W/120 M. G., or N. G.) at 0. R., the
former schedule rate being applicable in case the traffic is carried
for distances less than 300 milea and the latter for distances of
300 miles and over. The C/B schedule has a uniform basis of
charge of 0-333 pie per maund per mile. The basis of C/J
PAPER 303
applicable only to distances of 300 miles and over, the rates for
distances of less than 300 miles as contained in this schedule do not
is given below :
Grass and rags are the two most important raw materials
by the paper mills. Imported pulp is also largely
largely utilised
used by the mills, and this tendency has received a stimulus since
the last few years, due to a fall in the price of pulp. Wood pulp is
"
1. The imposition of protective duty on paper while wood pulp is
admitted duty free has naturally acted as a stimulus to an extended use
of imported pulp.
Vide, T. B, Report, 1931. Para. 16.
PAPEK 305
It will be seen that the railway freight from the Western Circle
area is very heavy, and therefore it is not surprising if the
charge, because the rates adverted to above are special rates, lower
than the ordinary rates, applicable only on the traffic passing to
the mills. Rates from the Sahebganj area are lower because of the
distance which is about 200 miles only.
Since 1934, however, the rates have been raised from some
stations. For instance, the rate from Soneh Road has 'been raised
from Rs. 75 to Rs. 83. The higher incidence of rates will be seen
from the following table :
Rs. a. p. Rs. a. p.
Via Ghaziabad 75 83
Soneh Road ... 75 83
Najibabad ... 74 81
Gajroula 71 78
Babrala 70 77
Chandauai .., 63 75
Station from
Japla
Bariarpur
Hazaribagh Road
Mirza Ohowki
Sahebgunj
The traffic is routed via Mokameh Ghat, and the rates have been
kept specially low to stimulate traffic moving to the mills. The
lower level of rates becomes still more clear when it is recalled that
the traffic has to pass over two railway systems, the B & N. W. K.
and E. L R.
important towns via Naihati with a view to point out the incidence
of freight on the traffic moving to these mills.
freight per maund per mile would work out to be a little higher in
the case of rags than in that of grass. This is due to the fact that
the rates on rags noted above are on actual weight, while those
on grass are applicable for wagon loads only. Further, it seems
that since rags are collected from scattered sources and in small
lots even were offered on wagon
if special station-to- station rates
the mill can with ease draw its grass supplies from that area instead
of stopping work. This is indeed a good facility. Another import-
ant feature of the foregoing table is that in respect of railway
transport facilities, especially in the areas referred to therein, the
Ranigunj Mill is in a position almost similar to that of the Titaghur
and Kankinara Mills. But, here it may be noted, as we shall show
in detail later, that the Ranigunj Mill draws its grass supplies from
Rs. a. p.
1. These rates are quoted via Lucknow for traffic to Badshanagar and are
applicable
on wagon loads.
PAPER 311
"
The rates are subject to the minimum charge of Rs. 10/- per
4- wheeled wagon There are siding charges which are levied
used.
in addition to the above rates. Further, the charge from Poona to
raw material, obvious that the area from which it can draw its
it is
In addition to rags and gunny pieces, the mill also uses waste
paper which is Bombay and Madras, The value of
brought from
the material varies from Rs. 15 to Rs, 80 per ton f.o.r. Bombay.
The railway freight from Bombay to Hadapsar station is Re. 0-4 11
per maund, which amounts to Rs. 8-6-0 per ton. The freight from
Madras to Hadapsar is Rs. 1-0-9 per maund in wagon load
minimum weight being charged at 300 maunds
consignments, the
per wagon. Wood pulp is imported and the railway freight from
Bombay to Hadapsar is Re. 0-4-11 per maund on actual weight.
There are no wagon load rates. Coal is brought from C. P. and
Bengal. Railway freight from C. P. collieries is Rs. 7-10-0 per
ton and from Bengal collieries it comes to Rs. 13-14-0 per ton.
Chemicals and stores are purchased from Bombay and the railway
rates to Hadapsar work out as follows .
the distance from Naihati is 16 per cent greater than from Bombay
1
and the freight charge 100 per cent."
is On being asked by the
President to give further information, Mr. Carr of Messrs. Balmer
Laurie & Company, Managing Agents of the Bengal Paper Mill
Company, gave the details of railway freight to Lahore, as paid
by
the importer and by the Ranignnj While the rate from
Mills.
Ranigunj to Lahore for about 1,200 miles was Rs. 60 per ton, that
from Karachi to Lahore for about 725 miles was Rs. 26-10-0. 8
This was the condition then. The task set before us to find out as
to how far this preferential treatment is the constituent element
of the railway rates policy as pursued at present. shall also We
study the marketing conditions and endeavour to point out the
incidence of railway rates on the movement of traffic.
Per cent
ing as it does about 23 per cent, of the total output of the Titaghur
and Kankinara Mills. The importancemarket is of the Calcutta
8
The Calcutta market
equally great to other Bengal mills as well.
and the purchases made by the Government and Railways together
account for more than 60 per cent, of the total annual production
of the Company. Next in importance is the Punjab area, with
Delhi as its Consumption in the towns near
distributing centre.
Calcutta is Bombay consumes about 6 per cent
about 11 per cent.
of the aggregate production. Burma and South India each
consume about 5 per cent. The United Provinces ranks last,
because the Upper India Couper Mills are more advantageously
located in supplying this area.
Rs. a. p. Rs. a. p.
245 Bhagalpur and Via 3 10 032
273 Gaya 060 050
410 Benares Cantonment 072 061
493 Allahabad and Via 075 062
612 Cawupore 092 078
Moradabad 12 1 10 I
traffic has a clear advantage over the importer. The same is the
case with the long distance traffic. Even in those centres where
the imported traffic gets the advantage of port competition, in-
ternal traffic has a relative advantage. For instance, to centres
like Agra, Dehli, Meerut and Saharanpur the importers pay
Rs, 1-9-8, Rs. 1-9-0, Rs. 1-10-2, and Rs. 1-10-10 respectively
but the local manufacturers booking from and via Naihati have to
pay very low charges, as will be seen from the foregoing table.
It seems, however, that these reductions in rates offered
This change in the rates policy is probably due to the fact thai
with the reduced rates hitherto available, traffic did not increase
because as pointed out by Sir W. Carey, railway rates do not affecl
the prevailing price level which is determined by foreigr
competition. If so, the railway authorities will get better receipts
without any adverse effect on the industry.
Other local mills enjoy similar concession rates which are nol
available to the importer. The Bengal Paper Mill Company'*
Monghyr J MeerutCity
Cawnpore 078 065 Jubbulpore 092 7 *
When we compare the rates paid by the Eanigunj Mill and the
importer and also the rates paid by the Naihati and Titaghur grouf
of mills, the most obvious conclusion which emerges is that the
Ranigunj Mill has a freight advantage in the nearer as well as up-
country markets over all others, excepting the Upper India Coupei
Mills, as we shall point out later. Thus, for instance, to market*
nearer Calcutta like Gaya, freight from and via Naihati is Re, 0-6-0
from Howrah Re. 0-10-11, and from Ranigunj Re. 0-3-10 pei
maund on actual weight. To Cawnpore, rates from and vis
Naihati are Re. 0-9-2, from Howrah Re. 1-6-9 and from Ranigun;
Re, 0-7-8 per maund. To Delhi, likewise, Ranigunj Mill has ar
advantage because freight from and via Naihati is Re. 0-13-3, froir
Howrah Rs. 1-9-0 and from Ranigunj Re. 0-11-10. It does nol
come as a surprise to note, therefore, that whereas Titaghui
Company's mills are hardly able to sell about 23 per cent, of theii
output in these areas, the Ranigunj mill disposes of more thati
40 per cent. No doubt the total quantity sold by the Titaghui
Company's mills in these areas is greater than that of the Ranigunj
Mills, but what we intend to emphasise is that the freighl
concession granted by the railways facilitates the marketing of th
In this case also the rates have been raised since 1934, as will
be seen from the following table :
Agra 12 5
Angarh 12 10 10
Allahabad 086 7 1
Baroilly 12 10
Cawnpore 10 1 8 5
Delhi 13 11 11 7
Farukhabad 12 8 10 7
Gaya 5 9 2
Luoknow 9 11 8 3
Meerut City 13 11 11 7
Moradabad 12 8 10 7
Patna 10 4 10
consignments be noted.
per maund on actual weight and Re. 0-3-2 on wagon load consign-
ments but via Lucknow to Aligarh for 238 miles the rate quoted
;
rate structure ; rates on traffic moving from local mills have been
raised. This has restricted the facility of lower rates hitherto
available to the local mills.Imported traffic has also been affected
by change in policy, for reduced station-to-station rates, which
this
were available for traffic moving from Howrah both on actual
weight and in wagon loads, are now available only on wagon loads,
the former concession having been withdrawn. Further, the
rates on wagon loads have been raised, as will be seen from the
following table :
Yeotmal 1 3 11 Surat
Jubbulpore 176 Rajkot
Nagpur 143 Sholapur
R.41
322 RAILWAY RATES AND PARES
since the freightfrom the port to the markets is higher than that
from the mill. But in these markets the demand is limited
to small quantities and is for various kinds of paper. In the
centres in Upper India, like Cawnpore, the Couper Mill and
the Bengal Mills have an advantage in the form of lower freight.
The same is the case with the markets in the Punjab. This leads
us to the conclusion that the Reay Mills have to^ sell a greater
part of their output in markets where they have no freight
advantage.
SUMMARY OF CONCLUSIONS
1. The per capita consumption of paper in comparison with
other countries of the world is deplorably low and if Gladstone's
to be imported.
INDIVIDUALISTIC POLICY
The most striking feature of the railway rates policy as dis-
cussed in the preceding pages is the individualistic policy pursued
by the Indian railways. Doubtless, it is difficult to visualise the
damage caused by the policy to the industrial development of this
country. Much less will it be possible to assess precisely the
harm done to individual industries. However, in the body of
the book we have endeavoured broad outline, how
to point out in
concerned with numerous illustrations
this policy affects the trades
in support of our remarks. The detailed data which we have
collected unmistakably demonstrate the injurious effects of such
a policy, and call for an urgent enquiry. Such a policy might
have had some justification when the Indian railways were owned
and managed by Companies, and the Government of India could
not exercise adequate control over their rates policy but the ;
Japanese export houses. The same is the case with our other raw
materials. This excessive dependence upon foreign demand for
our raw materials is a very serious weakness in our body- economic,
more growing economic nationalism. The
so to-day in the face of
DIFFERENT GAUGES
Defects in the construction of railways in this country have
an adverse effect on the maintenance and growth of internal trade
and industries, because Indian railways, from their very inception
THE NEED FOE A NATIONAL POLICY 327
PREFERENTIAL RATES
The prevalence of numerous preferential rates is another most
glaring defect of our rates policy. It is due to the lack of effective
K, 42
330 RAILWAY RATES AND FARES
Bengal Paper Mill Company, 187-88, lay, 16-17; imortance of cost basis,
pany, 130-31; Sone Valley Portland goods from Bombay, 52-56. Cawn-
Cement Company, 131-32. pore mills: "organisation 79; rates
Cement Marketing Company of on mill stores, 82; rates on piece-
India,
146. goods, 82-83; rates on raw cotton,
Coal-fields Committee Report, 79-81. Nagpur mills: organisation,
171,
173. 72; rates on mill stores, 76; lates
Coal industry: embargo on coal, 178;
on.piece-goods 76-79; rates on raw
further reductions in rates in 1929, cotton, 76-79: Sholapur % mills:
135n, 136n, 137n, 138n, 139n, 142n, 245; railway classification, 251;
144n, 145n, 148n, 156, 158n, 160n, rates on the B. B. & C. I. Railway,
161n, 172, 178, 223n, 224n, 225, 270-74; rates on the E. I. Railway,
226, 229n, 230n, 240n, 284n, 259-65; rates on the G. I. P.
285n, 286n, 287n, 289n, 290, 291, Railway, 265-70; rates on the
pioneer regions and joint costs, 12; als, 113-14; rates on piece-goods,
16; 31. 114-16. Baroda Mill: rates on
Titaghur Paper Mills Company: auxiliary raw materials, 104 rates