The Railways in Colonial South Asia

Economy, Ecology and Culture

Ganeswar Nayak

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9781032057378
• eBook ISBN: 9781000427486
• Edition: 1
• Topic: History
• Subtopic: Indian & South Asian History
• Index: History

This book is an interesting collection of essays on the Railways in Colonial South Asia. The book introduces the key concepts which have now entered the study of railway history, e.g. economy, ecology, culture, health and crime through the various essays. The well researched essays include those on the Imperial Railways in nineteenth century South Asia, Pakistan Railway, Impact of railway expansion on the Himalayan forests, development of the Sri Lankan Railways, a study of the European employees of the BB & CI Railways, problems of Indian Railway up to c. ad 1900, railways in Gujarati literature and tradition, mapping the Gaikwad Baroda State Railway on the colonial rail network, coming of railways in Bihar, expansion of railway to colonial Orissa, etc. This book will be of immense value to those researching on various dimensions of railway transport in colonial South Asia. It can also be read by the more perceptive general reader exploring books on railways. Please note: Taylor & Francis does not sell or distribute the Hardback in India, Pakistan, Nepal, Bhutan, Bangladesh and Sri Lanka.

CHAPTER 1
British Imperial Railways in Nineteenth Century South Asia

Laxman D. Satya

In 1846 the Revenue Commissioner of Bombay, Thomas Williamson wrote to the Chairman of the Great Indian Pen-insular Railway Company in London stating

The great trunk-line, running by the Malseje Ghaut in the direction of Nagpur, would be most direct which could possibly be selected to connect Bombay to Calcutta. Commercially, it would be best for the cotton of Berar, while for the first 120 miles from Bombay we would proceed in the immediate direction of the military stations of Ahmednuggur, Jaulna and Aurangabad.¹

Nothing could be more obvious then the twin purpose of colonial railways stated so early and so clearly above, i.e. commercial and military. These two objectives set the tone for the imperial railway project until the end of the British Raj. Four years later the same company undertook the construction of the very first 20–4 miles railway line from Bombay to Thane completed and opened in April 1853.² By 1900 over 24,000 miles of tracks had been laid.³ This enormous project was financed entirely by British private investment capital.

Imperial Finance and the Colonial Railway Project

Private British companies with the strong backing of the Government of India not only built but also owned these railways. There were on an average 1,405 miles under construction every year until the end of the century.⁴ Some hundred and fifty million pounds-sterling was invested in Indian railways by the end of the nineteenth century. This became the single largest investment in the British Empire. The Government of India became the guarantor to the railway shareholders who were mostly British. Private companies would build and operate their respective lines in different regions of the subcontinent with a guaranteed 5 per cent return on their stockholders’ investment assured by the Indian revenues of the empire. And between 1869 and early 1880s, the Government of India itself built railroads for private British companies. Fifty-million pounds-sterling from Indian revenues were set aside by the colonial state to meet the guarantee irrespective of the company losses.⁵

The ‘guarantee system’ promised its shareholders that if the companies performed poorly, the taxpayers of India would pay for the loss. Thus the entire profit went to the railway companies and their English shareholders while the loss was borne by the Indian people. Simply put, this was a ‘heads-I-win, tails you-lose proposition’.⁶ The deployment of British capital in such a manner was an example of ‘private investment at public risk’, or the privatization of profits and socialization of losses. By the 1870s the outflow of interest actually exceeded the inflow of fresh capital into India.⁷ And by the end of the nineteenth century the total cost of Indian railways amounted to 350 million pounds sterling, the largest outlet for the export of British capital.⁸

Under the guarantee system, all contracts were given only to British companies.⁹ The Government of India provided free land and other facilities including recruitment of cheap labour.¹⁰ Almost all private capital spent on Indian railroads was raised in Britain. The railway shares for Indian investments could be traded only in London stock markets. Apparently, ‘It was the policy of the railroad companies, the East India Company, and the British Government to hire contractors and discourage Indian enterprise.’¹¹ The absolutely risk-free nature of the British investment meant that, ‘The railway profits, which could have financed India’s own development, went instead into the pockets of investors in Britain’.¹² The annual tribute of India to Britain amounted to about 35 million pounds sterling and Britain’s empire in India became a great asset to the crown.¹³ With a reliable debt service, the railway capital market in London thrived although investment in irrigation would have been far more productive than this kind of railway expansion.¹⁴

The guarantee system contributed substantially to the ‘drain’ of funds from the subcontinent. It naturally prompted more spending on construction per track kilometre than local conditions warranted. It also created profitable conditions for even wasteful construction that increased the subsidy and the drain further. The unprofitable lines depended for their very existence upon the guarantee, which increased the drain. Had the drain not existed, it is unlikely that private capital on such a large scale would have ever been invested in the Indian railway project. The money paid out of Indian tax revenues to British investors in subsidies was substantial. It is estimated that between 1849 and 1900, a total of Rs. 568 million was paid out.¹⁵

Recurring trade surplus for which the people of India received no return, marked the steady increase in the drain throughout the nineteenth century. For example, just for the year 1882–3, the balance of payment based on railways alone amounted to 4.14 per cent of the Indian national income.

What happens to a country which year in and year out loses such a sizeable part of its GNP to another, as India did during the entire period 1858–98 (and, in fact, right from 1757)? The fact that India had to have a rate of saving of 4 per cent of its national income just to pay the tribute…. Such continuous loss of savings had a crippling effect on the economy. Where would investments come from to stimulate any expansion of the economy, when the bulk of the possible savings was annually lost.¹⁶

India was a captive economy made to serve Britain’s economic needs.

British Indian Railways and the Development of a Classic Colonial Economy

The foundations of this colonial economy were laid well before the introduction of railways. The railways only strengthened this foundation. ‘If we can cheapen carriage, we may greatly increase the imports of foreign articles into the interior; and in a corresponding degree, export cotton and other agricultural produce.’¹⁷ This observation made by an East India Company agent in mid-1840s aptly sums up the fundamental characteristic of the colonial economy of India in the nineteenth century. It is not surprising that the cotton barons of Lancashire were the most vehement supporters of the Indian railway project.¹⁸ They had a double objective: first, to sell their cheap machine-made cloth to the millions of Indian masses and second, to secure a more reliable source of raw cotton than the United States. Karl Marx in 1853 prophesied, ‘… the English millocracy intend to endow India with railways with the exclusive view of extracting at diminished expenses the cotton and other raw materials for their manufactures’.¹⁹

The railways pushed India into an era of classical colonialism. This was characterized by Indian exports of agricultural raw materials and imports of British manufactured products. India’s economy was twisted to fit this classical colonial pattern. Throughout the nineteenth century, Britain enjoyed a trade surplus with India. But it had a growing deficit in its overall international trade with other nations, which were offset by substantial Indian export surplus. These exports primarily constituted agricultural raw materials such as cotton, jute, tea, coffee, wheat, oil seeds, opium, sugar cane, tobacco, etc., while imports were made up of mostly cloth from English mills,²⁰ railway and military hardware. Thus Indian economy exclusively serviced British economic interest.

The British devised a rather clever way to transfer huge sums of money from India to England. Each year funds were transferred to pay off debts on secure and profitable capital investments on the railways.²¹ But this was just the tip of the iceberg. The colonial system required the annual transfer of funds from the colony to the metropolis to meet an array of ‘home charges’.²² These were funnelled through India’s rising export surplus. Home charges included the cost of the secretary of state’s India office in London, costs of wars at home and abroad, purchase of military stores, pensions for British military and civilian officials and for servicing the guarantee system. By the end of the nineteenth century, the visible home charges annually amounted to between 17 and 18 million pounds sterling. The chief items on the bill in order of magnitude were guaranteed railway interest, military expenses, interest on India debt, purchases of government stores, and pensions. In addition to this, there were private remittances made by British officials serving in India and transfers of profit by British merchants and ‘invisible’ charges for services, including shipping, banking and insurance.²³ All of this was extracted from the Indian peasants through heavy taxation in the form of land revenue, taking away resources that otherwise would have been used for investment in the economic development within India.²⁴ During the same period by contrast, Meiji Japan registered tremendous economic growth and its railroads were all indigenously financed and served the economic interest by helping to build a modern nation.²⁵ Consequently, the Indian nationalist writers of the nineteenth century like Dadabhai Naoroji, R.C...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Preface
• Acknowledgements
• Introduction: The Railways in Colonial South Asia
• 1. Imperial Railway in Nineteenth Century South Asia
• 2. Pakistan’s Railway: A Painful History?
• 3. The Impact of Railway Expansion on Himalayan Forests
• 4. Railways and Forests: History of Railways and their Impact on Forest Policies of South India, 1850–1900
• 5. The Rise and Fall of Pakistan Railway, 1849–2013
• 6. An Overview of the Development of the Sri Lanka Railway
• 7. The Covenanted Workforce: A Study of the European Employees of BB&CI Railway in Colonial India, 1852–1870
• 8. Construction of Railway Line over Thall and Bhore Ghat: A Dream Come True
• 9. Problems of Indian Railways upto c. 1900
• 10. Socio-Cultural History: Railways in Gujarati Literature and Traditions
• 11. Mapping the Gaikward’s Baroda State Railway on the Colonial Rail-Network
• 12. Colonialism and Transformation in Punjab: A Story of Railway Development
• 13. Railways in Bihar: Peasant Protest, Response of Raj and Compensation
• 14. Railway Development in India: A Study of Extension to Colonial Orissa
• Bibliography
• List of Contributors