Book II, Chapter 9: Railways and Irrigation

CHAPTER IX

RAILWAYS AND IRRIGATION

RAILWAY operations were commenced in India under an arrangement, calculated to lead to extravagance, and not calculated to secure the comfort of passengers. Private companies working under a State guarantee of profits at 5 per cent. or 4½ per cent. on the outlay, were not likely to observe economy in the outlay, or to seek the convenience of travellers. If there was extravagance and waste in construction, the shareholders nevertheless got their guaranteed profit on all the money that was spent, wisely or unwisely. If traffic decreased and the earnings fell short of the guaranteed rate, the difference was made good from the revenues of India, i.e. from taxes paid by the people.

The experience of twenty years showed that these apprehensions were not unfounded. There was an extravagance in the construction of lines, and a disregard for the comfort of travellers, perhaps unexampled in the history of railway enterprise in any other country. And these facts were proved by witnesses of the highest rank and position, examined by the Parliamentary Committees of 1871, 1872, 1873, and 1874, of which we have spoken in the last chapter.

Juland Danvers and William Thornton, who were examined together in March 1872, were, from their position, the most important witnesses on the subject of Indian railways. Danvers was the Government Director of Indian Railways; and, while he admitted the extravagance and waste which had proceeded from the guarantee system, he nevertheless denied that “any other system would have enabled the Government at the time to have constructed the system of railways that has been carried out in India.” Thornton was precisely of the contrary opinion, and held that “the guarantee system has not served any purpose whatsoever which might not have been better served without it.”¹

Speaking at a subsequent examination, Thornton said: “I do believe that unguaranteed capital would have gone into India for the construction of railways, had it not been for the guarantee. Considering how this country is always growing in wealth, and what an immense amount of capital is seeking investment which it cannot find in England, and goes to South America and other countries abroad, I cannot conceive that it would persistently have neglected India. I conceive that, as a result of the capital going to India and not being guaranteed—and it being known that if the investors made great mistakes, they would have to take the consequence of those mistakes—very much greater care and very much greater economy would have been adopted in the construction of the railways.” “But,” said Thornton, “when once Companies had been guaranteed, then there was no chance of unguaranteed Companies coming forward.”²

It is difficult to believe, but nevertheless it is true, that the contracts were so hastily and carelessly drawn up, that they afforded no protection to the Government or to the Indian revenues on important points. “I think,” said Thornton, “that the contracts are a perfect disgrace to whoever drew them up, for they contradict themselves two or three times in the course of their several clauses, and they are seldom appealed to for the protection of Government interests without turning out to be practically worthless for that purpose.” “This is the necessary result of the way in which they are drawn up that, a railway having been commenced on the understanding that a certain guarantee would be given by the Government whatever the railway might cost, the Government is practically bound to continue the guarantee of interest upon the expenditure. Therefore, of course, the undertakers of the railway, the Company, are deprived of one of the great inducements to economy; they know that whatever blunders they make, those blunders will not prevent their getting full current interest on their expenditure.”³

Lieutenant-Colonel Chesney, who had been auditor of railway accounts for six years, and was afterwards President of the newly established Cooper’s Hill Engineering College, testified to the costliness and the carelessness of the work done under the guarantee system. “Railways,” he said, “began in India in the year 1848, when the first staff of engineers were sent out; and I need hardly say that in those days engineers in England were not accustomed to make economy their first consideration. These gentlemen were sent out to make the railways, and there was a kind of understanding that they were not to be controlled very closely. . . . Then, too, the system of audit was extremely imperfect; it was what is called technically a post audit—nothing was known of the money expended till the accounts were rendered. The result of the system was that on one railway, the East India Railway, four millions sterling out of twenty millions had been disallowed from the capital account. The only thing to be done, however, under those circumstances, was to allow it, and bring it all into the capital account again, because, under the contract as it was worded, it was quite impossible to disallow it finally, and it was quite understood that whatever was spent must be eventually passed.”⁴

Higher officials than Colonel Chesney spoke of the extravagance of the railway operations in India under the guarantee system. The Right Hon. William N. Massey, who had been Finance Minister of India under Lawrence and Mayo, said: “The East India Company cost far more, if not twice as much, as it ought to have cost; enormous sums were lavished, and the contractors had no motive whatever for economy. All the money came from the English capitalist, and so long as he was guaranteed 5 per cent. on the revenues of India, it was immaterial to him whether the funds that he lent were thrown into the Hooghly or converted into brick and mortar. The result was these large sums were expended, and that the East India Railway cost, I think (I speak without book), about £30,000 a mile. . . . It seems to me that they are the most extravagant works that were ever undertaken.⁵

Sir John Lawrence, as Viceroy of India, had condemned the extravagance of the Indian railways in the strongest terms, and had recorded that “the history of the actual operations of Railway Companies in India gives illustrations of management as bad and extravagant as anything that the strongest opponent of Government agency could suggest as likely to result from that system.”⁶ As a witness before the Parliamentary Committee of 1873, Lord Lawrence repeated his condemnation of railway extravagance in India, and also of the ill-treatment of passengers.

“I think it is notorious in India among almost every class that ever heard talk on the subject, that the railways have been extravagantly made; that they have cost a great deal more than they are worth, or ought to have cost.”

“With a guarantee of 5 per cent., capitalists will agree to anything; they do not care really very much whether it succeeds or fails; 5 per cent. is such a good rate of interest that they are content to get that, and not really look after what is done. Hence one of the reasons why the cost of the railways has been more than it ought to have been.”

“The Natives in my time, (and I see little difference to this day in spite of all the attempts of the Directors of the Companies to improve the system), greatly complained of their treatment on the railways; and I myself believe that though it is difficult to prevent abuse of power under such circumstances, yet the Government could be more effective in that respect than the Companies. . . . The Natives complained very much in this respect; and on inquiry that I used to make in India, both official and private, I was confirmed in the view that these statements of the Natives were to a considerable extent true.”⁷

Our extracts have been long. But it is necessary to quote one more passage to show that even when the Indian Government declined to incur fresh railway liabilities, the Secretary of State for India had the power, no doubt under pressure from British traders, to sanction new schemes against the wishes of Indian authorities. This is revealed by the evidence of General Richard Strachey, who spoke with an experience of many years in the Public Works Department of India.

Fawcett.—But your evidence with regard to these bad bargains that have been made with various Companies tends to show this, that the people of India may be taxed in so many different ways. They may be taxed locally by local authorities; they may be taxed by the Governor-General; and the Secretary of State may carry out a scheme even against the wishes of all the authorities of India, and although he may know nothing whatever about India, and may never have spent an hour in it, which may entail heavy financial burdens on the people of that country?

General Strachey.—“There is no doubt that that is the unfortunate result of having a Despotic Government, managed in the sort of way that the Government of India is; and, for myself, I do not exactly see that there is any remedy for it.⁸

It did not strike General Strachey in 1872, and it has not struck British administrators during the thirty years which have since elapsed, that the people of India, whose money was thus squandered, might have been consulted to some extent, even by a Despotic Government. If this had been done even in 1872, when the Parliamentary inquiry was made, the vast amount of capital which has been spent within the last thirty years on State Railways and Guaranteed Railways, greatly in excess of the available resources of the country, might have been reduced. But one of the gravest defects of the Indian administration is its rigid exclusiveness; there is no room in the entire machinery of the Indian Government for any effective control by the people of their own concerns.⁹

In a Minute, dated August 16, 1867, Lord Lawrence had calculated the total loss which the people of India had suffered from the construction of railways. “It is estimated,” he wrote, “that while the Companies will have to supply 81 millions for the railways now under construction, the Government contribution will be 7½ millions for land, loss by exchange, and supervision; 14½ millions for interest paid in excess of nett revenues; and 4½ millions in interest paid on those payments of guaranteed interest.”

The Guarantee System was eventually abandoned. “The main system of Indian railways is nearly completed,” said the official chronicler of Indian progress,¹⁰ “and the State Railways, which are now under construction or proposed, will, for the most part, supplement the existing trunk lines. There are now open in India 5872 miles of railway which have cost about £97,000,000, giving an average expenditure of £16,536 per mile. . . . As no more lines will be entrusted to Companies, all railway construction will eventually be in the hands of the Government. Lines are now open from Calcutta to Multan and Bombay, and from Bombay to Madras. The completion of the latter line was effected on the 1st of May 1871, on which day the Great Indian Peninsula [railway] joined that from Madras.”

“The whole amount of guaranteed capital which has been raised to the 31st March last was £94,725,000, of which £92,417,000 had been expended. The sum expended direct by the Government amounted to £5,398,000, making a total expenditure of upwards of a hundred million pounds sterling.”

“But the railways are now almost completed, so that, with the cessation of heavy outlay on construction, the financial position may be expected to improve.”

The writer of the above report anticipated a cessation of heavy outlay on construction in the future. It were well for India if his anticipation had been realised. It were well for the overtaxed population if, after the main lines had been completed, and a hundred millions had been spent on railways, the minor lines were left to private enterprise from 1874. The country could afford to wait, and the country should have waited, in view of its resources and its liabilities. But this was not to be. The fatal facility with which the Indian Government could borrow in the English market made the construction of railways more rapid from 1874 than in the preceding years. And before the close of the century the mileage of railways in India had gone up from less than six thousand to over twenty thousand.

Railways helped the distribution of food supply in times of famine, but did not add to that supply. It was irrigation works which added to production and secured crops in years of drought. Hindu and Mahomedan rulers had therefore paid the greatest attention to irrigation works. And the remains of such works in every part of India, canals in Northern India, extensive tanks in Bengal, and large reservoirs in Southern India, still attest to the foresight and prudence of the ancient rulers. British administrators took up the work after some hesitation; and the excellent results achieved before the close of the Company’s rule have already been described in another chapter. But the British nation, more familiar with railways than with canals in their own country, did not adequately realise the supreme importance of irrigation works in India; and did not extend them with the eagerness with which railway lines were multiplied.

Sir Arthur Cotton, the architect of the magnificent Kaveri and Godavari works, was one of the few men of his time who saw the great need of canals in India, both for irrigation and for transit. And he stated his convictions before the Parliamentary Committee with the pardonable exaggeration of an enthusiast. “On every important line of country in India,” he said, “you can carry a canal, that is to say, on every line where there is great population.” And he elucidated his remarks in the following words:—

“My great point is this, that what India wants is water carriage; that the railways have completely failed; they cannot carry at the price required; they cannot carry the quantities; and they cost the country three millions a year, and increasing, to support them. That steamboat canals would not have cost more than one-eighth that of the railways; would carry any quantities at nominal prices and at any speed; would require no support from the Treasury; and would be combined with irrigation.”¹¹

It is due to two other eminent administrators, Sir Charles Trevelyan and Lord Lawrence, to state that they also recognised the importance of irrigation works for India. “Irrigation is everything in India,” said Sir Charles Trevelyan; “water is more valuable than land, because when water is applied to land it increases its productiveness at least sixfold, and generally a great deal more, and it renders great extents of land productive which otherwise would produce nothing, or next to nothing.”¹²

For twenty years and more, Lord Lawrence had been an advocate of irrigation works in India. He believed irrigation to be infinitely more important for the wants of the country than railways; but he could not make head against the general and deadening indifference on the subject. Railways, therefore, had proceeded faster, even under his administration, than irrigation works.

On one point, however, he was particularly strong; he would not impose a compulsory water-rate; he would make it optional with the cultivators to take water if they liked, and pay for it. “I would almost rather not make a canal at all, however much I desired to do so, rather than make it obligatory on them [the people] to take water.”¹³

As the construction of railways by private companies under the Guarantee System was slowly abandoned, the expenditure by the State increased from year to year. Irrigation works had, on the other hand, been generally undertaken by the State from the commencement, and the State expenditure therefore virtually represents all that was spent on irrigation. We extract the following figures from the Statistical Abstract, showing the expenditure on railways and on irrigation from Imperial Funds, not charged to revenue accounts.

It will be observed that while the total expenditure on railways by Guaranteed Companies and by the State came to 125 millions sterling down to March 1880, the total expenditure on irrigation works was only twelve millions sterling. It was this disproportion between the two classes of public works which irritated and grieved Sir Arthur Cotton; and after the terrible Madras famine of 1877, he found an opportunity to rouse the attention of the British public to the unwisdom of their policy in India.

Indian economic questions, not directly touching the interests of British traders and manufactures, seldom receive public attention in England. Sir Arthur Cotton had done all that man could do to rouse public attention to the importance of irrigation in India. And in spite of the practical proof he had given by his Kaveri and Godavari works, he might have gone to his grave unheard by the British public, if he had not enlisted the sympathy and co-operation of one of the foremost Englishmen of the day. John Bright came to his rescue.

At a great meeting at Manchester, held in January 1878, Mr. Bright supported the scheme of Sir Arthur Cotton to construct a number of navigable canals all over India at a cost of thirty millions sterling. This troubled the souls of officials. John Bright could not be ignored. The bold scheme for which he had stood sponsor could not be disregarded. Over a hundred millions had been spent on railways which Englishmen understood. But irrigation they did not understand; and to spend thirty millions on irrigation appeared to them waste of money. To take up the question of irrigation all over India seemed to the average Englishman something like taking a leap in the dark.

Lord George Hamilton, then a young man of thirty-two, and Under Secretary of State for India, expressed these apprehensions in his speech. “Seeing that, except in the delta, these irrigation works had all failed, he thought it was wrong for any one to support a gigantic agitation to force the Government into incurring an enormous expenditure, and yet keep back these notorious facts. Specially was he sorry to find that Sir Arthur Cotton had received countenance from such a high quarter as the right hon. gentleman, the member for Birmingham. His eloquence was so great that it seldom failed to influence the public mind.”¹⁴

Henry Fawcett “strongly deprecated any partisan feeling in discussing the question whether railways or works of irrigation were the better calculated to yield a profitable return, and to prevent the recurrence of famine.”

John Bright then rose and asked, with all the weight of his high authority: “Why should not this Committee be appointed for the express purpose of ascertaining from such evidence as we can get in England, and if necessary, such as we can get from India, how it is that after so many years of possession—one hundred years of possession of this very part of the country—still we have got no further than this, that there is a drought, and then a famine? . . . We hear that there has been nine millions or sixteen millions sterling spent on such works [irrigation]. What is that in India? The town of Manchester alone, with a population of half a million, has spent two million pounds already, and is coming to Parliament now to be allowed to spend 3½ millions more: that will be 5½ millions to supply the population of that town and its immediate surroundings with pure water and a sufficient quantity of it. But in India we have two hundred millions of population subject to the English Government, and with a vast supply of rainfall, and great rivers running through it, with the means—as I believe there are the means—of abundant irrigation.”

Sir George Campbell, who had entered Parliament after retiring from his high office in Bengal, sneered at Sir Arthur Cotton, and “thought there was some truth in the saying regarding him, that he had water on his brain!” But General Sir George Balfour spoke of the great and single-hearted irrigationist with esteem and admiration. Standing up before the House he would say that he did not believe that a single work that Sir Arthur Cotton had executed had ever been a failure. “Sir Arthur Cotton was a man of mighty genius; he was a man who had done much for the people; he had been a great benefactor to India ; and his name would go down to posterity as one who had done great things for that country.”

The inquiry asked for could not be refused. And on January 22, 1878, a select committee was appointed. Lord George Hamilton was the chairman. Twelve witnesses were examined, including Lord Northbrook, Lord Napier, and Sir William Muir ; but it is needless to say that Sir Arthur Cotton was the most important witness. It was his scheme which was on its trial.

Sir Arthur put the whole case before the Committee in a few words at the commencement of his evidence.

“The Railway account now stands thus:—

for which we have about 7500 miles, or at the rate of £23,000 per mile. At the present cost to the Treasury in interest on share capital 4 1/2 millions, and on land and debt at 4 per cent., 3 millions ; total, 7 1/2 millions. From which, deducting nett receipts, 4 1/2 millions, leaves three millions a year as the loss on the money sunk.”

“The capital spent on the water-works, including the Toombhadra, is £16,000,000. The accumulation of interest against the Bari Doab, the Ganges, and other canals, are much more than balanced by those to credit on the Kaveri, Krishna, and Godavari works, which have at least 10 millions to their credit, leaving a balance in their favour of 5 millions. So that the money sunk may be taken at £11,000,000, the interest of which at 4 per cent. is half a million, against which we have a nett profit over working expenses of about a million, leaving a nett gain to the Treasury of half a million a year on irrigation works.”¹⁵

But the great point which Sir Arthur Cotton made was that railways were no protection against famines. “I am afraid we must reckon that out of the 40 millions affected by the famine in Madras, Mysore, Hyderabad, and Bombay, 4 or 5 millions have perished, after spending 120 millions on railways besides incurring a debt of 50 millions sterling.”¹⁶ And he pointed out forcibly that railways did not provide food for man and beast; did not carry the whole traffic of the country; did not carry it cheaply enough; did not pay interest on cost and debt; did not drain the country, and did not provide drinking water for the people. All this was and could be done by irrigation works.

Why then were irrigation and navigable canals neglected? If these canals provided cheaper means of transit, why did the Indian Government not construct them?

“I want to know what is in your mind,” asked Sampson Lloyd, a banker of Birmingham and a member of the Committee, “why any man should dread cheap transit?”

“Because,” answered Sir Arthur Cotton, “it would stultify the railways, that is the sole point. Only think of a canal by the side of the Eastern Bengal Railway which carries some 200,000 tons, and a canal by the side of it carrying 2,000,000 tons, and swarming with passengers and goods. What a terrible affront to the railway that must be.”¹⁷

The reply is a good illustration of the vehemence of Sir Arthur’s convictions; but there was truth in what he urged. Englishmen had not appreciated the peculiar needs of India for cheaper transit as well as for irrigation. They had not realised that securing crops in years of drought was of far more greater importance in India than means of quick transit. Having already constructed a vast system of railways along the main lines of communication, they hesitated to venture on navigable canals which would compete with railways as a means of transit, and would deduct from the profits which the Government had guaranteed to Companies, or were deriving on their State lines. Nature had provided India with great navigable rivers which had been the high roads of trade from ancient times. And a system of canals, fed by these rivers, would have suited the requirements of the people for cheaper if slower transit, and would at the same time have increased production, ensured harvests, and averted famines. But Englishmen made a geographical mistake. They needed few canals in their own country, and they therefore neglected canals in India.

The principal lines of navigation which Sir Arthur Cotton recommended were (1) from Calcutta to Karachi, up the Ganges and down the Indus; (2) from Coconada to Surat, up the Godavari and down the Tapti; (3) a line up the Tumbhadra to Karwar on the Arabian Sea, and (4) a line up the Ponang, by Palaghat and Coimbatore.

Other witnesses were almost as eloquent as Sir Arthur Cotton himself on the benefits of canals for the purpose of navigation; and they also showed that, what Lord George Hamilton had called “failures,” were not failures. Sir William Muir, who had been Lieutenant-Governor of Northern India, and then Finance Minister of India, said :

“I do not think I have expressed with sufficient emphasis the great value which I attach to the advantages derivable from the large canals such as the Ganges Canal and the Jumna Canals. The extent of prosperity which has been conferred upon the districts through which they pass is very great in a general point of view; and the degree in which the people are preserved from the distress and privations of famine is beyond all calculation a benefit to the country. The advantage also which I spoke of before in saving land revenues, which would otherwise be in arrear and lost, is also great. And further, there is an advantage in the country being protected and being preserved from deterioration, which is incidental to land which is affected by famine, that is to say, being protected from the secondary effects of famine which are liable to continue for considerable periods after the famine itself has passed away. Altogether the general improvement and advancement of the Doab, which is due specially to these canals, is a matter which, apart from their immediate financial returns, cannot be overlooked, and must be borne in mind in determining the general advantages derivable from canal irrigation.”¹⁸

But Lord George Hamilton’s Committee failed to grasp the importance of irrigation works from this broad and statesmanlike point of view. And they returned again and again to the narrower view, based on the immediate financial return of works constructed. A few paragraphs from the Select Committee’s Report are quoted below.

“Sir Arthur Cotton proposes the summary and indefinite suspension of nearly all railway schemes and works. He would, however, devote ten millions annually for the next ten or twenty years to irrigation works, mainly canals (Question 2722), the main canals to be of such dimensions as to permit navigation. By such an expenditure he estimates that ten thousand miles of main line navigation would be constructed at a cost of thirty million sterling, dealing with the most populous districts, whilst the remainder of this vast sum was to be spent on feeders or subsidiary works.

“Sir Arthur Cotton estimates that such an expenditure would give a large return to Government (Question 2751), though your Committee were unable to ascertain the data of this conclusion, especially as he does not deem it to be within his province to consider how, or at what rate of interest, the money expended would be raised. Neither has he in any way attempted to estimate or make provision for the immediate rise in the cost of material and labour which so sudden and simultaneous an expenditure throughout India must inevitably produce.

“The figures already embodied in this report show how few of the most carefully examined irrigation schemes have proved remunerative, and these returns are more than confirmed by Sir Arthur Cotton himself, who, in reply to a question asking him to indicate what works constructed by the Government of India during the last twenty years, other than those in the Madras Delta, had proved remunerative, replied, ‘None of the great works pay yet’ (Question 2214).

“It is evident to your Committee that this scheme, though of gigantic dimensions, is of too shadowy and speculative a character to justify their noticing it, except for the purpose of emphatically rejecting it.”

It will appear from these extracts that the Select Committee singled out the Madras Deltas as the only remunerative works; and that, from their narrow point of view, even the Ganges and Jumna works, which had increased the prosperity of the people, prevented famines, and saved the land revenues from loss in years of drought, were not remunerative.

It is worthy of note that shortly after Lord George Hamilton’s Committee had come to this decision, the Madras Famine Commission commenced its inquiries in a more thorough and systematic manner in India and in England. And the Famine Commission came to a conclusion diametrically opposite to that of Lord George Hamilton, both as regards the immediate returns, and the broad results of irrigation works. “The result has been,” so the Famine Commission wrote in respect of irrigation works, “a great advantage to the State, regarded merely from the direct financial return on the money invested; and apart from their value in increasing the wealth of the country in ordinary years, and in preventing or mitigating famine in years of drought.”¹⁹

And the people of India—those who paid the cost of railways and irrigation works alike—would undoubtedly have given their support, if they had been consulted, firstly, to Sir Arthur Cotton’s proposal to stop the further extension of State Railways and Guaranteed Railways, after the main lines had been completed, and secondly, to the construction of carefully considered irrigation works for the benefit of cultivation and the prevention of famines. Sir Arthur Cotton’s plans undoubtedly were “shadowy and speculative”; for schemes drawn up in London, even by a man of his genius and Indian experience, must be only tentative in their nature. But a close and careful examination would have shown us how far these schemes were practicable, and were likely to be beneficial. And the construction of such useful works, twenty-five years ago, would have averted the worst effects of the famines of the last years of the century. But Lord George Hamilton’s Committee had given their verdict; and the occasion created by Sir Arthur Cotton’s foresight and John Bright’s large-hearted sympathy passed away, not to return again within the century.

Footnotes