East Indian Railway: 1906 History of the EIR - Chapter VIII

Note: This is a sub-section of the East Indian Railway

The History of the East Indian Railway by George Huddleston. Published 1906 by Tracker, Spins and Co

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CHAPTER VIII. OPENING OF THE RAJPUTANA RAILWAY LEADS TO COMPETITION BETWEEN CALCITTTA AND BOMBAY - THE VIEWS OF GOVERNMENT ON THE QUESTION - THE POSITION DEFINED BY Mr. CRAWFORD, CHAIRMAN OF THE EAST INDIAN RAILWAY.

THE Rajputana-Malwa (metre gauge) Government Railway, connecting the North West Provinces with Bombay, and the Bombay, Baroda and Central India Railway, was opened for traffic on the 1st January 1881, and very shortly afterwards, the question of the competition between the Ports of Calcutta and Bombay came under the consideration of the Government of India, with a view to the laying down of principles upon which the traffic by the rival routes should be conducted, having due regard to the several interests concerned.

Taking the two important centres Agra and Delhi, distances to Bombay and Calcutta then compared:—

• Agra to Bombay via Rajputana - 847 miles
• Agra to Bombay via Jabbulpore - 1,121 miles
• Agra to Calcutta - 841 miles
• Delhi to Bombay via Rajputana - 889 miles
• Delhi to Bombay via Jubbulpore - 1,284 miles
• Delhi to Calcutta - 954 miles

The Board of the East Indian Railway held that the Calcutta trade should be given the full advantage of the economical conditions under which their line was worked; they argued in fact that the East Indian Railway should have the power of carrying goods at cheaper rates than other railways.

The managements of the Bombay Baroda and Rajputana State Railways declined to accept this view, and undeterred by the disadvantage of break of gauge, at once began active competition by reducing charges, in order to draw to Bombay by their route, a large portion of the traffic which had previously been carried by the East Indian Railway, from Agra and Delhi, to Calcutta.

The Great Indian Peninsular Railway, which had previously only secured a small portion of the traffic of the North-West and Punjab to Bombay by the Jubbulpore route, found themselves seriously handicapped and proposed to construct an extension of their line to Cawnpore, which would shorten the distance by their route, both from Cawnpore and above. This proposal was accepted by the Secretary of State and thus a further complication was introduced, though it is true that it was not until some years later that the connection was actually made by the Indian Midland Railway, since amalgamated with the Great Indian Peninsular.

The Government of India wrote a despatch on the question in which the general principle was laid down that railway rates should be fixed "at the lowest limit possible to secure a fair profit on working". This principle was very much in accord with the views of the East Indian Railway Board, who now looked upon the competition with less alarm, for they knew they could make a fair profit out of far lower rates than other railways and therefore had the whip hand.

Let us, however, extract more fully from the Government despatch, which is dated 19th May 1882.

"The Government of India has certainly no wish to favour either the port of Calcutta or that of Bombay in this matter. Both ports have their respective advantages and disadvantages as regards the export of country produce. Bombay has a magnificent harbour and a convenient dock, combined with lower freight charges to Europe; but as regards inland transport it has the disadvantage of costly fuel and hilly country. Calcutta on the other hand has a somewhat dangerous river for its approach, no docks and heavier freight charges to Europe; but in respect of inland transport it has great advantages, not only from the abundant supply of cheap coal but also from its river transport. The competition of the river compels low charges on the railways, while the cheap coal enables these low charges to be remunerative; and it appears to His Excellency the Governor-General in Council that if the Government ruled that the rates from Delhi and Agra to Bombay and Calcutta were to be the same, such ruling would be distinctly favouring Bombay at the expense of Calcutta, and placing an artificial restriction on the East Indian Railway traffic, thereby depriving the districts served by it of the natural advantages of their position."

At this time the rates from Agra and Delhi to Calcutta and Bombay were considerably in favour of Calcutta, and the Government of India in this despatch merely reiterated the theory they had promulgated in a previous letter to the Government of Bombay, to the effect that "the ultimate limit of legitimate competition between the various lines must be regulated by their capabilities of making an equally fair profit from the traffic they carry"

A long controversy ensued in which the Chambers of Commerce in Calcutta and Bombay joined, while the Secretary of State expressed an opinion quite opposed to that held by the Government of India. He was in favour of leaving the rival railway lines to compete for the trade by quoting whatever rates they found desirable, subject to the interposition of Government in extreme cases, and laid down that "the advantages due either to geographical position or other circumstances, should furnish no reason for imposing on either artificial restrictions, in order to produce an equal return of net profits on the capital of both."

These very opposite views in no way brought the controversy to a close. It continued for years before even a temporary solution was come to, but ultimately the Government of India, in 1887, accepted in a large measure the principles laid down by the Secretary of State that "the managers of railways should be left to fix their own rates and fares, that the interests of railways and trade generally would be better served by accepting the legitimate consequences of competition, and that the interposition of Government would be justified only in cases where companies, under the security of a guarantee, might fix rates below what would cover the cost of transport with a margin of profit."

Certain general rules were then formulated by Government, subject to which railways were left free to fix such rates and fares as seemed most advantageous for their respective lines.

Among these rules were what is known as maximum and minimum rates, but otherwise the utmost latitude was allowed the several railway managements. In other words it was left to the railways to compete with each other, until they reached the minimum charge permissible, whether this minimum meant a profitable charge or otherwise. The natural result has been that in the course of years of competition, coupled with other considerations, the lines leading to Calcutta and Bombay have both reached the minimum in many instances, and the East Indian Railway, not being able to go further, loses the advantage that a purely commercial concern would gain by reason of the cheaper conditions under which it is worked.

As will be shewn further on the question has recently been revived, and is under discussion at the present moment; but while this correspondence was going on and at a time when the Rajputana route had started active competition with the East Indian Railway for the trade of the North West, and when the Great Indian Peninsular Railway was still endeavouring to gain access to Cawnpore, Mr. Crawford issued an interesting brochure entitled "Some Observations on the Development of the Railway System of the Valley of the Ganges."

In this sketch Mr. Crawford considered the general effect of the accomplishment of certain projects likely to affect the working of the East Indian Railway.

He referred firstly to the approaching completion of the Hooghly bridge, connecting the railways on either side of Calcutta; then to the bridge crossing the Ganges river at Benares and the probable acquirement by the Government of the [Oudh and Rohilkand Railway; then to the development of the Bengal and North-Western Railway System, serving, with the Tirhoot State line, the important provinces north of the Ganges, and lastly to the competition between Bombay, Kurrachee and Calcutta.

It is only with the last portion of the pamphlet that we are here interested, and more particularly with the competition between Bombay and Calcutta.

"This competition," he remarked, "was unknown, in point of fact it was not possible, before the meeting of the East Indian and Great Indian Peninsular lines of Railway at Jubbulpore in the year 1869, and it has been effective only since the completion of the Rajputana-Malwa (narrow gauge lines) and their incorporation with the Bombay-Baroda line in 1881, thus affording Bombay a continuous unbroken communication with points of contact with the East Indian line at Agra and at Delhi. The basis upon which this competition is, as regards Bombay, the great superiority the port possesses over the port of Calcutta, owing mainly to natural causes - the extent and depth of the water of its harbour, its facility of access and immunity from cyclones and, more than all, its position, confronting, on the Western coast of India, the entrance to the Red Sea, and the communications with every part of Europe. Add to these the moderate port charges and there appears to be some reason why there should be a reputed difference of 10s. per ton in favour of Bombay, between the freights from Bombay and those from Calcutta, and just as much, say 10s. per ton in the relative costs of the transport of goods between the marts in upper India and their destination in Europe."

"If by the gifts of nature Bombay is so largely superior to Calcutta as a shipping port, there is a set off of no slight importance in the fact that the approach to, and departure from Bombay, are subject to the drawback of the Western Ghats in both the lines of the Great Indian Peninsular Railway leading into the interior of the country, and the flooding of the rivers, notably the Taptee and Nurbudda, which cross the path of the Bombay and Baroda Railway, in its northward course to its junction with the Rajputana-Malwa line at Sabarmati. Added to this, coal is not to be found economically suitable for the purposes of locomotion at any point on either of these lines. The consequence is that both of these depend upon the imported coal into Bombay for the supply of their requirements, at a cost as follows compared with the East Indian Railway Company: thus the half year ended 30th June 1886.

• East Indian Railway used ... Tons 100,175
• Great Indian Peninsular used ... Tons 108,490
• Bombay and Baroda used ... Tons 24,987

Costing

• East Indian Railway - Rs.479,422. per ton at 1/8 per rupee 7s 11.75d.
• Great Indian Peninsular - Rs.1,678,778. per ton at 1/8 per rupee £1 5s 9.5d.
• Bombay and Baroda - Re493,112. per ton at 1/8 per rupee £1 12s 10.5d

This statement showed that, in the one item of coal, the East Indian possessed an enormous and indisputable advantage over the Bombay lines, but if it was a fact that Bombay possessed a superiority in homeward freights it still remained necessary for the East Indian, by the observance of every practical economy in management, and by affording every possible facility to the public, to take all the advantage it could of its cheap working, and so retain the traffic to which it considered itself entitled.

The bridging of the Hooghly, the enlargement of Howrah station and the additions to locomotive and wagon stock then contemplated were among the measures which, in Mr. Crawford's words, enabled the East Indian Railway "to enter into a free and open competition with the Great Indian Peninsular and Bombay and Baroda Railways, confident of being able to hold their own, if they are only allowed fair play."

Taking the Great Indian Peninsular Railway first, their avowed object in getting into Cawnpore was to divert from the East Indian Railway as much as they could of the Cawnpore-Calcutta traffic.

"Cawnpore," wrote Mr. Crawford, "is distant from Calcutta 684 miles, and it will be, it is understood, 831 miles distant from Bombay, consequently the distance from Bombay to Calcutta by the two routes conjointly being 1515 miles, the half-way house or mid-point of the entire route will be at 757 miles from either port or about 31 miles distant westward of Calpee. In other words, all things being equal, a ton of goods could be sent from that half-way house to either port for the same charge for freight.

"But all things are not equal in this case of competition. If, on the one hand, the Western Port of India is unsupplied by nature with coal of any kind for the locomotive uses of the railways, and the courses of those Railways are impeded and obstructed by mountain ranges and the opposing waters of great rivers, we find, on the other hand, Calcutta in immediate connection with coal-fields of great extent on the very line of her chief Railway, and that railway pursuing its way of nearly 1000 miles to Delhi over a course practically level throughout.

"The results of these differences in the natural conditions under which the East Indian and the lines of Western India are worked have been formulated in the Summary of the Analysis of Working of Indian Railways, and show-

Average cost of hauling a goods unit (one ton) one mile

• East Indian Railway - pies 2.40
• Great Indian Peninsular - pies 517
• Bombay and Baroda - pies 4 77
• Rajputana Railway - pies 5.20"

This great difference in favour of the East Indian Railway was, in Mr. Crawford's opinion, "sufficient to transfer the central economical working meeting point on the Indian Midland line, 356 miles to the westward of Cawnpore."

In the competition with the united Bombay, Baroda and Rajputana Railways the case was somewhat different; the distance from Calcutta to Agra being 841 miles and from Bombay to Agra 847 miles, the midway house is 3.5 miles to the west of Agra, or say at Agra itself, but according to Mr. Crawford's calculations the economical working midway point would be 307 miles westward of Agra.

These arguments, which are perfectly sound, apply with equal force to the present time. Beyond laying down maximum and minimum rates, the Government has, as already indicated, in no way interfered with competition between the different railways in India, the minimum rates are the same for all and, as a consequence, the Bombay lines charge from Agra to Bombay the same as the East Indian charges from Agra to Calcutta; while from Cawnpore the Great Indian Peninsular and the East Indian have been known, during active competition, to both charge the minimum allowed them for the more important items of traffic, or in other words to maintain equal mileage rates irrespective of the cost of working. Therefore up to the present time the East Indian Railway has not been allowed to get any advantage from the more economical conditions under which it is worked. Such an arrangement is not only contrary to the spirit of commercial enterprise, but is distinctly unfair to the East Indian Railway. It is very doubtful whether the minimum rates can pay in the case of railways which are not so cheaply worked, and it would be interesting to hear what arguments there are to the contrary. It may also be remarked here that to protect the public by prescribing maximum rates, above which no railway may charge, is understandable, but that rates should be governed by minima, below which no railway may go, is an economic absurdity. Minimum rates were no doubt brought about by the system of Government guarantees, and the fear that, without some such restriction, certain railways would charge lower rates than were profitable to them, but this is no defence when it limits the powers of a railway, in a position to charge less than the prescribed minimum, and yet derive a fair margin of profit.

This question of competition will be referred to in other phases elsewhere; it is sufficient to say here that Mr. W. A. Dring, the present General Traffic Manager of the East Indian Railway, has in a recent note on slow freight rates re-opened the question of a varying minima and it is on this that we are now awaiting the decision of Government. Mr. Dring says:—

"The present minimum charge of .23d per ton mile is acting as a restraint on the operations of the managements to which Government has entrusted the working of its railways, and it seems probable that in the early future Government may consider whether the minimum can be reduced. There will then be the problem whether, as hitherto, there shall be one minimum for all alike, or whether the sheep working lines shall be allowed to charge a lower rate than the system where the prevailing conditions do not permit of the same economy. In other words, whether the cost of working shall be taken into consideration in fixing the minimum rate which may be quoted by the different systems. It is too much to expect that there shall be a different minimum for each railway, small and large, but it is submitted that different minimum rates based on cost of working could be laid down for the larger systems, and a general minimum for the smaller, and that such a procedure would be both fair to the consignor whose goods are to be carried, and in the interests of Government as owning the railways,"

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