RAILWAYS IN INDIA:
I
i>\¡áx State mû Hm^ects ;
CONSIDERED WITH REFERENCE TO THE FIELD
THEY PRESENT FOR ENGLISH CAPITAL.
WITH OBSEBVATIOIÍS UPON
THE TERMS OF THE GUARANTEE
GRANTED TO THE RAILWAY COMPANIES, BY
THE HON, EAST INDIA COMPANY.
SECOND EDITION.
LONDON :
, \Vm. H. ALLEN, & CO.,
7, LEADENHALL STREET.
1855.
London W?'*H.AUen /•<?' 7 lendenhaU Oinet.
JtC- Wtilkrr Sculp*
RAILWAYS IN INDIA
Cljitr Iprfsmt Síaíí nú |pr0spctís ;
CONSIDERED WITH REFERENCE TO THE FIELD
THEY PRESENT FOR ENGLISH CAPITAL.
WITH OBSERVATIONS UPON
THE TERMS OF THE GUARANTEE
GRANTED TO THE RAILWAY COMPANIES, BY
THE HON. EAST INDIA COMPANY.
SECOND EDITION.
LONDON:
Wm. H. ALLEN, & CO.,
7, LEADENHALL STREET.
18.55.
LIBRARY
BUREAU OF RAILWAY ECONOMIÇa,
WASHINGTON, D. C.
ÎK I31CHANÔ£ '
LONDON SCHOOL
OF ECONOMICS.
ADVERTISEMENT.
An examination into the subject of Indian Railway
undertakings has resulted in the following observa¬
tions, which the writer has ventured to put forward
under the impression that the nature and value of the
field which Railways in India oifer for English capital
are not fully understood and appreciated, and in the
hope that the information which he has gathered may,
in the following shape, prove of some use and be
generally acceptable.
RAILWAYS IN INDIA.
CHAPTER I.
The object of the following remarks is not to prove
the great social, commercial, and political advantages
which a well devised system of railway communica¬
tion will confer upon India. These have already been
fully recognized and acted upon by the highest
authorities in the Government of India.* Nor is it the
intention of the writer to discuss any controversial
questions, or to point out the errors and exaggerations
of zealous promoters of public works in India, whose
ardour has sometimes allowed them to accept unsound
data for their reasoning, and to indulge in erroneous
calculations to suit their own peculiar f views. His
* They have also been well represented and ably explained
by writers well acquainted with the state of India, more
especially, W. P. Andrew, Esq., " The Old Post Master,"
Mr. E.. M. Stephenson, Managing Director of the East India
Railway, and the late Mr. Jolin Chapman.
t It has, for instance, been represented by one dis¬
tinguished officer, whose zeal in the cause of public works
in India has been unremitting, and whose services have been
invaluable to bis government, that railways in India will cost
£60,000 per mile, and that it will take 200 years to provide
the country with a system of trunk lines.
6
desire is ratlicr to relate what has been done with
respect to these important undertakings, to represent
what is in progress, and to consider what value may
be attached to Indian railways as property for private
investments.
It is now nearly ten years ago that the subject of
railways in India was submitted by the Directors of
the East India Company, in consequence of various
projects whicli had been set on foot by parties in¬
terested in the commerce and improvement of the
country, for the consideration of the Government of
India. Attention was directed, in a despatch upon
the subject, to the difficulties which it was supposed
would be peculiar to the climate and circumstances
of India. The periodical rains and inundations, the
ravages of insects, the influence of the winds and
sun of a tropical climate, the vast exposed tracts
through which a road would have to pass, were
especially referred to. At the same time, the Court
of Directors, sensible of the importance of such means
of communication, expressed their opinion that,
" wherever railroad communication could be advan¬
tageously introduced and maintained, it was eminently
deserving of encouragement and co-operation from
the Government."* An Engineer, practised in the
construction and management of railways in this
country, was despatched to India, and was associated
with two engineer officers in the service of Govern¬
ment, for the purpose of investigating this important
* Parliamentary Returns, 1846.
7
subject. Lord Hardinge was then at the head of the
government. Taking a soldier's view of the question,
suggested probably by the recent critical state of
affairs, he at once hit upon the great value of railways
as a means of consolidating the military strength
of the country. His opinions were expressed in July
1846,* and the operations of theSutlej in the beginning
of that year, which resulted in the bloody victories of
Moodkee, Ferozshah, Aliwal, and Sohraon, were fresh
in his recollection. He was well able, therefore, to
judge of the increased strength which the facilities
fur a prompt and easy concentration of troops would
confer upon government.
The three Engineers applied themselves to their
appointed duty, and, in six months, a report was pro¬
duced, submitting the results of their surveys and
examinations, and representing that no physical
difficulties existed that could not he overcome. In
forwarding this report to the Court of Directors, the
government expressed their strong opinion in favour
of the commencement of an Experimental Line ; the
chief assistance which they recommended to he
granted to an Association formed for the purpose was
the grant of land.
It was now for the Court to consider what measures
should he taken in view to a commencement of the
work. But the period was unfortunate. Many, no
doubt, still experience the effects of the anxiety and
ruin of the years 1846 and 1847. A season of gloom
* Parliamentary Returns, February 1847.
8
and despondency had succeeded one of feverish excite¬
ment and unbounded speculation. The public had
lost all confidence in railway schemes ; so many had
been injured by recklessness, that timidity was the
consequence ; and what two years before would have
been grasped with avidity was now shunned. It was
not surprising, therefore, that the promoters of Indian
railway projects now laid great stress upon the
novelty of the undertakings, upon the uncertainty of
the results, upon the remoteness of the country, and
advanced these circumstances as reasons for the neces¬
sity of their receiving direct pecuniary assistance
from the Government of India. References at the
same time were not wanting to the great commercial
and political importance of the works, which were
also represented as sure to yield large pecuniary
benefits to those who embarked in them. The English
public, however, were not in a mood to join in these
anticipations, and it is to be feared that, to this day,
an undue want of confidence is shown for the just
expectations which are entertained of those results.
In order, therefore, to ensure the prosecution of ex¬
perimental lines for India, it became necessary either
to afford a greater measure of encouragement than
had hitherto been considered expedient to induce the
public to subscribe the necessary capital, or for the
Government to take the works into their own hands.
There were advocates for each course ; but all agreed
as to the expediency of making a commencement. And
the views in favour of employing private enterprise
and capital in this grand field of Indian improvement
9
prevailing, it was decided that railways in India
should be constructed through the instrumentality of
companies. It had now to be considered, what were
the best means of carrying out this principle, and
what extent of encouragement was necessary for the
purpose.
A guaranteed dividend upon the capital was sought
for. But this was thought an inexpedient measure ;
and the Government of India participated in the ob¬
jections to a guarantee, considering that the free
grant of land ought to afford sufficient inducement.
It was regarded by some as an encouragement to a
lavish expenditure and to laxity of management. But
without some such pecuniary assistance it was evident
that the works could not be undertaken by a Com¬
pany.
To provide against the evil results so much appre¬
hended, a government supervision was suggested ;
and, after much deliberation and negotiation, cer¬
tain conditions were agreed to, upon which two com¬
panies* undertook the construction of an experimental
lines.
The chief advantages accorded by the East India
Company under this agreement, the terms of which
have formed the basis of all subsequent contracts
with the Indian railway companies, were,—The free
grant of all land required for the purposes of the
railway, and the guarantee of an interest (in this
instance) at the rate of 5 per cent, per annum, for 99
* The East India and Great Indian Peninsular Pailway
Companies.
10
years, upon the capital employed on the undertaking
upon the following conditions, viz.: —
The Railway Company have the power of sur¬
rendering the works, at any time after the Line
is opened, upon giving six months' notice to
the government, and the East India Company
undertake to repay the whole amount that has
been expended by the Railway Company :
The East India Company have the power, within
six months after the expiration of twenty-five
or fifty years, of purchasing the Railway at
the mean market value, in London, of the
shares, during the three previous years :
In case the Railway Company fail to complete
the railroad, or to work it satisfactorily, the
government is entitled to take possession,
and repay, within six months, the sums ex¬
pended :
The Railway Company repay the guaranteed
interest from the profits of the Railway. If
the profits exceed the rate of guarantee—say
5 per cent.—half such excess is to be added
to the dividend of the Shareholders. Should
the Railway work at a loss, that is, not pay
its working expenses, a rateable deduction,
corresponding with the amount of expenses
uncovered, will be made from the dividend:
At the expiration of 99 years, the land, together
with the works thereon lapse to the Govern-
Il
ment, who, at the same time, purchase the
stock of engines, carriages, &c., at a valua¬
tion.
These conditions were based upon sound principles.
India herself could not supply the means for carrying
out the'work. The enterprise of this country would
not embark in these undertakings without government
aid and encouragement. An unqualified grant of
pecuniary aid from government would have removed
all stimulus to care and exertion. It was necessary,
therefore, to adopt the double system. Private asso¬
ciations are now the agencies employed, while govern¬
ment, without retarding the energetic action of pri¬
vate enterprise, adopts a plan of co-operation which
has the effect of urging on the work, and affords a
check against extravagance and mismanagement.
This system has now been in force for four years,
and has been narrowly watched, in view to correction,
if necessary, by the vigilant eye of the Governor
General. In his able Minute of the 20th April, 1853,
Lord Dalhousie thus refers to it :—
" It has been objected to the system actually in
existence, that by guaranteeing the payment of a fixed
interest upon the capital expended, all inducement to
economy and exertion upon the part of the Railway
Company is destroyed ; and that by admitting the
direct interference of government, the Railway Com¬
pany is obstructed and delayed.
" These objections do not appear to be well founded.
• " It is to be presumed, that interest will not be
1-2
guaranteed by the Honourable Court upon any sum
to be expended, until it has satisfied itself that this
sum, which it is proposed to raise for the construction
of any fixed extent of railway, is not more than is
sufficient for the work, well and economically carried
on, or without some secure provision for the comple¬
tion of the Line within a period to be named. If
these conditions be observed, I apprehend it cannot be
correctly said, that all inducement to economy and
exertion is lost. These will be requisite, to enable the
Railway Company to construct the Line within the
sum, and the time allotted for it. Nor will induce¬
ment to the utmost economy and exertion ever be
wanting, unless it be supposed that the Company
would be wholly indifferent to any prospect of gaining
a higher return upon their capital than the rate of
interest guaranteed, which an economical construction
and working of the line might probably enable them
to I'ealise.
" On the other hand, it does not necessarily follow
that, because the government has become a party to
the undertaking, by guaranteeing a certain interest
upon the capital expended, and has thus gained a
right to closer interference with the operation of the
Railway Company than usually or properly is allowed
to a government, that it will therefore interfere vexa-
tiously or obstructively. It is not difficult to conceive
that the government, by its officers, may exercise a
close and vigilant check upon the proceedings of the
Company, without giving any just cause of com¬
plaint.
13
" Experience of the working of this system in the
Presidency of Bengal, justifies the opinion 1 have
expressed. The Consulting Engineer is placed in
direct communication with the Railway Company,
and has authority to settle all matters of detail, or
professional questions, unless they should be of great
magnitude, without previous reference to the govern¬
ment. Every precaution is taken to obviate delay in
those cases in which the action of the Governor-
General in council is needed. I have every reason to
believe that these measures have been successful; and
that while the Consulting Engineer, directly and
indirectly, exercises upon behalf of the government a
very wholesome control indeed over the proceedings
of the Railway Company, neither obstruction, nor
vexation, nor delay, can be justly attributed to the
existence of a power of control in the hands of the
government." *
What clearer or more satisfactory refutation could
be produced, of the oft-repeated representations, as to
the obstructive and costly effects of the government
guarantee and supervision? It has, at all events,
been found that the absence of a guaranteed interest
on English lines has not prevented extravagant and
wasteful expenditure.
It will be observed that the last provision respecting
the guarantee refers to a contingency under which a
deduction might be made in the rate of interest. This
* Parliamentary Return, 1853.
14
allusion seems to have caused apprehensions both
unnecessary and unreasonable. The provision against
a barely possible event has been regarded as a recog¬
nition of a probable one. But what legal instrument
does not provide against every possible contingency,
however remote and improbable ? And was it not
right that, in establishing a system of pecuniary
encouragement to works of this nature, care should be
taken to provide against the risk involved in a state
of things which some, doubtful of the result of Rail¬
way undertakings in India, had suggested as pos¬
sible to occTir. With regard also to the power secured
to the government to take possession of the works ;
no government would be justified in sanctioning a
heavy charge upon the state without adopting every
precaution to secure the object for which such oxitlay
was made. The purposes the government had in
view in this case were the benefit of the country, and
the amelioration of the condition of the people.
In the event of the failure of those who undertook a
work with these high objects, it was only right to
provide against the possibility of future interruptions
by having the power to take steps to ensure the
completion of the works. Hence the authority
retained by Government to take the works out of the
hands of a company that might prove incompetent to
carry them on. It is evident that such a step would
rather conduce to the interests of the Shareholders
than otherwise. It could only be taken in the event of
unsatisfactory progress and management, and such
causes would diminish their confidence, as much as
15
that of the Government, in the success of the under¬
taking. And if this step were adopted, the Share¬
holders would receive back whatever capital they had
advanced.
But a little consideration will show that all alarm
is groundless, and that these provisions will never
operate against the interests of the Shareholders. To
suppose an instance of a railway when completed not
paying the expenses of its own working, the clause
would work thus :—
A line which cost £1,000,000, is completed and
opened. The guaranteed interest (at the rate of 5
per cent.) is £50,000 per annum. The receipts are
£•20,000, and the working expenses £"25,000. A clear
loss of £5,000 would thus be sustained by the rail¬
way. The fund for the payment of the guarantee
would be reduced to £45,000, and the interest reduced
to 4^per cent. But then the clause, enabling the
Shareholders to surrender the undertaking, comes to
their aid, and, in the words of the East India Com¬
pany's despatch to the Government of India, dated
November 1849, "secures to them the power of re-
" ceiving back their capital, in the event of any
" unexpected or unforeseen disappointment arising,
" which had the effect of reducing their dividend
" below the guaranteed rate of interest."* So that,
neither loss of capital or of interest need accrue to the
Shareholders from the failure of the undertaking.
Was such an advantage ever possessed by any other
body of Shareholders ?
* Parliamentary Return, July 1850.
16
Experience, however, has already not only proved
that any fear of such an occurrence as we have sup¬
posed above is perfectly unwarranted, but that ex¬
pectations may be entertained of an early increase to
the rate of interest. It is true, any section of a line
may be opened at the bidding of government; but this
power will only be exercised upon full assurance, from
previous calculations, that the portion thus worked will
support itself. It was doubted by some whether the
forty miles from Calcutta first finished, leading as it
did to no place of any note or particular attraction,
would be able to bear the disproportionate expenses
of so short a line. The subject, however, was well
considered, and the line was ordered to be opened.
The result has been a profit to the extent of 3 or 4
per cent, upon the outlay.
It may be thought that the power of selecting
the line, which is left to the Government, may be
exercised in opposition to the interests of the Railway
Company. But may not the Shareholders place as
much confidence in a selection made by Government
as in one made by their own directors ? The object of
both is the same, viz., to fix the line where it is most
required. And late proceedings on the Bombay side
of India have exhibited the desire entertained by
the Government to prevent the choice of costly and
unproductive lines. It may at least be expected that,
in the event of difference of opinion, investigation
and discussion will ensure the right decision. The
Governor-general has himself said, with respect to the
line from Calcutta to Delhi, " The course which the
17
Railway follows for political purposes is at cne same
time the very best which it would be possible to select
for the interests of trade, and for the local advantage
of the whole of this portion of India."* And this will
always be the case in every Indian line of railway.
There can be little doubt that any line selected
under the present system will be self-supporting.
Good ground exists, therefore, not only for expecting
that no reduction in the rate of the interest guaran¬
teed will take place, but that the provision for the
application of profits will soon come into operation.
That provision may be thus illustrated. A line which
cost £1,000,000, produces an annual net revenue of
£100,000, or 10 per cent, per annum; this is £50,000
in excess of the amount of the guarantee. Half, there¬
fore, of the excess, viz. £25,000, is divided among the
Shareholders, raising the dividends to 7| per cent
The other half is paid to Government. When the
amount advanced by Government on account of the
guarantee shall have been repaid, the Railway Com¬
pany will have the full benefit of the profits, and will
receive 10 per cent.
The clause in question is thus referred to in the
despatch of the Directors above quoted. " So long as
the net receipts, after payment of the current expen¬
diture, shall not exceed 5 per cent., they will be
appropriated entirely to our reimbursement for the
interest on the capital paid under our guarantee.
When such net receipts are more than is required for
* Parliamentary Return, July 1853
n
18
this purpose, one-half of tlie surplus will be appro¬
priated to the repayment of the arrears of interest,
with interest thereon, as may at the time be standing
from former years ; and the other half shall be applied
to an additional dividend above the guaranteed inte¬
rest of 5 per cent."* The object of this arrangement
is also explained ; and it will be seen that no oppor¬
tunity was lost by the Court of Directors for giving
an impulse to the vigorous and speedy prosecution of
the undertaking and for ensuring economy. " Our
motive" it is observed, " for not appropriating the
whole of such surplus at once to the repayment of
arrears of interest is, that the Directors and Share¬
holders may have the strongest inducement for an
active, energetic and economical management of their
affairs, by an early participation in an^' excess of pro¬
fits above the guaranteed rate of interest. After the
arrears of interest due to us shall have been repaid,
then the whole of any excess of profits which may
arise will be applicable to increasing the dividends of
the Shareholders."
No one is more competent than the present Governor
General of India to give an opinion upon any question
connected with railways. Both in this country and
in India he has paid much attention to the subject, and
if his recommendations had been heeded as much at
home as they have been in India, the errors which have
been permitted to graft themselves upon our railway
* Parliamentary Papers—Return to an order of the House
of Commons. 11th June, 1850.
19
system here, would have been prevented by a prudent
legislation. The opinion of Lord Dalhousie with respect
to the remunerative character of the railways sanc¬
tioned in India is, " that the Government will never
be called upon, after a line shall have been in full
operation, to pay the interest guaranteed upon the
capital." In other words, that the railways will
immediately work at a profit of more than 5 per cent.
It was at first supposed that it was to the con¬
veyance of merchandize the railway companies could
only look for remuneration. Whether it was imagined
that the prejudices of some natives would be averse
to the unavoidable mixture of various classes that a
passenger railway train entails ; or that the poverty
of others would oppose an obstacle to their use of the
iron road ; or whether it was thought that the country
was not ripe for so rapid a means of counnunication,
all agreed in expecting the chief result of the railway
to be the provision of a safe and unfailing channel for
internal commerce, and not a means of locomotion that
would be adopted to a remunerative extent by native
travellers. These views have proved to be erroneous
almost simultaneously with the opening of the first
line in the country. On this occasion the line was
not prepared for a goods' traffic. The means of
conveying passengers only were ready. But so great
was the rush of natives to use this novel mode
of transit, that the means which had been provided,
failed. The carriage accommodation was insuffi¬
cient to meet the demand, and stations were ciowded
with disappointed candidates for seats. Thus were
•20
the calculations of Indian experience blown to the
winds. Natives of India will undoubtedly be found
as ready and anxious to enjoy the benefits of rapid
communication as any class of people in the universe,
and the liberal policy which has established the low
rate of a pie, or less than a halfpenny, a mile for the
tliird-class passengers, will bring forth abundant fruits
both in the shape of revenue to the Railway, and
comfort and social improvement to the poor native.
Nor was it merely the novelty of the undertaking that
produced so unexpected a result. A steady increase
has been maintained in the number of third-class
passengers, both in Bengal and in Bombay. " To
our inconceivable surprise," writes the ' Friend of
India,' of 21st December, 1854, "we have already
at the rate of 350,000 passengers a year from the
middling and the lower classes of society availing
themselves of the rail. Of the returns of the four
weeks (ending the 2nd December), amounting to
(rupees 16,731) £1,673, the contribution from the
third class was (rupees 9,320) £932." *
These statements, it should be observed, apply only
to a line of forty miles in length, extending from
Calcutta to no place of any note. Lieutenant-Colonel
Baker, the consulting engineer to the Government of
India, alluding to the subject of passenger traffic,
states, " This population" (that of the Ganges valley)
" is very locomotive ; wherever roads exist, they are
crowded with travellers, and the inhabitants of the
* See "Allen's Indian Mail," 14th February.
21
principal towns freely avail themselves of facilities for
increased rapidity of transport, afforded by metalled
or other well-constructed roads." " I have never,"
he continues, " heard a doubt expressed that all
classes would avail themselves of this means of transit
whenever they might have occasion to travel on legal
or commercial business, to visit their families, or for
religious objects." *
Lord Dalhousie's testimony upon this question is
also very satisfactory. " The commercial success of
railways in India, which the experimental lines were
partly intended to test, is, in my humble judgment,
not less certain than the practicability of them as
material constructions.
" Whatever might have been the result of the com¬
mercial experiment upon the short section of line
which was commenced at Calcutta, if.it had not been
extended beyond its original dimensions, there seems
^ to me to be no doubt of it proving remunerative, if it
became, as is now proposed, portion of a substantive
line towards the North West Provinces. The amount
of traffic which is passed and met by any one travelling
upon the great trunk road, the inability of the limited
number of steamers on the Ganges to meet the demand
for freight, and the numerous river craft which every¬
where cover the stream and crowd the canals near
this city, through which they communicate with the
port ; all betoken an amount of goods requiring con¬
veyance, which must be very great in extent. There
* Parliamentary Return, 12th July, 1853.
22
is HO priirui facie reason to suppose that the parties
interested in the conveyance of this mass of goods
will not greatly prefer the rapid, safe and easy car¬
riage of a railway, to the slow and riskful voyage of a
country boat. And all the engineers have distinctly
stated in their several reports, up to the most recent
which Major Baker has submitted, that their constant
communications with the natives, with whom they are
brought in contact along the country which is to be
traversed by the lines, have satisfied them, not only
that the natives will gladly use the railways for the
conveyance of their goods ; but that they will have no
scruple in availing themselves of them as passengers,
if only the rate of fare paid shall render the carriages
available to them."*
Under this valuable and unmistakeable evidence,
and with the result of the present experience in the
mere fractions of railways already opened, which,
notwithstanding that the traffic is confined to pas¬
sengers, yield at the rate of 3 per cent, upon the
outlay,—there can be little doubt but that the popu¬
lation will readily avail themselves of the Railway ;
and that the passenger traffic will contribute, to no
inconsiderable eJitent, towards the commercial success
of these undertakings.'!' Among the marvellous
* Parliamentary Return—ut supra.
t The present expense of a journey, by road, from Cal¬
cutta to Benares, 428 miles, is £25 for each person, and five
days are consumed on the way. By railway, the journey
will be performed in thirty hours, and will cost—third class,
25s. ; second class, £2 15s. ; first class, about £G or 7.
changes that are taking place in the condition of
India, no improvement will be more remarkable than
that produced by a ready means of inter-communica¬
tion. And when, a few years hence, trains are seen
running to and fro across the country, crowded with
its people, and loaded with the products of its fertile
plains, the historian will draw a ludicrous comparison
between the travelling by Dák, by Palkee, or by
Gharry, which in " good old times " involved a con¬
sumption of from two to ten weeks in time, and from
£15 to £40 in cash, between the termini of the Great
Trunk Railway to the North-west, and the means
which will then exist for depositing at Delhi the
regiment or the merchandize which, the day before,
might be seen in the streets of Calcutta.
Mistakeii, however, as the notion has proved to
be, regarding the use of railways by native travellers,
the conveyance of merchandize may yet be expected
to constitute the chief source of revenue. In this
country, the reverse has been thought to be the case ;
but it may nut be generally known that whilst the
increase, both in the traffic of passengers and goods,
has been steadily progressive, the amount of receipts
from the latter bears an increasing proportion to that
of the former. The receipts from goods' traffic on
English lines have increased in the five years ending
in 1853 from £4,750,000, to £8,112,477, or from
£1,090 per mile in 1849, to £1,415 per mile in 1853.
In 1849, the receipts from passengers were larger than
receipts from goods in proportion of 53.42 to 46.58.
In 1853, the per-centage was, passengers 47.45,
24
goods 52.55. Whilst the receipts from passengers
have increased 3Í) per cent., the receipts from goods
have increased 75 per cent.*
Increased facilities for trade and communication
have always been attended with increased demand ;
and in proportion to the extent of the increase of
facilities will be the amount of additional traffic.
India is not likely to form the exception to this rule.
The advantages which will be gained by railway
communication there, are not to be judged by the
results in this country, where the road had been
brought to so high a perfection that the mail coach
almost rivalled the train in speed, and where canals
offered a cheap and regular means for the conveyance
of goods. In India this has not been the case. The
means of conveyance have been uncertain. In some
places and seasons, the communication between two
districts is entirely suspended. The time consumed,
and the obstacles met with on the road, often deterio¬
rate the quality, and sometimes destroy the value,
of the article of trade. The cost of conveying it, in
the case of cotton, more than doubles the expense of
production. But with Railways, new life will be
infused into every department of industry, and fresh
vigour will be given to every branch of trade in India.
The varied productions of her fertile valleys will
find an ever ready channel for their transport. An
increased activity will be seen in her marts and ports.
The frugal subsistence of the ryot will no longer de-
* Report from Railway Department of Board of Trade.—
9th June, 1854.
pend exclusively upon the crops of his own particular
district; and the Baboos and Europeans of Calcutta
will enjoy the fruits and esculents of the mountainous
districts of the North West. Manchester, it is hoped,
will receive cotton to an extent sufficient to excite
alarm in the breasts of our Trans-Atlantic brethren ;
and India will receive in return a proportionate in¬
crease of the fabricated material. But, without
attempting to estimate the impulse which the trade
of the country will receive, and the great develop¬
ment of her boundless resources which will follow,
from the introduction of a rapid and cheap means
of transport, a reference to the amount of merchandize
which is conveyed along the present channels of
communication will afford sufficiently encouraging
prospects to the Railway Companies.
1st. As respects Calcutta. The total amount of
imports into Calcutta by sea, for
The year 1852-3, was tons 407,735, in 813 ships
do. 1853-4 „ 406,097 „ 823 „*
The total amount of exports by sea in
The year 1852-3, was tons 419,066, in 856 ships
do. 1853-4, „ 421,827, „ 909 do.*
The greater portion of this merchandize—the im¬
ports consisting^ chiefly of cotton piece goods, twist
and yarn, haberdasliery, iron and salt—the exports-
of opium, indigo, sugar, rum, silk, piece goods, lin,
seed and hides—is brought down from, and conveyed
to, the Upper Provinces. To this may be added, the
* Calcutta Commercial Annual, 1854.
2G
traffic between intermediate places on the route from
Calcutta to Delhi, which is also very great. It has
been estimated* that 1,166,041 tons of goods (both
ways inclusive) annually pass between Mirzapore and
Calcutta, a distance of 550 miles; and 879,190 tons
between Mirzapore and Delhi, 450 miles. The fol¬
lowing statement of the traffic between Calcutta and
Delhi, in 1844-5, compiled from Government returns,
gives a greater extent of traffic than the above, hut
that year was one of great activity in trade :
Tons.
-j" Traffic,—by river, between Calcutta
and Mirzapore . . . 2,115,885
,, by Mirzapore Road and
Damooda River . . 110,474
,, between Mirzapore and
Delhi 900,000
3,126,359
The whole distance between Calcutta and Delhi by the
railway will be 1000 miles. These statements are the
result of careful inquiry and calculation ; but, granting
that the first-mentioned quantities may be above the
average, and deducting one-third for the trade that
may still continue witli its old channel, the river,
it will be within the mark to suppose that a quarter
of the remainder, viz., 340,000 tons, is carried
over half the distance, or 500 miles, per annum.
The charges^ which have been adopted for the con-
* Railways in India, by an Engineer. London : 1847.
b Appendix to " Indian Railroads," by 'Old Post Master.'
X The present charges average about \\d. per ton per
mile, by river, and SJrf. per ton per mile by road.
veyance of goods by the railway, are \d, Q,\d. and
3íí, per ton per ralle, according to the description of
merchandize, the lowest consisting of coals, timber,
&c.; the second, of grain, cotton, wool; and the high¬
est, of piece goods, salt, wine in cask, furniture, &c.
Taking \^d. as the average for the cost of conveying
merchandize of all descriptions, a revenue of more
than a million will he produced from this source alone.
And supposing that the passenger traffic is only
sufficient to pay the working expenses of the line, the
goods traffic, at its present amount, alone would give
a dividend of 10 per cent.
With respect to Madras, the traffic cannot he so
easily estimated. There are, however, sufficient data
to produce a satisfactory result; a result, moreover,
calculated to raise just expectations of a large in¬
crease.
At Bombay, as well as at Calcutta, the problem of
the remunerative character of passenger traffic has been
solved. A small section of the line has now been opened
and worked for a complete year ; and, although the
portion finished was of a more expensive nature than
the average of such works will prove to he, and the
working expenses are of course much greater in pro¬
portion to the gross returns in a short line of forty
miles, terminating in no place of any importance, the
result has been, from passenger traffic alone, a profit
of more than 5 per cent.
Cotton will constitute the chief source of prosperity
to the goods' department of this line ; and the
additional facilities for transporting it cheaply and
speedily to the coast, will afford a strong stimulus
to its increased cultivation. The amount of cotton
supplied to England by India* is 62,000,0001bs.,
or about 13 per cent, of the total requirements
of the former : America supplies 79 per cent, of
the remainder. Of the Indian portion, Bombay
supplies 11^; Madras, 1^; and Bengal, Bom¬
bay alone, therefore, exports to England about
24,500 tons of cotton annually. This is all brought
from the interior, where a field exists, sufficient in
extent, to admit of an almost unlimited increase
in its cultivation. The charge which has for the
present been adopted for the conveyance of this de¬
scription of goods by the railway, is '¿\d. per ton per
mile.f Supposing the railroad completed for 150
miles to Mulligaum at a cost of £1,500,000, the traffic
in this single article of production in its present state
and extent of cultivation, would yield a revenue of
nearly £34,500, or nearly 2^ per cent, per annum
The other chief articles of traffic from the interior
to the coast are opium and grain ; manufactured
goods and salt constituting the principal inland trade.
The latter article has been estimated to amount to
80,000 tons yearly.J It was also calculated that the
* Evidence before Parliamentary Committee on Cotton.
t The present charge by road averages about per ton
per mile. In some seasons the charge reaches 8d. and 10c?.
(Evidence before Parliamentary Committee on Cotton.)
Î The late Mr. Chapman in Papers respecting the Great
Indian Peninsular Railway Company, 1847 ; and Evidence
bel'ore Parliamentary Committee.
29
railway would draw to itself 180,000 tons of traffic
annually.
The railways now in course of construction at
Bombay will afford two channels of communication
with the interior : one in a south-easterly direction
to Poonah, over the Bhore Pass ; and the other,
in a north-easterly direction over the Thul Pass.
Good roads now exist along these routes. Careful
estimates have been made of the traffic upon them ;
and the returns have given, for the Thul Pass road
50,008 tons, for the Bhore Pass, 43,084.* It has been
calculated that the quantity of goods and the number
of passengers which are conveyed along these roads,
upon a moderate scale of charges, produce—
Thul Ghaut Koad. Bhore Ghaut Road.
The distance from Bombay to Mulligaum, vici the
Thul Ghaut, being 150, and from Bombay to Poonah,
viá Bhore Ghaut Road, 74 miles, a revenue would at
this rate be produced from the
one, of ..... . £183,600
and from the other, of . . . 96,718
Goods and Cattle £976
Passengers . 248
£536
771
£1224 pr. mile £1307 pr. mile.
£280,318
* Official Report on the traffic of the Thul Ghaut and
Bhore Ghauts—Nov. 1852, Bombay.
30
The Capital of £2,000,000 will be required for the
purposes of the two branches. After deducting 40 per
cent, for working expences, a fund of more than
£160,000 or 8 per cent, remains for the dividend to
Shareholders. And this, be it remembered, is pro¬
duced without any speculative calculations upon the
increased traffic which a railway will provoke, and
without including the traffic of other intermediate
passes which railways would be sure to attract to
themselves.
No part of India will probably feel the advantage
of the Railroad so much as the Madias Presidency.
The means of communication are less advanced there
than in other districts—the trade may be considered
at its infancy. The estimates that have been made of
the traffic on the line to be constructed to the Malabar
coast promise, even under existing circumstances, a
profitable return. The imports into Madras, by sea,
amount to tons 26,237 per annum. About a fourth
of this is conveyed into the interior. There are also
about 15,000 tons of salt required annually for the
inhabitants of the inland districts; and fish, and other
miscellaneous articles, are also sent in the same direc¬
tion. So that about 23,500 tons have to be conveyed
from Madras to the interior. The imports into Madras
by land, for exportation, amounts to about tons 34,900,
making a total traffic of goods into and from Madras
of 58,400 tons.
From the opposite, or Malabar Coast, it is calculated
that 11,112 tons, consisting of imports by sea, are
conveyed annually into the interior. Of articles pro¬
duced on the coast, consisting of salt, which alone
31
amounts to 5,000 tons, timber, betel-nuts, fish, coffee,
&c., 11,000 tons are sent inland ; making a trafiic in
goods of tons 22,112 from the Coast inland. The
traffic, vice versa, is estimated at 27,000 tons. Thus
we have on the
Madras side a trafiic amounting to 68,400
Malabar ditto ditto 49,112
Total 107,512
It is also calculated, that the provisions required
for the consumption of the people of Madras (720,000
souls, together with 30,000 horses) amounts to 404,071
tons. Supposing that one-half of this is conveyed
by ordinary means, 202,000 tons will thus be carried
l)y the railway. The local traffic in goods along the
line is calculated at tons 230,000. The whole esti¬
mated traffic in goods along the Railway is therefore
539,512 tons. Supposing that one-fourth of this, viz.
134,875 tons, is conveyed along half the distance,
viz. 250 miles, and that \\d. a ton is charged per
mile, a revenue of £210,746 would be produced from
this source alone.
The line passes through a highly populous, as well
as productive country ; so that passenger traffic may
be expected to a large extent. But it is satisfactory
to learn that, from the existing traffic in merchandize,
a profit more than sufficient to cover the guaranteed
interest may safely be expected.*
♦ The writer begs to acknowledge the kindness of Mr.
Walker, the Managing Director of the Madras Railway
Company, who has obligingly supplied him with the data
upon which the above calculations are founded.
With respect to the clauses under which it is pos¬
sible that the Railways may be transferred to the
Government, either by their »lapse to the Govern¬
ment at the end of ninety-nine years, or by the
Government taking possession as a remedy against
failure or mismanagement, provision could be made by
the Companies for the permanent benefit of the con¬
cerns, by setting on foot, at an early stage of their
progress, and at an insignificant present cost, a sinking
fund, which should be allowed to accumulate suffici¬
ently to cover any pecuniary loss that the operation of
those clauses might involve. The formation of such a
fund would hardly be felt by the Shareholders, and
would add to the value of their property as an invest¬
ment. It could not, of course, be commenced until a
division of the profits, in e.xcess of the amount of
guaranteed interest, took place.
Other great causes for congratulation to the pro¬
moters of Indian railway undertakings are the small
cost, compared to English lines, at which they will be
executed, and the better system of legislation and
management which will be applied to them. The
expense per mile was estimated, in the first instance,
at from £14,000 to £1-5,000 per mile. The actual
cost of those which have been finished has been about
* In his endeavour to avoid the not uncommon tendency
of exaggeration, when estimating the prospective advantages
of a novel undertaking, the writer fears that he may have
committed the opposite error, and not have sufficiently dis¬
played the pecuniary benefits to be derived from these public
works. He trusts, however, that if he is guilty of this fault,
he will be considered to have erred on the right side.
33
£10,000; but these are expensive sections, and the
average cost for the whole of India will, probably,
not exceed £8,000 per mile. This might be still
further reduced, if materials for the permanent way,
and if fuel were provided from Indian sources. An
abundance of iron, no doubt, exists, and the subject of
manufacturing it into articles required for the rail¬
roads is, it is understood, receiving the earnest con¬
sideration of the Government, and of the Railway
Authorities. One company, the Bombay and Central
India Railway Company, who projected the establish¬
ment of iron works simultaneously with the commence¬
ment of their undertaking, calculated to secure thereby
a reduction of 50 per cent, in the cost of rails and
permanent way materials. But notwithstanding the
necessity which at present exists of conveying the
permanent way portion of the work a distance of
many thousands of miles, the amount required per
mile for an Indian railway will bear a most favour¬
able comparison with the expenses of the chief Eng¬
lish lines, which, on an average, have exceeded a
sum of £30,000 per mile.* This vast expenditure
* This is greatly below the expense per mile of the chief
trunk lines of this country, e.g., the cost of the North-West-
ern was £41,612; South-Eastem, £44,412; Eastern Counties,
46,355; Great Western, £46,870 ; Manchester and ShefiSeld,
£56,316 ; Brighton, £56,981 ; Manchester and Birming¬
ham, £61,624; Manchester and Leeds, £64,588 ; Croydon;
80,000. The local and branch lines have not been so expen¬
sive. The total amount expended in railways in England is
£280,000,000, and the number of miles executed about 9000.
c
34
has been made up of many charges which cannot,
under the system which has been introduced, enter
into the cost of an Indian railway. The high price of
land, the immense sums paid as compensation to
landed proprietors. Parliamentary expenses, the re¬
sistance of rival schemes, engineers' and solicitors'
exorbitant charges, and a lavish expenditure on works
and buildings are sources of expense, all of which will
be avoided in India.
The land being provided by Government, the Rail¬
way Companies incur no expense on this account
whatever. The Parliamentary expenses consist of
only those incidental to procuring Acts of Incorpora¬
tion, &c., in this country, and amount to, perhaps,
three or four hundred pounds. Absence of competi¬
tion reduces the lawyer's bills to a bagatelle. The
exercise of the Government supervision, both in this
country and in India, is a complete check to extrava¬
gance ; so much so indeed that economy becomes the
principle of action, and the control resolves itself into
a zealous co-operation between tbe supervisor and the
supervised. Well would it have been for the pos¬
sessors of English railway property, had the Legisla¬
ture provided the same protection over their interests
that lias been supplied by the Indian authorities. It is
not now intended to enter upon a discussion of the
grievous wrongs indicted upon the railway proprietors
and the public of this country, by faulty legislation.
Railway companies have been denounced as monopolies
and railway shareholders have been ruined by an undue
competition; railway directors have been condemned
35
for an utter disregard to the interests of their pro¬
prietary, and the English public have been deprived
of many advantages they might have enjoyed. But
all has arisen from the want of an energetic policy on
the part of the executive in the first instance, and the
responsibility for the errors which have been com¬
mitted, and the evils which exist, rests upon the
Legislature of this country.
With respect to India, experience has happily been
made use of, and it will be found that, with wise
regulations, and under a properly conducted govern¬
ment control, railways there will be the greatest
source of wealth and prosperity which the country
has yet witnessed, and will produce a handsome re¬
turn to those who have embarked in them. It may
also confidently be expected that, in a moral and
social point of view, the success of these undertakings
will have a most beneficial eflfect upon a people who
(with a few^ noble exceptions) have not yet attained
to habits of spontaneous action, or been moved by"
the spirit of industrial enterprise.
36
CHAPTER II.
The advantages appertaining to Railway projects in
India, as explained in the preceding chapter, may be
thus summed up.
To the Railway Company.
1. The sure receipt of a handsome rate of interest
upon the capital, by means of the guarantee.
2. The fair prospect of an increase to that rate from
the profits of the undertaking.
3. A security against loss in the event of any
unforeseen failure.
4. An immunity from competition with projects of
a similar character.
5. A watchful guardianship over the interests of
the Railway shareholders through the co-operation of
Government and Railway Company's representatives.
To the Government.
1. All the benefits that will be conferred upon the
country by a perfect system of inter-communication,
and by the introduction of European skill, enterprise
and capital into the country.
2. The advantages usually derived from com-
37
petition, by means of the power secured to Govern¬
ment to control the proceedings of the Railway
Companies.
3. Security against the effects of unforeseen failure
on the part of the Railway Company, by power to
take possession of, and to complete the work, by
Government agency.
4. The ultimate saving to the State of pecuniary
outlay, by the employment of private capital, and
by the return of the amount advanced on account of
interest.
5. Ultimate possession of the Railway in ninety-
nine years.
It is now only necessary to give a concise account
of the different schemes which have been undertaken
upon these terms.
As soon as the Indian authorities were satisfied of
the practicability of constructing works of this nature
in India, and of the success of the system which had
been introduced for their management, by the re¬
sults of the experimental lines, the subject of estab¬
lishing a system of trunk lines for the whole of India
was taken into consideration. The question was
accordingly referred for the views and recommenda¬
tions of the present Governor-general. Lord Dal-
housie expressed his decided opinion, that the time
had arrived for conferring upon India the benefits of
Railway eommunication. In accordance with the
comprehensive views and energetic measures which
have characterised his government of that mighty
empire, he laid down a vast plan for establishing
38
these chief arteries of communication throughout the
country. His scheme met with the hearty con¬
currence of the Court of Directors, who at once
adopted measures for carrying it out, and entered
into arrangements with the Companies hereafter
mentioned.
The first in the rank of lines thus sanctioned was
the grand trunk road from Calcutta to Delhi, and to
the North-western frontier, a line which, by the wise
selection of the Ganges valley for its course, will tra¬
verse a country rich in natural productions, and
already possessing a considerable trade, populous also,
and free from all physical diificulties. The next is a
line connecting the upper part of the above-mentioned
road with Bombay. 3rd. A line between Bombay and
Madras. 4th. A line from Bombay to Candeish, and
the vast cotton-producing districts of Berar. 5th. A
line from Madras in a south-westerly direction to the
Malabar coast, with a branch to Bangalore.*
Subsequent to the adoption of this system, another
important line has been sanctioned in the province of
Scinde. This railroad will commence at the port of
Kurrachee,and will join the river Indus at a place above
all the difficulties of its navigation. It will confer
inestimable benefits upon this improving province, by
opening a safe and accessible approach from the sea to
that mighty stream. It will thus enable a large trade
to be opened in hitherto unknown marts, and in time
* Correspondence between Government of India and Court
of Directors. Parliamentary lleturns, July, 1853. June,
1854.
39
of any threatening assault upon our territory, will
present increased facilities for providing means of
defence to our frontier. These advantages it was, for
many years, the object of treaties to obtain. The
sword subsequently superseded diplomacy ; but it has
been reserved for the peaceful tool of the navvie to
overcome the last impediment, and to render the
free navigation of the Indus complete.
The extent of the existing traffic along the route
proposed for the Railway was estimated by Lieutenant
Chapman, who surveyed the line, to be d 0,000 tons
yearly Calculating at the moderate rate of 2¿. per
ton per mile for the conveyance of this amount, a
revenue of £40,000 will be derived from this source
alone.
Such are the trunk lines which in the course of a
few years will traverse the surface of the country,
adding might to the British power, spreading comfort
and plenty in their course, displaying hidden treasures
to the world, removing prejudices, and increasing
knowledge. Great as the changes have been during
the last twenty years, the next twenty will witness
more progressive improvement in the condition of the
country than the last fifty have produced. For that
period wars have, with little intermission, engaged the
attention and drained the resources of the government.
But are not wars the means ordained by Providence
for effecting mighty and most glorious changes in a
people's destiny? Never has so vast and noble a field
for enterprise, philanthropy and employment, been
spread before a civilized nation, as thai provided for
40
Great Britain by the valour of the Indian army. An
extent of territory* more than three times as large as
Great Britain has, within the last twenty years, been
opened to the light of civilization. Although the
frontier has been extended, the power of the British
has been consolidated and strengthened, and the finest
natural boundary for the security of a country has
been obtained. More than fifteen millions of human
beings have, during the same period, become our fellow
subjects, and have received the blessings of security
and freedom. The rays of Christianity have pene¬
trated into regions which had harboured vices and
practices abhorrent to humanity. Trade has been
made free, and the value of imports and of exports
has more than doubled.f The revenue has increased
Area in sq. miles. Population.
Scinde . . .52,120 1,087,762
Sattara . . . 10,222 1,005,771
Punjab . . . 78,477 7,000,000
Cis Sutlej Territory. 4,559 619,413
Pegue . . . 40,800 1,000,000
Berar Valley . . 8,500 500,000
Nagpore . . . 76,432 4,500,000
271,110 15,712,946
Thornton's Gazetteer of India, 1854.
Area of Great Britain, 83,828 square miles.
M'Culhch's Geographical Dictionary.
t 1834-5.
Imports,—£6,154,129
Exports,— 8,188,160
1851-2.
£17,300,000
20,000,000
£14,342,289
£37,300,000
41
£7,000,000. Canals have been opened for irriga¬
tion, and Electric Telegraphs established for rapid
communication. This has been the work of the
last twenty years ; hut, for the most part, it con¬
stitutes only the foundation for a noble superstruc¬
ture, the commencement and erection of which, the
next cycle of the same period will witness in the
advance and spread of education, the increase of trade,
the cultivation of the arts and sciences, and the develop¬
ment of the general resources of the country. Rail¬
ways will aid, almost more than any other agency,
in promoting these objects. And, if the edifice of the
Indian empire should, in course of time, he so strength¬
ened by this, and more direct means of developing
the human understanding, as to ripen the country
for institutions of free government, a monument will
be left to posterity worthy of the British name.
The following are the Railway Companies with
which contracts have been entered into for con¬
structing the above-mentioned lines. The same sys¬
tem is adopted for the regulation of each, and the
gauge of five feet six inches, which, after much
deliberation, was decided to be the best calculated to
embrace the twofold advantages of speed and economy,
will of course be uniform.
1. The East Indian Railway Company, which,
within four years from the commencement,* has just
completed and opened the experimental line of 120
• The same distance in England, viz. London to Bristol,
took more than six years.
D
42
miles, extending from Calcutta to Raneegunge, has
engaged to construct the trunk road to Delhi ; the
whole length of these lines is 1,100 miles, and their
capital is £10,000,000. Two sections of more than
200 and 400 miles respectively one from Calcutta to
Rajmahal, and the other in the north-west provinces
from Allahabad to Delhi, will, it is expected, be com¬
pleted in about two years, viz. in 1857. The other
portions, which are being executed simultaneously,
will, it is expected, be opened in about two years
afterwards.
2. The Great Indian Peninsula Railway Company,
which has been working a line of forty miles in length
for many months, has undertaken the line from
Bombay to Poonah, and on towards Madras, for so
much of the road as lies within the Bombay Presi¬
dency. A ghàt, or pass, in the mountains running
parallel with the sea from the north to the south of
the Peninsula, and rising to the level of the table land
in the interior, will necessarily have to be surmounted,
but the difficulties of the ascent have been overcome,
and the work will be accomplished at a moderate cost.
The Great Indian Peninsula Railway Company has
also projected the line into Candeish, over the same
mountains, to be extended to the cotton districts of
Berar, and ultimately perhaps to be connected with
the lower part of the Bengal line. But the route by
which the district of Candeish can most satisfactorily
be reached has not yet been decided. The capital
of the Company is at present £1,500,000. Further
amounts are to be raised as required.
I
43
3. The Madras Railway Company have engaged to
construct the line from Madras, by Vellore and
Vaniambaddy, Salem, &c., in a south-westerly direc¬
tion to the opposite or Malabar coast, with branches to
Bangalore and the Neilgherry hills. The distance is
upwards of 500 miles, and it is estimated that a capital
of £4,000,000 will be required. They have also un¬
dertaken the examination of the country between
Madras and the Bombay frontier, in view to the con¬
struction of that portion of the grand trunk road be¬
tween the two presidencies.
4. The Bombay, Baroda, and Central India Railway
Company were formed for the purpose of constructing
the line included in the above mentioned system, ex¬
tending from Bombay north, viá Surat and Baroda, to
Delhi or Agra. They have also advocated the line
into Candeish, by the Taptee river, instead of over the
Ghauts. The Company have just concluded an ar¬
rangement with the authorities, by which they un¬
dertake to construct, in the first instance, a railway
between Surat and Baroda, viâ Broach ; with an ex
tension to Ahmedabad ; and afterwards to complete
the connexion between those places and Bombay.
They also continue the surveys of the proposed lines
to the North-west Provinces. The present capital is
£500.000.
5. The Scinde Railway Company have concluded an
arrangement with the East India Company for con¬
structing the line from Kurrachee to the Indus. The
distance will be abiut 120 miles, and the present
Capital is £500,000. Operations will, it is understood,
44
immediately commence in view to the early com¬
pletion of this undertaking, which will provide the
channel for a large and increasing traffic.
For the present, at least, the attention and re¬
sources of these Companies will be fully occupied in
the prosecution of the particular trunk lines which
they have undertaken. It is most important that
these should be completed without delay. But the
work will not end here; the twenty millions now
being expended, will soon lead to the profitable out¬
lay of many millions more. The time will come
when local wants will demand the advantages of the
railway. And when any particular district can show
that a branch connecting it with the trunk line would
sufficiently feed tlie main stream of traffic to ensure a
remunerative return, its requirements will undoubt¬
edly be met. By this means will the rail surely and
steadily creep into the rich and fertile and populous
portions of the country, and will, in due time, spread
a net-work of Railways throughout the length and
breadth of the land.
JUL 2 7 1911
W. LewU and Sen, Printers. 31, Fincb-lane, London.