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CHAPTER III
DEVELOPMENT OF THE JUTE INDUSTRY
IN THE CALCUTTA INDUSTRIAL REGION
3.1. INTROHUCTION
Past often provides a partial key to understand the present, and in our endeavour to examine
the present situation of jute industry and the society of its location, we decided to take a look
at the historical process of development of the industry. The historical antecedent of jute
industry has been described on a broad canvas, beginning from the early world development
phases to how the Calcutta region came to dominate the global production scene. The chapter
is based entirely on secondary sources and some unpublished reports etc.
3.2. EARLY PHASE OF THE INI>USTRY
Quite interestingly, jute started its manufacturing career in 1835 not from India, but from
Dundee, Scotland, depending on imported raw jute from India. Later, the Calcutta Jute
Industry started its journey in 1855, depending on imported machinery from Dundee.
Therefore, befon~ examining development ofthe Calcutta Jute Industry in particular, it would
be useful to focus on the development of the industry in the world starting from Dundee.
3.2.1. Hevelopment of Jute Industry in the World
'Records show that jute was first used in India by villagers for making rope and paper. Later
narrow strips of cloth were made from jutes in handlooms. Subsequently these strips of cloth
were pieced together to make bags and wrappers.' 1 Some of the fibre was even exported,
leading to the prosperity of lower Bengal region.
The first recorded instance of jute fibre being exported from India is the report of the
dispatch of a sample by the Board of Trade in Bengal in 1791 to England. At that time, the
Directors of the East India Company had instructed their officers to investigate the suitability
of indigenous fibres for the manufacture of ropes for their ships, and from 1792 onwards
small consignments of jute along with Indian-grown flax and hemp were shipped to London.
There is another report of a consignment of 1 00 tonnes of jute being shipped to England at
the instance of the East India Company in 1793. Small quantities were also being sent at this
82
time to the United States and Germany. The fibre was mostly used for the manufacture of
ropes, twine and doormats.2 However, the fibre was hitherto unknown to the then
manufacturing world, which later provided the biggest stimulus for the growth of jute
instantly to provide packaging material for a large number of other industries. By the year
1820, reports stated that jute was already being spun into yarn and used in the manufacture of
carpets in Oxfordshire in England. Two years later a consignment reached Dundee, which
was then the center of the flax industry in Scotland. The flax spinners were unable to make
satisfactory use of it and, after the failure of experiments, used the rest of the fibre for
making ropes. Dundee flax spinners, however, continued to experiment with the mixing of
jute with flax. 3
("In 1835, in Dundee, pioneer experimentalists produced jute yarns commercially for the first
time, using modified flax machinery and methods. Thus jute began its manufacturing career
using machines and techniques developed originally for another textile."4 Flax is not even a
product of the tropics whereas jute is entirely a child of tropical heat-humidity combined with
lowland terrain - a situation exemplified by lower Bengal region. Jute, therefore, remains a
classic case of the tropical world providing indigenous resources to fuel the engines of post
industrial European economy and society. It was connected to another world- thousands of
kilometers away - for its expansion and growth. The factory production of jute and its
importance as packaging for the world's expanding commodity trade brought it into
prominence in th~:! nineteenth century. 5 In the process, the specific mode of establishment of
the industry left a lasting imprint on the society and economy of the region where its
cultivation and manufacture had flourished once and are now in decline.
The Dundee industry played a pivotal role in the early history of the jute industry. After a
checkered industrial career in the eighteenth century, when it produced coarse woollens, shoe
buckles, and tanned leather, the town of Dundee on the river Tay came to develop the linen
industry as its most important manufacture in the second half of the eighteenth century.
There were three other 'linen centers' in Great Britain - Belfast, Leeds, and Inverness - but
they differed from Dundee in that Dundee produced fabrics of the coarsest kind, both of flax
and hemp. This meant that, unlike the other three centers, Dundee operated in a market for
cheap products, where survival dependent on keeping prices low. Faced with rise in flax and
hemp prices early in the nineteenth century - especially in consequence of the French
Revolutionary Wars (1793 - 1801) and the Napoleonic Wars (1804 - 1815) - Dundee
83
entrepreneurs started looking around for a cheap 'substitute for hemp in the manufacture of
cotton bagging (that is bagging for raw cotton)' and for an 'adulterant of flax tow.' They
tried tow and sunn before settling upon jute in the 1830s. It was the use of jute for
adulterating flax that gave both Dundee and jute a bad name in the early nineteenth century
when some of the Dundee flax and hemp spinners felt constrained to guarantee their products
to be 'free from Indian jute. ' 6
Around 1795, manufacturers of flax and hemp bags in Dundee began experimenting with the
idea of mechanical manufacture of jute cloth and bags. The fibre proved too weak and
brittle. 7 'In 1825-'26 Thomas Neish, a Dundee merchant, persuaded the Dundee flax
spinners, Messrs. Bell and Balfour, to try spinning jute with their machinery. The experiment
was unsuccessful. Circumstances, however, soon combined to place jute in a more favorable
position. There was a recession in the hemp bagging trade in 1831 followed by a failure, in
1834, of the Russian flax crop on which Dundee's dependence was total. In 1838, Dundee
feared ''that there might be a war with Russia arising out oftension at the outbreak ofthe first
Afghan War" in the event of which the flax supply would run out once again. All this led a
few more merchants and spinners of Dundee and its neighborhood to take a more serious
interest in the jute fibre. The shift is reflected in the figures on the import of jute: whereas in
1828 the amount of raw jute imported by Dundee manufacturers was only eighteen tons, the
figure rose to three hundred tons in 1833 (Table 3.1. and Table 3.2.).
Table 3.1: Raw Jute- Imports into Dundee
Year Bales ( 400 pounds)
1828 102
1833 1,680
1840 15,372
1850 78,400
1860 2,07,200
1870 5,76,800
1880 5,76,800
1890 13,38,400
1895 15,51,200
1896 19,09,600 s~~-~ce~-·-A:h'ffie<CrVi~iifi._uct<ilfi.-"·:-;;;~,;";;:;;··~~Jjatr;;Ti~/;·-~.~:-a commercial crop. 1850 1945: A study from the growers' perspective', pp. 17.
84
Figure 3.1: Raw Jute- Imports into Dundee (1828 to 1896)
--;;- 10000000 -,--------------.... --~--, -g 1000000 t------_........----.:-::::::.~P"""'...,,.~~ § 100000 +-----~-~=-----------j ~ 10000 / ~~_._--B-al-es-( 4_0_0_p_o-un_d_s_,) \ ~ 1000 -t-/---:;;,---------------1 . . ':;' 100 +-4J'----------------; ~
";j 10 +--------- ------1 ~ 1 +-.........--.,---.,--..---r---..,.--.---.,..--r---1
Year
Source: Based on Table 3.1 .
Table 3.2: Exports of Raw Jute From Bengal, 1828 - 1868 (Tones)
Year Exports
1828 - 33 1,200
1833 - 38 6,700
1838 - 43 11 ,700
1843 - 48 23,800
1848 - 53 73,900
1853 - 58 71,000
1858 - 63 97,000
1863 - 68 2,62,800
Source: Ulyanovsky (1985), pp. 30 - 31.
Figure 3.2: Exports of Raw Jute from Bengal, 1828 - 1868 (Tones)
-"' ~ = 0 ..... -"' t: 0 c. ~ ~
1000000
10000
100
1
_...
1828 1833 1838 1843 1848 1853 1858 1863 - 33 - 38 - 43 - 48 - 53 - 58 - 63 - 68
Year
Source: Based on Table 3.2.
85
)-+-- Exports )
By then, a large part of the flax machinery had been adjusted to jute, and 1833 saw the
beginnings of the 'mechanical manufacture of jute yarns and fabrics. ' 8 'The Dundee
manufacturers made a breakthrough in 1835 when they applied whale oil to sufficiently
strengthen and soften the fibre. Mechanical spinning started and power weaving followed
immediately.9 In 1835, "pure jute yarn" was put up for sale for the first time, and ''within a
few years jute appeared in the European market as a competitor of flax and hemp. 10 By 1838,
however, modifications had been introduced into weaving machinery and Dundee factories
started producing jute cloth. That year marks, therefore, the beginning of the Dundee jute
industry. In the same year, the Dutch Government placed an order for jute bags, which they
had decided to use in place of flax bags for coffee from the Dutch East Indies. The factory
made jute bag was thus commercially launched. By 1840 Dundee was receiving
consignments of jute bales direct from Calcutta. 11
The progress of the jute mill industry in Dundee was rapid after 1850. The cheapness of jute
and its usefulness for baggings, in which Dundee had specialized, led to into steady
expansion. The interruption of supply of hemp and flax from Russia, especially during the
Crimean War, the increase in demand following the progress of industrialization and the
considerable increase in the carrying trade with the development of railway and steamship
transport- all gave a boost to the industry. Raw jute imports into Dundee rose from 14,000
tonnes in 1850 to 2,77,000 tonnes in 1895. Between 1870 and 1890 the number of spindles
rose form 94,520 to 2,68,165 and the number of looms from 14,911 to 43,361. Dundee
manufacturers generally wished to use the Bengal monopoly to get cheaper raw jute to
Dundee, dearer raw jute to rivals on the continent and in the Americas, and to limit Calcutta's
exports of manufactured goods when had times came in international trade12 (Table 3.3.).
Table 3.3. Exports of raw jute from Bengal, 1890 - 91
1890- 91. Exports of raw jute to cwts.
UK 6745358
USA 2715728
Germany 1432872
Austria 316788
Italy 304704
France 295205
Spain 36731
Total Non - UK 5102028
86
8000000 7000000 6000000 5000000 4000000 3000000 2000000 1000000
0
Figure 3.3: Exports of Raw Jute from Bengal
Export Country
Source: IJMA, Proceedings of the Annual General Meeting held at the Bengal Chamber of Commerce, I 9 March, 1896, Calcutta 1896, p. 68 - 69.
From Dundee, the jute industry gradually spread to the European continent. Initially France and later Germany, Belgium, U.S.A., Austria, Italy, Russia, Poland, Czechoslovakia and Spain also started their own manufacturing units, depending mainly on imported raw jute (Table 3.4.).
Table 3.4. Exports of raw jute from Bengal to aU countries, 1867 - 1914 (in tons)
Year Exports of raw jute (in tons) 1867-'68 1879-' 80 1889- '90 1899-1900 1909-'10 1914
102,872 334,033 512,795 486,262 730,4 18 768,45 1
Source: IJMA. Report ofthe Committee, 1917, (Calcutta, 19 18), p. 115.
Figure 3.4: Exports of Raw Jute (in tons)
i .s 1,000,000 -...----------------------,
,§. 800,000 +------------------! 600,000 +---------------
~ 400,000 +--------'S 200,000 +----~
i o ~--~--~
1867-'68 1879-' 80 1889-'90 1899-1900 1909-' 10 1914
Year
Source: Based on Table 3.4
87
•Exports of raw jute (in tons)
Meanwhile, jute mills had been established in India and with the cost advantages that the
industry in India enjoyed the Dundee industry began to decline from the end of the
nineteenth century. There was a short period ofboom during the 1914- 1918 war, but that
was the last, flicker of the flame and thereafter a gradual depression set in. The worldwide
economic crisis of 1929- '33, competition from India and from other countries all combined
to bring about this decline in Dundee jute industry. 13
A brief note on the initial development of the jute industry in different countries of the world
is given below.
UNITED KINGDOM Raw jute was first exported to U.K. in 1791 for experimental purposes and bag
manufacturing started from 183 7 at Dundee. "By the middle of the 19th century,
approximately twenty years after the first jute yarn was sold in Great Britain, jute
manufactures had proved so successful and profitable that a majority of Dundee spinners and
weavers changed over to jute from flax and flax-tow." 14 Progress of the industry started with
the import ofraw jute U.K. imported 18 tons ofraw jute in 1828, 37,000 tons in 1860 and
3,41,000 tons in 1896 but in 1914 - 1918 average import was 2,20,000 tons. U.K.
manufactured 222 thousand metric tons of jute goods in 1954 but in 1973 only 73 thousand
metric tons were produced. 15
FRANCE
In 1843, the first jute mill was started at Ailly-Sur-Somme, but the industry began on a small
scale in 1850-' 51. In Nothern France about 80 per cent of the total production are available.
France jute industry had 130,000 spindles and 8000 looms in 1913. During the Second World
War 12 spinning Mills and 20 Weaving Mills were burnt out. In 1938 there were 73 business
houses and 112 factories but it came down in 1950 to only 69 business houses and 1 06
factories. Production of jute goods in 1954 was 165 thousand metric tons and 1973 it came
down to 39 thousand metric tons. 16
GERMANY
In 1861 the Vechelde Tow spinning mill in Germany was converted to jute and in 1869 a
second German mill was in operation at Bevel. 17 Germany's consumption of raw jute was
about double that of U.K. In 1913-'14, which was 9,20,000 bales. Germany was the largest
88
buyer of raw jute, about 8,06,000 bales from India in 1921-'22. In the year 1930-'3 1, its
purchase record was 1,2,12,000 bales but during the Second World War most ofthe German
jute mills were either destroyed or seriously damaged. In 1951 West Germany had 32 jute
mills with 4,800 looms and East Germany had 5 jute mills with 1,200 looms. In 1954 West
Germany had 22 spinning mills, 27 weaving mills with 5,084 looms and 73 ,000 spindles;
production was 165 thousand metric tons, but had come down to only 19 thousand metric
tons in 1973. 18
BELGIUM
Belgium jute industry was started around the year 1865 but by 1913 the country had about
1,200 looms. In the year 1938-'39 Belgium imported 288,000 bales of raw jute, which
occupied the sixth position among the buyers of the Indian raw jute. In 1929-'30 Belgium
had 18 jute mills, the number rose by 22 in 1938-'39, and by 1954 she had 43 jute mills
including spinning and weaving and production was 91 thousand metric tons. 19
UNITED STATES OF AMERICA
The jute industry found its way in U.S.A. in the year 1848 and by 1850 the industry had been
well established in Ludlow, Massachusetts and some other cotton growing states of the
South. By 1919 there had been about 26 firms in the jute manufacturing trade. Still, the jute
industry in U.S.A could never develop at par with the other industries of the country.
According to an old report of Indian Planning Commission (1955), U.S.A. had about 4,000
looms which was only 3 per cent of the World's total number of looms but U.S.A. remains
the largest consumer of jute goods. The U.S.A. consumes more or less 18 per cent of the
world's jute goods production. Jute goods production of U.S.A. had been 76 thousand metric
tons in 1954, but the Burlap production in the year 1972 was about 202.2 million sq. yards.
ITALY
Italy had a hemp industry long ago and jute began to be processed in about 1885. Italian jute
industry showed more or less steady progress. During the period from 1929-'30 to 1938-'39,
Italy purchased raw jute on the average 3,72,000 bales a year and ranked fifth among the
buyers of Indian jute. Before the Second World War, Italy had 30 jute mills with 5,000
looms. Montecatini is the biggest and modem jute mill in Italy. In 1954 Italy had 22 jute
mills with 4,600 looms and the production of the country was 97 thousand metric tons. In
1973, Italy' s production had come down to only 11 thousand metric tons.
89
SPAIN
Spanish jute or Esparto grass is esteemed as highly as jute is esteemed in Bangladesh or
India. Introduced in the second half of the nineteenth century, the jute fibre export to Spain
has continuously been on the increase. During the Spanish Civil War of 1936-'39 and Second
World War of 1939-'45, the Spanish jute industry was almost on the point of collapse. In
1954, the number of spinning mills at Spain was 28, weaving mills 74 with 4,353 looms, and
production was 72 thousand metric tons, but in 1973 production had come down to only 18
thousand metric tons.
JAPAN In 1889, the first jute mill was established in Japan named Koizumi Gomei Kaisha.
Afterwards, three more jute mills were constructed in the year 1914, 1916 and 1918
respectively. In 1954 the number of looms was 789 and production was about 62 thousand
metric tons. Japan imports the largest amount of raw jute from Bangladesh, other suppliers
being India, Thailand, China and Philippines.
UNDIVIDED INDIA
In 1854 George Ackland and Bysumber Sen had started the first jute mill with imported
spinning machines at Rishra on the Bank of the river Hooghly. It was named Wellington jute
mill now known as Champdany Jute Mill. The second jute mill was established by the
Borneo Jute Company in 1857, now known as Baranagore Jute Mill. The two banks ofthe
river Hooghly near Calcutta metropolis together form the largest jute-manufacturing region
in the world at present. This agglomeration was built up gradually; in 1863 Gourepore and
Serajaganj Mills were established in 1866 India Mill, in 1872-'73 Budge Budge, Fort Gloster
and Seebpur now known as Fort William Mills were started in India. In the year 1885 there
were 24 jute mills in India with 6,760 looms. Up to 1895 only two more new mills were
added but in 1900 there were 36jute mills with 15,430 looms. In 1913-'14 there were 64 jute
mills operating in India with 36,050 looms and 7,44,289 spindles. The number had reached
76 in 1918-'19 with 400,00 looms and 8,39,900 spindles.20
BANGLADESH The history of the establishment of jute industry in Bangladesh is the history of an
astonishing development, as the young country born after 1971 had to rebuild from scratch a
huge infrastructure. Till the time of partition, when all the jute mills were included into India,
East Pakistan, which later became Bangladesh had no jute mill. The industry started in 1951 with the
Bawa Jute Mills (spinning section) and Aciarryee First Jute Mills (Spinning and Weaving) started its
production in December 1951. By 1958 fourteen Jute Mills had started in difrerent places of
Bangladesh The jute goods production was 20.2 thousand tons in 1952-'53.
90
OTHER COUNTRIES
Other main jute goods producing countries are Brazil, Austria, Hungary, Netherlands, Egypt,
Philippines, South Africa, Portugal, Czechoslovakia, China, and Nepal etc. The internal
resources ofthese countries (except China) do not provide them with sufficient raw materials
and as such they import large quantities of raw jute from Bangladesh, Thailand and India to
meet their requirements of packing materials etc.21 (Table 3.5.).
Region
DEVELOPING COUNTRIES Asia
India
Bangladesh
Thailand
Others
Africa
Latin America
Brazil
Others
CENTRALLY PLANNED COUNTRIES 11 USSR
Eastern Europe
Others
DEVELOPED COUNTRIES North America
Western Europe
Japan
Others
WORLD TOTAL
1 I Excluding China.
Table 3.5: The World Jute Economy: 1972-'74
Raw Jute Production
2699 (97.7)
2551
940
993
463
155
57
91
73
8
63
47
16
(2.3)
(0.0)
2762 (100.0)
Raw Jute Exports
(o/o)
721 (100.0)
721
2
425
236
58
(0.0)
(0.0)
Jute Goods Exports
(o/o)
1065 (95.6)
1065
561
416
79
9
49
49
(0.0)
(4.4)
721 (100.0) 1114 (100.0)
Jute Consumption
(o/o)
1416 (50.5)
936
630
70
81
155
258
222
81
141
289 (10.3)
162
98
29
1095 (39.2)
483
354
102
156
2800 (100.0)
Source: Anderson and Others (1980). A Dynamic Simulation Model Qflhe World Jute Economy; World Bank, Washington, D. C., pp- 3.
91
Actually, by the end of the nineteenth century, jute mills were set up in both hemispheres of
the globe.22 As per the available records, Netherlands produced 4.8 thousand metric tons and
Portugal produced 19 thousand metric tons of jute goods in 1973.
After the initial rise and fall, the jute industries in various parts of the world (particularly in
India and Bangladesh) strengthen its position gradually.
3.3. PERIOD OF DEVELOPMENT AND DECLINE
Development and decline of the jute industry in the Calcutta Industrial Region may be
discussed under different heads as following:
L Growth and Expansion of the Industry during 1855 to 1914
The cost advantage of fabricating the finished products at close proximity to the raw
materials and possible economy of scale weighed heavily in favor of setting up jute mills in
the then Bengal. The very high profits from jute manufactures as a result of increased
demand for jute goods in Europe, North America and elsewhere and the boom conditions in
Dundee provided a further stimulus. 'The rise of Indian jute manufacturing following the
early development of the Dundee Industry was not due to any particular transport advantages
of converting close to the raw material supply. Jute, like most textile fibres, approximates a
"pure material" in the sense that the transport costs of final products delivered in consuming
countries are not much different whether the raw material is converted before movement or
after. Nevertheless, Dundee eventually gave way to an expanding Indian Industry and to
growing industries in the consuming countries of continental Europe. ' 23 Yet the lack of
machinery, difficulty in adequate transportation system and absence of risk-taking
entrepreneurs in a new field delayed the establishment of mills in Bengal. By the middle of
the nineteenth century, the railway mileage in India was still sufficiently low but,
nevertheless, facilitated the conveyance of coal, labor and, to a limited scale, raw materials as
well as finished jute goods.
In 1855 George Ackland, a former coffee planter in the then Ceylon imported a spinning
machine from Dundee and started the first spinning mill of India, at Rishra in the district of
Hooghly. Only two years later the first weaving mill came into existence at Baranagore in the
outskirts of Calcutta. Power looms were introduced in the industry in 1859 and a period of
boom in the Bengal jute industry followed. We get detailed information of this period in the
92
work ofD.R.Wallace, a pioneer historian ofthe industry. 24 Wallace (1928) noted that, "From
1868 to 1873 the five mills, excepting the Rishra Mill, just coined money and brought the
total oftheir looms up to 1250." Two other booming industries in India at that time were coal
and tea. But the returns in jute outstripped those by a huge margin. The enthusiasm for
investing in jute mills is vividly depicted by the mill owner-author Wallace (1928): " ... it
was only necessary to issue a prospectus of a jute mill to have all the shares snapped up in a
forenoon." By the year of 187 5, the number of jute mills rose to 18 with a loomage capacity
of 3,500. Such quick expansion in the industry brought instability and fluctuations in
earnings. But the sky-high expectations of solid gains in this industry kept capital pouring in.
By the year of 1885, the number of mills registered was 24 and the number of looms was
6,700.
The speed in the flotation of mills, increasing fear of over expansion and reduced profit
levels obliged 19 jute mills to form the Indian Jute Manufacturers' Association in 1884.
Apart from the general objectives of safeguarding and enhancing the interests of the mill
owners, other explicit concerns of this organization included the reduction of competition
among member mills, regulation of output and price fixing. The nomenclature of the Indian
Jute Manufacturers' Association was changed to the Indian Jute Mill Association (IJMA) in
1902. Properly endowed with legislative representation, expert lobbying skills, and adequate
connections in the administration, the IJMA grew up to be one of the largest and the most
effective of the manufacturers' cartels. It wielded a tremendous influence in almost all
aspects of jute industry, jute trade, manufacturing and pricing.
The jute mill industry experienced almost unbroken prosperity after 1895. The excellent
performance of the mills was reflected in the rate of dividends paid out to shareholders. As
par the figures presented by the Investors' India Year Book (1911), the average rate of
dividend exceeded 12 percent for the years 1901-'10, while the dividend on the face value of
ordinary shares of good companies climbed as high as 25 percent in some years.
Dalhousie, Alexandra, Auckland and Northbrook jute mills were floated between 1905 and
1910. In the mean time, Indian industry became a serious rival to the Dundee mills, which
prompted protests from the Dundee Chamber of Commerce against the long hours ofwork in
Indian mills. Claiming that the Indian mills were in unfair competition with the British
industry, the Chamber of Commerce maintained that " ... factories conducted by subjects of
93
the Crown, and equally under the control of Parliament whether in India or at home, should
be subject to similar conditions; particularly, that they should not be allowed to employ
women, young persons or children before six in the morning or after sunset at night." The
outcry led to the passage of Indian Factories Act of 1891. However, the Bengal mills
commanded a substantial lead in terms of cost of production over Dundee and by 1908 it
surpassed the home industry in output.
Noted among the mills opened before the First World War were the Albion Jute Mills Co.
Ltd., the Angus Jute Works and Empire Jute Co. Ltd. While the new mills were being
formed, the older units were also being sufficiently expanded so that by 1914-' 15 the number
of mills rose to 70 and the number of looms and spindles operating in India reached 38,400
and 7,95,000 respectively. Table 3.5 (A) gives the rate ofprogress in the jute industry.
Table 3.5 (A): Growth and Expansion of the Jute Industry 1879-'80 to 1914-' 15
No. of Nominal Persons
Looms Spindles Year Capital Employed
mills (Million Rs.) '000 '000 '000
1879-'80 to 1883-'84 21 (100) 27.07 (100) 38.8 (100) 5.5 (100) 88.0 (100)
1884-'85 to 1888-'89 24 (114) 34.16 (120) 52.7 (136) 7.0 (127) 138.4 (157)
1889-'90 to 1893-'94 26 (124) 40.26 (149) 64.3 (166) 8.3 (151) 172.6 (196)
1894-'95 to 1898-'99 31 (148) 52.21 (193) 86.7 (223) 11.7 (213) 244.8 (278)
1899-1900 to 1903-'04 36 (171) 68.00 (251) 114.2 (294) 16.2 (295) 334.6 (380)
1904-'05 to 1908-'09 46(219) 96.00 (355) 165.0 (425) 24.8 (451) 510.5 (580)
1909-'10 to 1913-'14 60 (266) 120.00 (443) 208.4 (537) 33.5 (609) 691.8 (786)
1914-' 15 70 (333) 139.43 (515) 238.3 (614) 38.4 (698) 795.5 (904)
Note: Figures within brackets show variations. 1879-' 80 to 1883-' 84 is the base period.
Source: Cotton, (1924) Handbook of Commercial Information for India, Government of India, Central Publication, Calcutta, p. 116.
The source of capital for the jute mills, according to Bagchi (1972) was the European and
British investors, businessmen, officials, and military men, stationed in India or having close
ties with India. A small portion of Indian capital was also involved in the jute industry. One
small unit, the Soorah Jute Mills Co. Ltd., with 175 looms was reported to be under Indian
management. The very dominant element in the jute industry were the large European and
British agency houses such as the Andrew Yule and Co., Bird and Co., F. W. Heilgers and
94
Co., (headed by a German), Thomas Duff and Co., Jardine Skinner and Co., Anderson
Wright and Co., Kettlewell, Butler and Co., which managed and controlled jute mills almost
exclusively. This particular trend continued well up to the end of the Second World War.
Apart from the manufacture of various jute goods, the agency houses were also involved in
shipping, transportation and the jute trade. The agency firms also enjoyed an 'enormous
degree' of interlocking of board of directors among different agency houses which enabled
them to forge price agreements or market sharing arrangements (Bagchi, 1972). Jute
companies regularly negotiated collective agreements with steamship companies for
conveyance of jute goods at preferential rates. 25 The unique position of the then agency
houses and their ability to manipulate market mechanisms had a very favorable impact on the
earnings of the mills. 26
II. Expansion ofthe Industry during 1914 to 1929
After the outbreak ofthe First World War (1914-'18) the Calcuttajute industry and overseas
trade in jute faced a number of problems. Two of the very important jute markets - Austria
and Germany- were closed and exports to other countries including Great Britain had to be
restricted due to shortage of shipping vessels. Strict enforcement of a license quota for export
resulted in piling of stocks. However, as the war activities intensified more, increased
demand for sandbags, canvass, com sacks, tent clothes, wagon covers, tarpaulins and so
forth, more than compensated the loss of civil demand. New orders flowed in from different
war zones of the Middle East and shipment to Britain, America, Russia and Japan went up
substantially. Naturally, the result was an annual average increase of over Rs. 100 million in
the value of jute exports.
The 1914-' 15 jute season experienced a bumper crop, partly due to favorable weather
conditions and partly because of the high price of raw jute in the previous season. During the
First World War the price of raw jute tumbled while that of jute manufactures doubled. The
mill-owners secured large stocks of the fibre at sufficiently low prices, which augmented
their profits. A chunk of people were released from railway construction and large public
works, there was a plentiful supply of labor for the jute mills at very low wages. The Factory
Law was also suspended to enable the mills to meet government war-orders. The
circumstances were ideal for the making of large profits by the mills. The review of the
Trade oflndia 1917-' 18 estimated the ratio of net profits to paid up capital at I 0 for 1914, 58
for 1915, 75 for 1916, 49 for 1917 and 73 for 1918.27 As the War carne to an end, the
95
Calcutta jute industry witnessed a boom until a short-lived depression struck in 1920-'21.
Earnings for the boom period were really spectacular. The reports of 41 jute mills, all under
European and British control, showed 22.9 million in profit on a total capital of 6.1 million
for the four years, during 1918-'21. This was in addition to 141 percent of ordinary capital in
1918 m, 125 percent in 1919, and 109 percent in 1920.
A great proportion of British capital flowed into India during these years in the anticipation
of sharing maximum profits. In one estimate the export of capital to India and Ceylon rose to
29 million in 1921 and to 36 million in 1922 as against an annual average of 14 to 15 million
for 1908-'10 (Ahmed, 1987). Six new mills, namely, Weaverly, Bally, Caledonian, Lothian
and Craig were floated during this period. However, as Table 3.6 shows, the loomage and
spindle capacity during the First World War years remained more or less unchanged.
Table 3.6: Number of Mills, Looms, Spindles, Person Employed, and Capital 1915-'16 to 1939-'40
Year Mills Looms Spindles Paid-up Capital Persons Employed
'000 '000 '000 Rs. '000
1915-'16 70 39.9 812.4 77,970.8 254.1 1916-' 17 74 39.7 824.3 86,913.8 262.5 1917-'18 76 40.6 834.0 103,166.0 266.0 1918-' 19 76 40.0 839.9 105,275.5 275.5 1919-'20 76 41.0 856.3 116,525.9 280.4 1920-'21 77 41.6 869.9 135,118.3 288.4 1921-'22 81 43.0 908.3 178,798.2 288.5 1922-'23 86 47.5 1003.1 171,445.4 321.3 1923-'24 89 49.0 1043.4 173,189.6 330.4 1924-'25 90 50.3 1067.6 170,735.6 341.7 1925-'26 90 50.5 1063.7 163,957.4 331.3 1926-'27 93 51.0 1083.8 164,858.2 333.6 1927-'28 93 52.2 1105.6 165,121.2 335.8 1928-'29 95 52.4 1108.1 167,443.5 343.8 1929-'30 98 53.9 1140.4 170,774.1 343.2 1930-'31 100 61.8 1224.9 175,756.0 307.7 1931-'32 103 61.4 1220.6 184,113.9 276.8 1932-'33 99 60.5 1202.2 185,320.7 263.4 1933-'34 99 59.5 1194.4 187,516.3 257.1 1934-'35 100 61.4 1221.8 181,888.5 263.7 1935-'36 104 63.7 1279.4 184,817.9 277.9 1936-'37 104 65.2 1300.0 191,313.9 289.1 1937-'38 105 66.7 1337.9 202,829.8 305.8
96
Mills Looms Spindles Paid-up Capital Persons Employed
Year '000 '000 '000 Rs. '000
1938-'39 107 66.9 1350.5 203,887.0 295.1
1939-'40 110 68.5 1369.8 205,645.8 298.9
1940-'41 110 68.8 1369.3 205,941.3 1941-'42 107 68.7 1373.2 212,019.0 1942-'43 113 67.7 1375.2 214,493.3 1943-'44 110 69.7 1376.6 249,501.2 1944-'45 110 69.4 1367.5 247,629.4 1945-'46 111 68.3 1444.8 255,320.2 1946-'47 106 66.0 1295.2 173,181.1
Source: Ahmed, 1987, pp. 155- 155a.
In spite of the imposition of an export duty in 1916, which was doubled in 1917, the Calcutta
jute industry continued to do well until the depression began in late 1921. The War years
provided a disguised protection as priority was assigned to war-industries in various foreign
countries. The growing uncertainty of the supply of raw materials also hampered the
production of mills abroad. Consumption by Indian jute mills increased (Table 3.7) and
output for outstripped the combined total of the overseas competitors.
Table 3. 7: Mill Consumption
Year Consumed by Indian Mills
1893-'97 (avg.) 31 1898-1902 (avg.) 39 1903-'07 (avg.) 42 1908-'12 (avg.) 47
1913 49 1914 59 1915 61 1916 63 1917 71 1918 65 1919 57 1920 66
Source: IJMA, Report of the Committee, 1921 (Calcutta, 1922) p. 163.
The devastation of various resources during the War, huge loss of shipping tonnage, high
prices, labor difficulties, and unstable, exchange rates, set in a worldwide slump. It
automatically affected the agricultural sector more as primary product prices suffered a sharp
decline. The total value of the export of raw jute fell from Rs. 246.9 million in 1919-'20 to
Rs. 163.9 million in 1920-'21 and slipped further to 140.5 million in 1921-'22 (Table 3.8).
97
Table 3.8: Value of Exports of Raw Jute and Jute Goods 1919-'20 to 1939-'40
Year Raw Jute Jute Goods
(Million Rs) (Million Rs.) 1919-'20 247.0 500.0
1920-'21 163.6 529.9
1921-'22 140.5 299.9
1922-'23 225.3 404.9
1923-'24 200.0 422.8
1924-'25 290.9 517.7
1925-'26 379.4 588.4
1926-'27 267.8 531.8
1927-'28 306.6 535.6
1928-'29 323.5 569.0
1929-'30 271.7 519.3
1930-'31 128.8 318.9
1931-'32 111.8 219.2
1932-'33 97.3 217.1
1933-'34 109.3 213.7
1934-'35 108.7 214.7
1935-'36 137.0 234.9
1936-'37 147.7 279.4
1937-'38 147.1 290.7
1938-'39 133.9 262.6
1939-'40 198.3 487.2
Source: (1) Government of India, Dept. of Commercial Intelligence and Statistics, Statistical
Abstract for British India 1919-'20 to 1928-'29, p. 578; 1929-'30 to 1938-'39, p. 736. (2) Annual Statement of the Seaborne Trade of British India, Vol. I, (Calcutta, annual).
The trend reversed itself in 1925-'26 only after the factories recovered and the need for raw
jute improved. As Table 3.8 shows, industrial product prices remained comparatively stable
due to increased need for finished goods. The widening gap between the prices of the two
groups of commodities had a negative effect on the earning capabilities of those involved in
the production ofraw materials: (Ahmed, 1987).
98
An active and efficient management, various cost cutting measures, and the monopoly
position helped the IJMA mills to sustain a relatively good level of profit during three years.
The policy of controlled production and expansion agreed upon by the IJMA mills during the
War, and followed throughout the 1920s, improved the earning situation. Profits for jute
mills were lower than the boom period but nevertheless, higher than those in coal mines or
sugar (Ahmed, 1987).
European jute traders lost some ground to Indians during and after the War. They were very
effectively barred from the operations of the market speculation or futlw bazaar. However,
the claim that the War ended their total control of the jute industry has not been substantiated
by facts. There is practically no doubt that the holdings of Indians in the industry had
increased compared to the pre-War period, but in the absence of any detailed list of Indian
shareholders or names of Indians on the board of directors, it is difficult to ascertain the
extent of Indian control of the mills. The House of Birla and Sarupchand Hukumchand
became very prominent in jute trade and industry. More Indians became involved in jute
business during the 1920s. However, they were yet to develop a control over the industrial
segment; in 1928 for example, the number of looms controlled by Indian firms comprised
only 4 percent oftotalloomage capacity. 28
ill. The Jute Industry During the Depression 1929 to 1939
At the onset of the worldwide great economic depression, agricultural and industrial
production was curtailed drastically. Between the years of 1929 and 1932 industrial
production fell by 15 percent in the U.K., 45 percent in the USA and Germany, 35 percent in
Canada, 30 percent in France, 17 percent in Sweden and 10 percent in Japan. India's
international trade sharply declined by 20 per cent. The total value of exports in jute, raw and
manufactured combined, fairly decreased from Rs. 968 million in 1925-'26 to Rs. 791
million in 1929-'30.
In a peculiar environment of uncertainty, slack demand and lower prices, the jute mill
industry faced the most critical time in its history. Under a situation of eroding profits,
achievement of agreements on production restrictions became very difficult to obtain. In
1928, the IJMA briefly allowed the associated jute mills to work a 60-hour week. But a
continued plunge in the prices actually compelled the members to agree on a 54-hour
workweek from February 1931 to March 1931 and thereafter to work only 40 hours a week,
99
keeping 15 percent of the looms sealed. The new jute mills with large fixed costs and very
little or no reserves, found the arrangement unprofitable. Two of the jute mills broke away
from the association. The IJMA complained that the outside jute mills, now a total of 5 jute
mills, with 13 percent production capacity, flooded the market with excessive outputs, and
were responsible for the glut. In May 1932, as a result of Government intervention, an
agreement was reached between the member and non-member jute mills. The IJMA jute
mills agreed to adhere to the previous arrangement. Outside jute mills, with few exceptions,
were allowed to work 54 hours a week with their full complement of machinery. No jute mill
was to increase its capacity during the term of the agreement except Agarpara Jute Mill,
which was permitted to increase its loom capacity by 64.
From 1933 onward, earnings by the jute mills improved gradually and looms were released.
Starting at the end of 1934 and through March 1936 all looms was put in operation. The turn
around in the market was not strong and the lifting of the restrictions on production seemed
too hasty. Failing to achieve its objective of curtailed production by non-member jute mills,
or to obtain legislative action to this end, the IJMA itself embarked upon a policy of
unlimited production. The goal was to create a glut so that enough losses would compel the
outside units to terms. In September 1938 the Bengal Government promulgated an ordinance
restricting work hours to 45 per week. All the jute mills, except the smaller units, adhered to
the arrangement to avoid legislation. However, as Table 3.9 shows, profits for the jute mills
did not improve substantially until the start of the Second World War when new orders on
war accounts began to pour in (Ahmed, 1987, p. 161).
100
Table 3.9: Industrial Profits 1927-'28 to 1938-'39
1 2 3 4 5 6 7 8 Year No. of Paid up Net 4as Index base Chain index Chain index of
Companies Capital Profits % 1927-'28 = of Profit Profit '000 Rs. '000 Rs. of3 100 1928 = 100 1928 = 100
Cotton All Indust!! Industries
1927-'28 46 162,067 66,137 40.8 100.0 100.0 100.0
1928-'29 47 161,540 65,581 42.5 104.2 99.1 78.0
1929-'30 47 161,540 45,067 27.4 67.2 37.9 37.9
1930-'31 47 163,960 12,123 7.4 18.1 52.5 27.8
1931-'32 47 163,960 3,215 2.0 4.9 82.8 34.6
1932-'33 47 163,960 8,285 5.1 12.5 33.9 44.2
1933-'34 47 164,062 15,360 9.4 23.0 90.1 62.6
1934-'35 47 160,490 23,626 14.7 36.0 89.0 69.2
1935-'36 47 160,490 22,027 13.7 33.6 98.8 63.1
1936-'37 47 160,490 10,702 6.7 16.4 137.9 60.7
1937-'38 47 160,490 2,276 1.4 3.4 253.4 70.6
1938-'39 60 NA 11,596 13.6 NA NA
Note: Capital and profit applies only to number of companies listed in this table.
Source: (1) Report of the Bengal Jute Enquiry Committee, 1940, p. 80
(2) Reviewofthe Trade of!ntlia, 1938-'39, pp. 22, 28; and 1943-'44, p. 30.
The Review of the Trade of India reported a loss ofRs. 8.3 million on the basis of returns for
59 companies in 1938; the same companies earned a profit ofRs. 9.5 million in the previous
year.29 Fairly poor performance of the jute industry compared to the combined index of all
industries and cotton in particular may be explained in terms of the nature of trade in jute.
Whereas cotton relied on a vast domestic market, the local consumption of jute was no more
than 60 percent. The IJMA ascribed some part of the loss of profit to the operation of the
.futka hazar in which Indian traders and middlemen gained notoriety over their European
counterparts. Profits for an export-oriented industry are very highly sensitive to external
demands. Creation of a glut, international or otherwise in a bear market, has a dampening
effect on profits. Sufficiently high overhead charges for the old mills were another factor that
absorbed some of the returns.
101
Since its inception, the Calcutta jute mills produced large quantities of coarse goods such as
sacking, canvas, tarpaulin and very little of the finer varieties in which Dundee specialized.
Machinery required for the first type of goods was quite simple and was imported regularly
along with the technical experts and managerial staff from Dundee. Because of the existing
simplicity of operation and low maintenance charges, the costs of starting a jute mill was
viewed as moderate. A 400-loom factory would cost Rs. 6.4 million. Considering the rate or
return, installation of new jute mills was an attractive proposition even when more than an
optimum number of jute mills were in existence. For example, in 1932 the total loomage
capacity registered an increase of 11.3 percent over the quinquennial annual average of the
years 1927-'31. In 1938 the looms had increased by another 9.4 percent over the 1932 figure
when the consumption of raw jute by Indian jute mills had actually declined. Thus something
over-expansion at a time of low demand was a more likely cause of the erosion of profits.
After the First World War, Dundee jute mills concentrated more on the production of finer
varieties such as clothing, carpets and upholstery while most of the Calcutta jute mills
retained their old machines and produced coarse quality jute products. So long as the jute
mills operated in an expanding market, production of a few items with a small degree of
technical efficiency did not pose a serious threat. However, in the depressed market of the
1930s, which was characterized by very keen competition among jute mills in India and
abroad, as well as the introduction of various substitutes, production with outdated machinery
not only meant excessive overhead charges but also loss of market share.
The colonial Government of India, more or less, left the jute industry to itself except for
some research in the agricultural sector. In 1928 the Royal Commission on Agriculture
warned against the complacent attitude that had developed as a result of India's continuing
monopoly in the jute trade. The Report drew an analogy with indigo and recommended the
formation of a Jute Committee to 'watch over the interests of all branches of the trade from
the field to the factory', (Ahmed, 1987, p. 163) since jute brought in large revenues to the
Government, the Commission suggested research and promotion in jute at state expense.
The threat from substitutes became very real in the mid 1930s as paper bags, cotton bags and
other fibres such as sisal, kenaf and hemp began to encroach on the packaging market at the
expense of jute. The IJMA had very little knowledge of the international market and lacked
strategy to combat the intrusion of the new commodities. The Finlow Committee Report
102
(1933) highlighted that "there is no industry in the world which knows so little about its
business as the jute industry." The Government of India blamed the IJMA for attempting to
secure substantial profits while working on a system, which involves unnecessarily high cost.
Even as late as 1944 the IJMA resisted development of jute by-products. 30
In 1934 Dr. S. G. Barker, an expert in wool research, was invited by the IJMA to prepare a
report on the problems of the jute industry of the region. Among a good number of findings,
the following received special emphasis: first, an atmosphere of complacency prevailed in
Calcutta jute industry as a result of its isolation from the mainstream of industrial innovations
in Europe. Second, the supervisory personnel of the industry lacked sufficient scientific and
technical knowledge to improve efficiency. Third, the absence of any agency to supply
technical, industrial, commercial, and scientific intelligence made the Calcutta jute industry
less competitive.
Ultimately, in 1936 the Government of India announced the formation of the Indian Central
Jute Committee with a grant of Rs. 2,50,000. This body represented all interests in jute and it
was entrusted with the great responsibility of "agricultural, technological and economic
research, the improvement of crop forecasting and statistics, the production, testing and
distribution of improved seed, enquiries and recommendations relating to banking and
transport facilities and transport routes and the improvement of marketing in the interests of
the jute industry in India. 31 The liMA set up a research lab and an information and statistical
department jute in Calcutta. The following year IJMA marketing representatives went to
important trading centers abroad to collect various information sand to seek trade contacts
and agreements. All efforts by the Government and the IJMA were too little and came too
late. A large share of the jute market had already been lost to substitutes. However, the
coming of the War in Europe and subsequent orders placed with the Calcutta jute mills
brought an end to the depression and revived prosperity in the Calcutta jute industry for the
next several years. 32
IV. Revival, Prosperity, and Decline: 1939 to 1947
The Review of the Trade of India (1940-'41) highlighted that with the start of the Second
World War (1939-'45) the Calcutta jute industry 'was looking forward to boom conditions.'
The first war-order to liMA came in February 1939 but it did not peak until the end of the
year. By then the Government withdrew the Bengal Jute Ordinance of 1938 and created the
103
Office of the Controller of Purchases (Jute), to channel foreign and domestic orders. 'Rapid
and substantial improvement' in the mill stock position led the industry out of the depressed
conditions of the previous years. Mills were able to work 60 hours a week with full
complements. The price of jute products and raw jute rose appreciably (Ahmed, 1987, p.
165.).
The German victories in Europe resulted in the natural loss of the continental market. A
bumper crop production for 1940-'41 triggered a descending trend in the price levels for jute
fiber. The Calcutta index number of raw jute (base: July 1914 - 100), which was 99 in April
1940, came down fairly to 50 in October of that year. The price of jute manufactures also
came down temporarily but the drop was not as sharp as that for the raw jute. The Bengal
Government issued an ordinance fixing the minimum and maximum floors and ceilings for
both raw jute and finished goods. But the jute mills refused to buy jute fiber at the floor price
and the Government failed to purchase the excess jute in the market. On December 4, 1940,
the Government reached an agreement with the IJMA by which the latter agreed to buy a
fixed quantity of jute at a stipulated price in return for huge war-orders placed by the
Government. The IJMA purchases fell short of the agreed-upon quota but still succeeded in
arresting the failing price of the fiber for at least sometime. The entry of Japan into the
Second World War and the bombing of Calcutta proved particularly unpropitious for Bengal
jute growers. The futka bazar became inoperative as it drove the whole speculative
community out of Calcutta city. The IJMA agents were left in the market to determine the
price of raw jute. Truly pleased, the Chairman of the IJMA remarked, "We have been
carrying on extremely well in the absence of futures market." Except for a short span in 1943
the price of raw jute remained depressed throughout the War period in spite of the fact that
the cropped area declined much below the prescribed acreage. The Review of the Trade of
India highlighted that at the beginning of 1943, "The members of the Indian Jute Mill
Association entered into an agreement with one another not to buy jute at more than certain
maximum prices which were lower than those ruling in the market by Rs. 2, as well as not to
buy more jute than was necessary to meet the needs of the order [placed by the United States
for 700 million yards of hessian in June 1943]. 33
The Calcutta jute industry, however, was not without problems. War brought many
difficulties such as the chronic shortage of fuel, transport problems and labor trouble, forced
the mills to curtail productive capacity. In May 1942, work hours had to be curtailed from 60
to 54, sealing off 10 percent of the looms, which resulted in the accumulation of stock. This
was at a time when acute shortage of necessary jute goods persisted in the United States,
Canada and Argentina. In the 1942-'43 season, the export of various jute goods fell short by
280 thousand tons compared to the previous season for lack of shipping space. Coal scarcity
104
As the Second World War came to an end, orders on Government accounts diminished. In
the short run, this was amply compensated by some new long run, very stiff competition
from substitutes, revival of the jute mills in other parts of the world, and higher tariffs were
anticipated. The IJMA undertook a publicity campaign along with a survey of the various
markets and new uses of different jute products.
It was the real picture of the development and decline of the Calcutta Jute Industry upto the
partition. Obviously, the jute industry was never a segment of the Indian economy, which
was hindered by a lack of growth and expansion. Quite the contrary, once a beginning of the
industry was made in the middle of the nineteenth century, the high returns lured a great
amount of investment capital. Even in the trying times of the 1930s when profits dwindled,
the Calcutta jute industry underwent some expansion in the anticipation of revival. The profit
motive was so pervasive and was taken so much for granted that only very little attention was
given to innovative research and the development of modern technology. The industry was in
dire need of commercial intelligence; some appropriate guidance and control in the
establishment of jute mills and the rate of expansion of productive capacity.
The Second World War period clearly showed the strength of the IJMA as a powerful
manufacturer's cartel. Its ability to keep the price of raw jute to a comparatively lower level
in spite of lower supplies compared to previous years fetched a good chunk of the profit. The
war conditions and the acute scarcity of packaging materials helped maintain a higher price
level. But definitely, the prosperity was short lived. Once all the dust from the turmoil
settled, it was found that jute goods from Bengal had lost the unique price-advantage that
once enabled them to acquire the packaging market.
The role of the Government of India in the growth and expansion of jute mills in Calcutta
region was minimaL A moderate cost of establishment of a jute mill and the anticipation of
huge profits fetched the investment capital. A certain amount of planning was absolutely
necessary to control over-expansion and healthy growth especially during the period of
depression. Proper State patronage and guidance in innovative research and industrial
education could be crucial elements in maintaining and augmenting the position of jute in the
international market. But the then Government of India overwhelmed by the excessive
burden of administration, wars and "decolonization", had little time and resources to draw a
sound plan for better industrial development.35
106
V. Initial Shock, and Revival after Partition: 1947 to 1965
With Independence, the industry's significant advantages were eroded. Because of partition,
the industry was cut off from the abundant supply of cheap and high-quality jute, and new
mills built in East Pakistan - with the advantage of better and cheaper raw material and an
export subsidy given by the then Pakistan government - implied increasing competition for
India's jute industry. Nevertheless, overall production showed an upward trend, although a
somewhat erratic one, between 1950 and 1965. Export remained at a high level: in 1964 it
reached the peak since Independence. There were various attempts by the government to
increase the quantity and quality of jute produced and India achieved near self-sufficiency in
raw jute, but the quality remained low. The industry modernized a part of its production
process and there was a rise in labour productivity during the 1950s, though investment in
modernization was miserably limited. The main exception was carpet backing, in which the
industry made considerable progress during the 1960s, but this market was gradually lost to
synthetics.
Employment in 1948 was higher than in any year since the crisis of 1931. But in the 1950s
the mills embarked on rationalization, which meant, in effect, a determined effort to reduce
labour costs. Labour employment was reduced by about 25 percent. Production per worker
increased and the number of workers per loom decreased. In the first half of the 1960s,
employment increased again, mainly due to the fast increase in production. 36
VI. Period of Decline -1965 Onwards to Present
After 1965, the condition of the industry declined very rapidly. Four clear factors were
responsible for this. First, there was a gradual decline of the export markets as synthetics
became popular as cheaper and more durable packaging material. 'The polypropylene cloth
industry expanded rapidly in Western Europe, Japan and the US and penetrated very
successfully almost all the traditional jute markets (bags, sacks, carpet backing and
cordage). ' 37 Second, West Bengal never gets priority in India's economic planning or in
freight equalization policies. There was very little attempt to promote export-oriented
industries. For instance, after the devaluation of the rupee in 1966, an export duty was
imposed on jute goods. This gave the then East Pakistan, which subsidized its export, a large
competitive advantage. The third factor was the withdrawal of British capital. Ownership was
slowly taken over by Indian entrepreneurs, but by the middle of the 1970s, the financial
position of the industry had weakened. Fourth, the labour situation changed drastically
107
around 1970. Within five years the industry was confronted with four general strikes and the
share of wage costs in total manufacturing cost increased rapidly. Actually from the second
half of the 1960s, employment declined rapidly. After 1969, employment recovered to
achieve a relatively high level by the mid-1970s. The number of workers per loom, however,
continued to decline. Employment showed a gradual decline after 1975 so that by the late
1980s there were only 220,000 workers engaged in the industry. After 1975, production has
remained remarkably constant, though the industry is in serious crisis. The new industrial
climate in the second half of the 1980s had no visible impact on the industry. The industry is
still 'sick' and many units close down regularly, for periods of over a year. The industry has
experienced short-term revivals, like in 1989, but this has not changed the downward course
of the industry. 38 There has been an upward trend in overall production in recent years, but
the financial scenario of the industry remains fragile and uncertain.
3.4. SUMMARY
Jute industry of Calcutta Industrial Region experienced periodic ups and downs in its long
journey. The industry experienced growth and expansion during 1855 to 1914. It experienced
further expansion during 1914 to 1929. The industry faced the most critical time in its history
during the depression in 1929 to 1939. The industry further experienced revival, prosperity
and decline during the period of 1939 to 1947. The period of 1947 to 1965 is marked as the
period of initial shock, and revival of the industry after partition. The period starting from
1965 is marked as the period of decline of the industry the industry once flourished
depending on its quickly expanding export market. However, it is compelled to see steady
decline after gradual loosing of its traditional export market from 1965.
3.5. OVERALL SUMMARY
Jute started its manufacturing career in 1835 from Dundee, Scotland, depending on imported
raw jute from India. Later, the Calcutta Jute Industry started its journey in 1855, depending
exclusively on imported machinery from Dundee. As a matter of fact, the jute industry
gradually spreads to the European continent from Dundee. The manufacturing units mainly
dependent on imported jute. By the end of the nineteenth century jute mills were set up in
both hemisphere of the globe. After initial ups and downs the jute industries in various parts
of the world (particularly in India and Bangladesh) strengthen its position gradually.
108
Jute industry of Calcutta Industrial Region experienced periodic nse and fall m its long
journey, as highlighted below:
( i) growth and expansion of the industry during 185 5 to 1914,
( ii) expansion of the industry during 1914 to 1929,
(iii) the jute industry during the depression 1929 to 1939,
(iv) revival, prosperity, and decline: 1939 to 1947,
( v) initial shock, and revival after partition: 194 7 to 1965, and
(vi) period of decline - 1965 to present.
The ups and downs of the industry are mainly influenced by the situation of the market, from
time to time. However, the effect of partition in 1947 and growing labour cost and labour
problems in recent decades, adversely affect the industry.
We have discussed the details of the development of the jute industry in the Calcutta
Industrial Region in this chapter. But, we have to find out the causes behind the steady
decline of the industry in recent decades. We are going to discuss about the causes behind the
decline, in the next chapter.
Endnotes
1 Chaudhuri, MR, The Jute Industry in India, A Diagnostic Goo-Economic Analysis (1982, p. 1), Calcutta. 2 Indian Jute Mills Associations (IJMA) Commemoration Volume on the Occasion of the International Jute Symposium, September, 1983. 3 Ibid 4 Barker, S.G., Report on the Scientific and technical development ofthejute manufacturing industry in Bengal with an addenda on jute; its scientific nature and information relevant thereto, Indian Jute Mills Association, Calcutta, 1935. 5 Sen, Samita, Women and Labour in I .ate colonial India: the Bengal jute industry, Calcutta, 1999 6 Chakrabarti, Dipesh, Rethinking Working-class history: Bengal, 1890-1940, 1989, (p.15-16) 7 Sen, Samita, Women and Labour in Late colonial India: the Bengal jute industry, Calcutta, 1999 8 Chakrabarti, Dipesh, Rethinking Working-class history: Bengal, 1890-1940, 1989, (p. 16) 9 Sen, Samita, Women and Labour in Late colonial India: the Bengal jute industry, Calcutta, 1999 1° Chakrabarti, Dipesh, Rethinking Working-class history: Bengal, 1890-1940, 1989 11 Indian Jute Mills Associations Commemoration Volume on the Occasion of the International Jute Symposium, September, 1983. 12 Stewart, Gordon T., Jute and empire: the Calcutta jute wallahs and the landscapes of empire, Manchester, 1998, p.39. 13 Indian Jute Mills Associations Commemoration Volume on the Occasion of the International Jute Symposium, September, 1983. 14 Ahmed, Matin Uddin, The rise and fall of jute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 15 Debnath, S.C., Camp, Directory of world jute industry, Calcutta, 1975 16 Ibid
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17 Ahmed, Matin Uddin, The rise and tall of jute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 18 Debnath, S.C., Comp, Directory ofwor1djute industry, Calcutta, 1975 19 Ibid 20 Ibid 21 Ibid 22 Ahmed, Matin Uddin, The rise and fall ofjute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 23 Shorter, Frederic Claiborne, Jute Policy in India and Pakistan, 1947-1953: an economic analysis, Thesis (Ph.D.)- Stanford University, 1957, p.- 53. 24 Wallace, D.R, The romance of jute, a short history of the Calcutta Jute Mill Industry, 1855-1909, Calcutta, 1909 25 IJMA, Report ofthe committee, 1935, Calcutta, 1936. 26 Ahmed, Matin Uddin, The rise and fall ofjute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 27 Review of the Trade oflndia 1917-' 18, Calcutta, 1918 28 Ahmed, Matin Uddin, The rise and fall of jute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 29 Review of the Trade oflndia, 1943-'44 30 IJMA, Report, 1944, Chairman's address, p. XIII- XIV 31 IJMA Report, 1936, quoted in the Resolution ofthe Government oflndia published in the Gazette oflndia, May 28, 1936, Calcutta, 1937, p. 292. 32 Ahmed, Matin Uddin, The rise and full of jute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 33 Review of the Trade oflndia, 1943-'44, p. -15 34 IJMA, Report, 1944, p. - v. 35 Ahmed, Matin Uddin, The rise and fall of jute as a commercial crop 1850-1945: a study from the growers' perspective, Thesis (Ph.D.), University of California, 1987 36 A case tor labour history: the jute industry in Eastern India, edited by Arjan De Haan, Samita Sen, Calcutta, 1999 37 Anderson, J & others, A dynamic simulation model of the world jute economy, World Bank, Washington, D.C., 1980, p. - 5. 38 A case for labour history: the jute industry in Eastern India, edited by Arjan De Haan, Samita Sen, Calcutta, 1999
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