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is based entirely on secondary sources and some unpublished reports etc.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.

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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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