Maker of Modern India
Dec 28 2012
His entrepreneurial acumen coupled with nationalistic outlook still bears fruits long after he is gone
Jamsetjee Tata was born in Navsari, Gujarat in 1839. It was the year when Lord Macaulay departed for England, leaving behind his famous Minute on Education. After early schooling in arithmetic and Gujarati, his father, Nusserwanjee, brought the 13-year-old Jamset to Bombay, where he admitted him to the Elphinstone Institution a year later. At college, Jamsetjee acquired an abiding love for English literature, and till his last days, was fond of Charles Dickens, Thackeray and Mark Twain. Reading was one of his main indulgences; the other was his love for good food. Nusserwanjee was a man of fortune who resided in his own seven-storey house in the Fort area of Bombay.
By the time Jamsetjee passed out of college, in 1858, India had been subjugated by the British, after receiving a stunning blow in the Revolt of 1857.
Jamsetjee first joined his father’s business of trading with the Far East.
Soon, Jamsetjee left Bombay for China, where he started a mercantile firm, Messrs Tata and Company. With time, his business prospered and Jamsetjee opened branches in Japan, Hong Kong, Shanghai, Paris and New York.
That was also the time when the Civil War broke out between the northern and the southern states of America. Ships carrying cotton from the southern states to England were blockaded by Abraham Lincoln’s navy. In their desperation, the mills of Lancashire, pioneers of Britain’s Industrial Revolution, turned to India for cotton. Jamsetjee and his father participated in that trading boom. But, when the Civil War ended, the cotton market collapsed, and most Indian traders lost their fortunes. Some, ruined, took their lives. The Tatas too lost money, but survived.
Upon returning from China to Bombay, Jamsetjee decided to travel to Europe and open an Indian bank in London, but the financial crash that occurred in Bombay prevented him from launching the project.
In England, Jamsetjee carefully studied the working of the textile mills, but he hardly had enough money to start a mill of his own. That opportunity finally came in 1868, when Jamsetjee and his father joined a syndicate to supply stores to an expedition to Ethiopia from Bombay led by general Sir Robert Napier. Government contractors amassed large fortunes from supplying to the expedition, and old Nusserwanjee became a wealthy man again.
Making of a Capitalist
Back from England and flush with cash from the Ethiopian expedition, Jamsetjee purchased the Chinchpoogli Oil Mill with a capital of Rs 21,000 (the equivalent of Rs 24 lakh today). He converted it into a spinning and weaving concern called the Alexandra Mills. Then, having turned it around, he sold the mill to the one Kessowjee Naik at a profit of Rs 2 lakh (Rs 2.3 crore today).
That success induced Jamsetjee to visit England again to study the Lancashire cotton mills in greater detail. Whatever he learnt there and in other manufacturing towns of England, stood him good when he returned to Bombay in 1870 to start a large cotton mill. He scrutinised his project thoroughly and travelled all over India to find out where the venture would succeed. After an exhaustive search, he narrowed down on Nagpur. Unlike his contemporaries, who hauled the raw cotton to Bombay, where the mills were situated, Jamsetjee thought of taking his mill where the cotton came from. The foundations were laid, and on January, 1 1874, the day Queen Victoria was declared empress of India, the Empress Mills were opened with 100,000 spindles and nearly 2,500 looms. Soon, Tata came to be known as a captain of the mill industry in India. Tata claimed to have started the mills on sound and straightforward principles. He considered the interests of the shareholders as his own, and the welfare of his employees as the surest foundation of his prosperity. Years later, The Times of India wrote: “When, in the words of William Blake, the ‘satanic mills’ of Lancashire extracted 14 to 16 hours of work a day, unconcerned about the men of the shop floor, an enlightened mill owner of Nagpur and Bombay was introducing sanitary hutment and filtered water for his workers. One of the first factory dispensaries was opened at Nagpur. In 1885, Jamsetjee Tata introduced a pension fund for his workers, and in 1896, accident compensation.”
Encouraged by the overwhelming success of the Empress Mills (its dividend touched 40 per cent), Tata thought of Pondicherry as a suitable site for another mill. The main object was to find a market for Indian manufactured goods in French colonies without paying the prohibitive tariffs imposed by their tax laws. Tata set up a company all right, but instead of building a new mill at Pondicherry, he preferred to buy up the Dharmsi Mill at Kurla, in Bombay, later known as the Swadeshi Mill. Investors reposed their full faith in Tata when he went to the market to raise capital for the “rotten mill”, as he called it, as they were convinced of his solid reputation.
The mill at Kurla had valuable property, but poor machinery. Though it did not, in any way, come up to the standards of the Empress Mills, he worked it with greater success than many of the Bombay mills. However, Tata had underestimated the work needed to set it right. So, when a shipment of Swadeshi Mill was rejected in Hong Kong, its share prices plummeted to a fourth of the original value. Jamsetjee asked a bank for a loan against the trust he had made for his children, but the bank refused to accept the shares as collateral. So Jamsetjee revoked the trust, sold some of his Empress Mills’ shares, pumped in his own capital into Swadeshi and the prices firmed up. He brought the best people from the Empress Mills, and seven years later, products of this once “rotten mill” fetched the highest price in the international market.
Tata’s mills grabbed an extensive market across the country because of their superior woven goods. Tata also set up his own agencies and shops in different towns — a practice since followed by others. Meanwhile, to support and promote the local mills, Tata tied up with the Japanese Steamship Company to wage a war of freights against the P&O, the Austrian Lloyd’s and the Italian Rubaltino companies, who monopolised the freight for shipment of cotton to China and Japan. This forced the triple alliance to reduce the freight from Bombay to Japan to Re 1 per tonne. In a pamphlet circulated internationally, Tata protested against the iniquity of a company subsidised heavily from Indian revenues using that very subsidy to make up for the loss incurred on the ruinous competitive rate to which, they had reduced their charges. He also appealed to the British to create a strong public opinion in his favour. The war of freights that resulted in some sort of a compromise, cost Tata almost Rs 2 lakh.
He also took up the cause of modernisation of the textile mills with the vigour of a public campaigner. A letter from Tata to the mill owners of Bombay was published in The Times Of India on August 14, 1986. His letter goaded fellow mill owners to take advantage of the latest and most approved cotton spinning machinery to successfully spin relatively larger quantities of finer counts from indigenous staple at a lower cost and with greater ease, with the unskilled, but cheaper labour that the Indian mill owners were in a position to command.
Five days later, he wrote to the newspaper’s editor assuring that Indian cotton was indeed adapted for higher counts of yarn. To establish his point, he said he had not only relied on his 26 years of experience in the textile business, but had also successfully demonstrated this in his own mills that had far surpassed many of the English mills in quality.
Following capacity expansion, the Empress Mills was set to employ 5,000 workers by August 1901. The chief commissioner commended Tata’s success at managing the Nagpur mill at the inauguration of a new plant on August 7. By then, the Empress Mill had seven ginning and press factories in the Central provinces and Berars and 31 agencies in Bombay and northern India for selling its products. Having started with a capital of Rs 15 lakh, over the years it had added Rs 32 lakh from reserves and profits to take its equity capital to Rs 47 lakh. Investors who had bought shares worth Rs 500 when the mill started had seen their capital appreciate to over Rs 6,000 by 1901, even as they earned over Rs 3,000 as dividend over a 25-year stretch.
Making of the Steel City
Jamsetjee first conceived of a modern steel plant way back in 1882 when he personally carried samples of iron ore and coking coal to Germany for testing. However, the coking coal was of inferior quality and Tata had to set aside his plan. Later on, reading a report in 1899 that the Jharia coalfields had adequate coking coal, Jamsetjee took up his old scheme again. He went to England to gather the support of the secretary of state for India, Lord George Hamilton. Hamilton supported Jamsetjee who, in turn, cabled his Bombay office to obtain prospecting licences for iron ore, coal and fluxes, and proceeded to the United States to study the steel industry there. He visited the world’s largest iron ore market in Cleveland and met the foremost American metallurgist of the time, Julian Kennedy.
On returning to India, Tata found that the obstruction or indifference of the secretariats had been replaced by not merely a readiness, but an eagerness to assist. He was confident that when the industry would be organised, the deposits in the Central Provinces would rank among the world’s most valuable iron ore mines. Estimates suggested that he would need to invest Rs 1 crore to produce 300 tonnes of steel daily under the most unfavourable circumstances, and a much larger quantity if possible difficulties were sorted out. Tata also took steps to revive copper mines in the Chanda district of the Central Provinces, said to have been abandoned 1,000 years ago. No time was too precious, no cost too great in thoroughly investigating the conditions necessary to make the project successful. Tata spent Rs 1.5 lakh in improving his concessions in the Central Provinces.
Jamsetjee also realised that when the iron ore mines were found, the new steel works would have to be located at a greenfield site that was accessible to the coal fields, the iron ore mines and stone quaries. It would also have to be located near a river to provide the steel plant with water essential for cooling the furnaces. For centuries, towns and cities had been allowed to grow haphazardly as landlords and builders laid out their properties only with a profit maximising motive. In 1902 this was still true even of industrially advanced countries in Europe and America. Haphazard townships had come up in England and America at Sheffield and Pittsburg around the steel works. But, Jamsetjee directed his son to ascertain the direction of the prevailing winds before he chose the location of the future township so that the factory smoke and fumes would blow not towards, but away from the workers’ dwellings.
In 1902, Tata wrote to his son Dorab: “Be sure to lay wide streets planted with shady trees, every other of a quick-growing variety. Be sure that there is plenty of space for lawns and gardens. Reserve large areas for football, hockey and parks. Earmark areas for Hindu temples, Mohammedan mosques and Christian churches.”
By the time the Tata Iron Company came up in 1907, three years after Jamsetjee’s death, the top British Railway official Sir Fredrick Upcott, remarked: “Do you mean to say that Tatas propose to make steel rails to British specifications? Why? I will undertake to eat every pound of steel rail they succeed in making.”
The Tatas originally planned to raise money for the Tata Iron Company in London. But the abnormal money market imposed insuperable obstacles. Not to be discouraged, the Tatas raised five-sixths of the required capital, or Rs 1.25 crore, from the local capital market by August 15, 1907. This was considered an extraordinary achievement.
In 1919, the Viceroy, Lord Chelmsford, came to Sakchi to visit the steel plant. Standing on the steps of the new director’s bungalow, he thanked Tatas for their role in First World War and added: “It is hard to imagine that 10 years ago this place was scrub and jungle and here now we have this place set up with all its foundries and its workshops.... This great enterprise has been due to the patience, imagination and genius of the late Jamsetjee Tata. This place will see a change in its name and will be identified with the name of its founder, bearing down through the ages the name of the late Jamsetjee Tata. Hereafter, this place will be known by the name, Jamshedpur.”
Over the years, Tata Steel, the mother of heavy industry in India, spawned several factories in Jamshedpur — The Indian Tube Company (later, the tubes division of Tata Steel), the India Cable Company, The Tinplate Company of India, Indian Steel and Wire Products (started by Sir Indra Singh), Tata Yodogawa, Tata-Robbins-Fraser, Tata Refractories and the biggest of all, The Tata Engineering and Locomotive Company. In the process of becoming the mother of engineering industry, Tata Steel created skills the nation did not have. By the mid-50s, Tata Steel had already trained 13,000 technicians in different aspects of steel making. They were available for the public sector steel plants when they came up. A senior manager from Tatas was to become chairman of the state-owned Steel Authority of India.
Around the time he was planning his steel mill, one fine morning Jamsetjee asked his friend Nusserwanjee Guzder for a launch ride on a Sunday morning. Guzder thought Jamsetjee wanted to go on a picnic as was his wont. But Tata had other plans in mind. He summoned all his senior executives that Sunday and asked the pilot to take them to Roha Creek. There, he pointed out to his colleagues the monsoon water gushing out from the Roha river into the bay. “We must harness this water,” he told his executives. Till then, every electric generating plant was at the foot of a waterfall. One his earlier visit to the United States, Westinghouse had invited Jamsetjee to the Niagra Falls to see its generating works. Bombay had no waterfall nearby and Jamsetjee wanted to create one. He was, perhaps, the first man in the world to conceive such a scheme.
As the first steel chimneys were rising in Jamshedpur, on the western side of India, giant pipelines were being riveted down the steep incline of the Western Ghats to generate hydroelectric energy. By 1910, hydroelectric power was harnessed only through natural waterfalls, but the scheme visualised by Tatas was to build an artificial reservoir on the brink of the Western Ghats and the speed the flow of water down the pipes to the generating plant at the foothills of the Ghats.
This original idea of using large pipes was one thing; its execution was another. Each pipe had to be perfectly laid on saddles hewn out of uneven and craggy rocks and held in place by massive anchor blocks. Even the artificial dam envisaged at Walwhan, off Lonavala, was an engineering feat of the time. It was only a little smaller than the great dam constructed at Aswan by Sir William Willcock.
The governor of Bombay, Lord Sydenham, aware of this, said while laying the foundation stone of Walshan Dam: “This project symbolises the confidence of Indians in themselves.”
Jamsetjee had envisaged a “smokeless city” free from the soot and grime of the coal-burning textile mills and other factories and planned for the supply of clean hydroelectric power to Bombay. The Tata Hydro-Electric Power Company was established in 1910. The Andhra Valley Power Supply Company was established in 1916 and the Tata Power Company in 1919.
In between planning his steel mill and the hydroelectric plant, Jamsetjee conceived a grand hotel in Bombay. His decision to build the hotel was born out of a personal experience when he took a foreign guest for lunch to Majestic, a leading British hotel of those days. At the entrance of the restaurant, as he was following his guest in, the manager stopped him politely to remind that Indians were not admitted into the restaurant. Jamsetjee and his friend had to go elsewhere for their meal. It is said that when he returned home, Jamsetjee remarked that he would build a hotel that would put the Majestic out of business. Soon, he bought newly reclaimed land at Apollo Bunder and participated in the design of the building as conceived in 1900. Inspite of poor health, he personally went to Dusseldorf and other European cities to purchase some of the essential facilities that the hotel needed, including a soda water plant. In 1903, on the eve of his death the following year, the Taj Mahal Hotel rose on the sea front and, since the Gateway of India had not been conceived at that time, stood in solitary splendour for many years.
Making of an Educationist
Jamsetjee was a great believer in higher education. On January 29,1892, he endowed a fund for sponsoring higher studies for Parsi youth in England as a means towards the advancement of his community. Later, in 1894, he threw open the benefits of the fund to all castes.
Jamsetjee wanted to help select candidates to enter the Indian Civil Service or any of the liberal professions by helping them secure the highest proficiency in the specialised subjects such as electrical and engineering, they wanted to pursue. His offer was valid for England as well as the universities of Bombay, Calcutta and Madras.
Jamsetjee intended to establish a permanent endowment, prior to which, he was prepared to render assistance to students in the shape of monthly stipends up to Rs 50 for collegiate and extra collegiate studies to be decided by a committee of experts. The endowment would also fund books and fees for at least three years, while they were studying in England or on the continent.
But his biggest achievement in the educational field was a research university that still outshines all educational institutes in the country. On September 28, 1898, Jamsetjee announced a scheme and endowment for what eventually came to be known as the Indian Institute of Science. The idea came to Tata’s mind at least two years earlier, and he tasked the honorary secretary of his trust B J Padshaw to consult educational experts in Europe beforehand.
When Jamsetjee visited England in 1900, he asked the Royal Society to recommend a scientist to visit India to prepare a project feasibility report. The Royal Society recommended Prof William Ramsay (later to be a recipient of the Nobel Prize). Ramsay toured India and suggested that the British government should give at least £5,000 a year (if not £8,000) to match Jamsetjee’s contribution of £8,000 a year.
A committee of distinguished citizens led by Justice Candy, vice-chancellor of the Bombay University, was formed to promote the scheme. In 1904, Jamsetjee added a codicil to his will reaffirming that this offer, which was worth half his fortune, be kept open for the British government to accept.
Somehow, Lord Curzon (the viceroy of India) was under the wrong impression that Jamsetjee wanted to link his benefaction to the university with a baronetcy.
A year later, Lord Curzon gave the permission for the university and offered from the imperial government an amount equivalent to Jamsetjee’s benefaction. The Maharaja of Mysore had already offered the spacious grounds. The Indian Institute of Science became the pioneering fountainhead of technological manpower for the next decades.
In 1911, the Indian Institute of Science started with three departments for electrical engineering, mechanical engineering and chemistry, which in those days, included both organic and inorganic.
On September 17, 1907, Times of India reported that organisation of the Indian Institute of Science had been arranged. The principal of the institute, Morris Travers, had arrived in India to settle the remaining issues. The constitution of the institute has been fixed broadly on the lines of the new English universities. The management was tasked to be committed to a council, comprising the professors and an equal number of nonacademic members. The professors formed a senate — a purely academic body, to consider all academic questions before they came up to the council for sanction. The viceroy consented to become the patron, and there were also be vice-patrons, and a body called a Court of Visitors to keep the institute in touch with public opinion, and to act as a check on the council. The institute commenced with an income of a little over Rs 2.5 lakh, and a capital of about Rs 7.5 lakh.
Jamsetjee’s splendid conception, which he endowed with princely liberality, came just when India was beginning to clamour for a class of experts, which the institute eventually began to furnish.
In setting up the institute, the promoters intended to provide instruction in subjects that were applicable to established industries of India. Therefore, chemistry, pure and applied, became the first care of the institute. Electrical technology was also taken up as Bangalore, the theatre of the institute, offered special facilities owing to its proximity to the electrical installation on the Cauvery at Sivasamudrum. Next in order were bacteriology and the study of fermentation. By express wish, the Tata family desired against their name being directly associated with the institute.
By early 1904, Jamsetjee, then 65, lapsed into poor health. In January, he left for Egypt on medical advice. He first went to Cairo and then proceeded to Naples and visited other cities on the continent, and eventually went to Vienna, where he remained under medical treatment. While at Vienna, he sent for Dr Rao, his family physician in Bombay, who immediately rushed to his bedside, and sent a telegram home to Tata’s family to say that Jamsetjee’s condition was anything but satisfactory. From Vienna, Tata was removed to Nauheim. He died on May 19. Jamsetjee’s eldest son, Dorab was by his bedside at the time of his passing away. Jamsetjee’s body was later removed to London where he was interned in the Parsi cemetery near Woking.
In pursuing his calling, Jamsetjee became not just the founder of the House of Tata, but also a maker of modern India.