Indian Mercantile Marine and the Coastal Traffic Reservation Bill

Indian Mercantile Marine and the

Coastal Traffic Reservation Bill

THE PAST AND THE PRESENT

The history of Indian shipping and maritime activity is now entirely a record of the past. The brilliant story of the rise and prosperity of that great national industry of ours, covering a period of :over twenty centuries, and the pathetic tale of its decline and fall in very recent times are faithfully narrated by writers like Prof. Radhakumud Mukherjee, Mr. S. N. Haji and others. Mr. S. N. Haji, writing in 1923 in his Economics of Shipping says:

"It is worthy of notice that, in the matter of shipping, the glories of India can be traced not merely to a dim and distant past, but its progressive growth can be traced right up to the end of the 18th century and unfortunately its progressive decay from the early years of the last century to the present year of grace 1923."

Between 1781 and 1830, nearly 300 ships were built on the Hoogly. In Bombay, an enterprising firm of Parsee contractors achieved fame as ship-builders, and in 1802, the Admiralty ordered certain men-of-war also to be built in Bombay. Within the last three decades, no less than 20 shipping companies were floated with an authorised capital in the neighbourhood of 10 crores of rupees; but, almost all of them succumbed to the aggression of foreign shipping interests. Not much purpose will be served by my attempt to epitomise the historical survey of the vast coastal traffic and the extensive maritime intercourse between India and other countries that once subsisted. The present position is this: ninety-eight per cent of India's export and import trade and about ninety per cent of her coastal trade are served by foreign ships which are owned by non-Indian companies; in other words, roughly no more than 10 per cent of India's coastal trade and 2 per cent of her foreign trade is carried today in Indian bottoms. India's tonnage in overseas trade may be graphically described from two standpoints. One way of looking at it is to compare the tonnage of the different countries engaged in the overseas trade of India. India, the very country whose import and export trade forms the subject of comparison, occupies the last place as a negligible factor in international

trade. In 1924-25, British tonnage carried 73.5 of India's overseas trade; Japan 6.9 per cent; Italy 5.6 per cent; America 3.6 per cent; Dutch 3.2 per cent; Germany 3 per cent; while India carried 1.6 per cent of her trade. The small balance of 3 and odd per cent was shared between all the other nations of the world. Another way of judging India's position is to compare her tonnage with that of the other maritime countries. In one of the coloured charts, exhibited at the Congress Exhibition held at Calcutta last December, 27 sea-faring countries of the world are piled up in the form of a pyramid with Great Britain with her tonnage of over 19 millions as the base and India, with her tonnage of a little over 1.5 lakhs, as almost the top piece of the pyramid, occupying the 24th place. There were then no doubt Chile, Turkey and Poland occupying the remaining three topmost places, with tonnage of very little less than that of India; but since the figures in that chart were compiled, Chile and Turkey reserved their coastal trade to themselves, and Poland has taken steps to develop a National Mercantile Marine. So, India must have now ascended to the topmost point, thus occupying the lowest place among the maritime nations of the world, notwithstanding the fact that she has a magnificent coastal line of about 4,500 miles and an export and import trade of huge dimensions.

THE ASSEMBLY RESOLUTION OF 1922

This is a position which no Indian can contemplate without the gravest concern for India’s commercial and political future. With the insignificance to which she has sunk in the international trading world and the complete severance of her maritime intercourse with the rest of the world through the medium of her National Marine, her individuality as a nation and her influence in international affairs have become totally extinguished. The desire, therefore, of India to re-establish contact with the other nations by means of her own mercantile ships and to regain at least a fraction of the vast foreign and coastal trade of which she has been deprived is something more than a mere "fancy of national sentimentality" as her exploiters assert. From time to time, attempts have been made by businessmen and legislators to bring home to the Government not only the gravity of the situation, but also the great importance of forming a Mercantile Marine and encouraging ship-building in India. These attempts assumed the shape of definite proposals in 1922 when Sir P. S. Sivaswamy Aiyer moved a resolution in the Legislative Assembly asking for the examination of the measures to develop the Indian Merchant Marine in all its aspects by an impartial Committee of experts and others interested in the subject, and when Mr. S. N. Haji embodied his proposals in the form of a Bill for reservation of the coastal trade of India for concentrating public attention on it. Sir Charles Innes, in accepting the resolution on behalf of the Government, made it abundantly clear in his speech, that while the Government recognised that the desire on the part of the people of India for their own Mercantile Marine was very natural, they emphasised the insurmountable nature of the difficulties that stood in the way of the realisation of that desire and warned them against forming "too great hopes forrapid development of Indian Mercantile Marine," to use his own language. The scope of the resolution as originally moved was also materially curtailed by a substantial amendment which Sir Charles Innes persuaded the mover of the resolution to accept. The desirability of building up an Indian Mercantile Marine and the general measures that are called for in that behalf being more or less matters on which there is little scope for differences of opinion among those who genuinely favoured the promotion of true Indian interests, Sir P. S. Sivaswamy Aiyer rightly asked at first that the Committee proposed by him should prepare a scheme for the furtherance of six definite objectives which he detailed. But Sir Charles Innes had the words prepare a scheme occurring in the resolution replaced by the words consider what measures can be usefully taken, perhaps realising that it would be easier to turn down suggestions couched in general terms, than definitely worked out schemes, with which. the Government might eventually find itself in disagreement. The Assembly had no alternative but to accept the amended resolution lest it should be defeated in its original form or rejected by the Government, even if the Assembly carried it. The debate, however, sufficiently indicated the general nature of the measures which were favoured by the popular representatives. State aid was asked for chiefly in two directions: adequate facilities for the training of Indians for sea careers and the reservation of coastal trade to Indian-owned ships. Other shapes which State aid might take were thus summarised by Sir P. S. Sivaswamy Aiyer: It might take the shape of an exemption of ship-building materials from import duties, of preferential railway rates to goods shipped over specific steamship lines, of loans to ship-owners for the construction of ships, of reimbursement of port dues, of subvention for the carrying of mails and of subsidies for ships run under Indian ownership. Sir Vithaldas. D. Thackersey urged the intervention of the State to put an end to deferred rebates and rate wars which virtually killed Indian shipping enterprise, an aspect of the subject with which I shall deal later.

THE MERCANTILE MARINE COMMITTEE

The Government, after the lapse of an year from the date of the adoption of the resolution by the Assembly, appointed a Committee known as the Mercantile Marine Committee in February 1923 with terms of reference which were more or less in accordance with the main terms of the resolution. The Committee completed its task in an year's time and made its report in March 1924. The recommendations of this Committee, which have to be gathered from the report as a whole, for the usual practice of summarising them at the end has not been followed, must be conceded to be progressive and sympathetic on the whole. One of the main conditions which militate against the development of shipping enterprises in India, apart from foreign competition and the resources and resourcefulness of the existing British-owned lines, is the want of experience and knowledge in the shipping trade which are so vital for the success of new ventures. The ship-building activity itself has been so thoroughly extinguished as not to be even thought of. Sir Charles Innes, little realising what a sad commentary it was on the character of the administration of this country by his own countrymen, made, while speaking on Sir Sivaswamy Aiyer's resolution, the damaging admission that "what impressed him most was the complete absence in India not only of trained ship-builders, but of the means of training ship-builders." He went on to say: "In England, wherever there is a ship-building port" it has its school or schools in which a full technical education can be obtained. There are three universities, in each of which a chair of naval architecture and engineering is established, where a full scientific education in the subject can be got; the result is that ship-designing is done by men of high scientific and technical attainments and ship-yards are continually recruiting young men who are technically trained to take up positions as draftsmen, foremen and managers." He says India must make up these deficiencies before aspiring for the ownership of a Mercantile Marine. The cruelty of the joke is patent: But he did not venture to state when and how a process of education in maritime engineering and nautical training can be completed, even when an attempt to start it had not been made till then by the Government of which he was so worthy a representative, in charge of its commercial portfolio.

The Mercantile Marine Committee, however, acting on the preponderance of opinion of the witnesses who appeared before it, recommended that adequate facilities should be provided in Indian waters to Indians to equip them as officers and engineers in the Mercantile Marine and to open out suitable sea careers to Indian young men. A section of diehard opinion opposed the idea of even creating these training facilities. In order, therefore, not to leave the admission of Indian apprentices into merchant vessels and their employment after training to chance or to the goodwill of the unfriendly shipping companies, the Committee recommended that before a license is granted to any company for coastal trade, an undertaking should be taken that apprentices would be taken to the extent of at least two per ship subject to a maximum of 60 for any Company, and that Indian officers or engineers as they become eligible would be employed up to the extent of 50 per cent of the total number of officers and engineers employed; The Committee, so far as I am aware, has not made any recommendations which are calculated to promote the ship-building industry in India.

Almost the entire body of witnesses representing the vested interests, cried halt at this stage and strenuously urged on the Committee that the active assistance on the part of the Government towards the creation of an Indian Mercantile Marine should stop at the provision of the training facilities and that the rest should be left to "a gradual process of development by ordinary commercial methods." This plea is evidently the outcome of the consciousness on their part of the potency of the offensive and defensive weapons of warfare employed by them in shipping commerce and of the practical impossibility of any development of Indian enterprise on a normal commercial basis.

Development by ordinary commercial methods implies at least equal opportunities and a fair field for competition. It is idle to pretend that such opportunities do exist. Numerous instances of unfair dealing with Indian Companies have been brought to light. Among those which were adduced, I shall mention only two by way of illustration. When a contract for carriage of 12 lacs of tons of coal from Calcutta to Rangoon was pending, even an opportunity for tendering for the business was denied to the Indian Companies and the contract was placed for 10 years elsewhere at rates which the Government declined to disclose in the interest of the public. When three boats with full cargo of timber on account of the Government of Burma were fixed directly in London and the Scindia Company protested, the Government of India merely said that they could not interfere with the discretion of the Provincial Governments. In this connection it may be mentioned that even such a conservative body as the Council of State agreed to a resolution moved by Sir Lalubhai Shamaldas when he was my colleague in that Chamber, that, when the rates of the Indian and foreign companies were the same, the Indian companies should be given preference for carrying of government and Railway materials from any ports to India. But was this recommendation ever put into practice? It is therefore sheer hypocrisy to speak of "a gradual process of development by ordinary commercial methods." Even self interest to relieve unemployment in Britain did not induce Britain to extend the benefits of the scheme of State aid to ship-building Industry in British dockyards to agree to build ships for Indian Companies and Sir Lalubhai Shamaldas who was specially deputed to England on this mission had to return disappointed.

The case for India naturally was that it was practically impossible for Indian companies under existing conditions to gain a footing in the trade, overcoming foreign competition and that, in order to build up Indian Mercantile Marine, it was not enough to merely train Indians to man ships, and that in addition facilities should be given to own and manage the ships and that the two things should progress side by side. Fortunately, the Committee, in a way, agreed with this view in principle and stated that they could not agree that the provision for training facilities alone exhausted all the necessary avenues of action which could be usefully taken for the development of Indian Mercantile Marine. Among the various measures examined in this connection, the most outstanding one, with which alone I propose to deal on this occasion, is the reservation of the Coast Trade exclusively to Indian-owned ships. It is admitted on all hands, to quote the words of the Committee, that "in other countries, which have desired to develop a National Mercantile Marine, one direction in which action has been taken to this end has been to reserve the coasting trade for the subjects of the particular country concerned." This principle is not disputed even by the representatives of the British shipping interests in India, but on the other hand, it is pressed into service by them to advance their peculiar interests in a curious manner. This attitude of theirs is made clear by the demand which they put forward, before the Great War, for the repeal of an old Act known as the Indian Coasting Trade Act V of 1850, by which the coasting trade of India was thrown open to all comers. The demand for its repeal was made with a view to the exclusion of foreigners (non-British subjects) from the coastal trade of India and thus to further strengthen the British monopoly. Foreign competition with the British having greatly declined after the war, the demand was not pressed with any insistence latterly. But, in view of signs of the revival of such competition, and the prospect of some surplus tonnage lying idle in British ports, the Mercantile Marine Committee indeed recommended the repeal of that Act, subject to treaty obligations with foreigners. The proposal for the exclusion of foreigners is made to rest on the theory that "the coastal trade of a country is regarded universally as a domestic trade in which foreign flags cannot engage as of right, but to which they may be admitted as of grace." In other words, the committee's recommendation is made to rest on the supremacy of the British flag in Indian coastal waters, the trading in which is, in international language, a "domestic preserve". So far, it is smooth sailing.

The next question that naturally presented itself to the Committee for its solution was whether it is permissible to discriminate between British ships and Indian ships which fly the same flag, and reserve the Indian coastal trade in the interests of India or Indianised concerns, which is inevitable if India is to be really helped to develop her Mercantile Marine. Much was made of the so-called "flag discrimination" involved in such a course. But the fancied legal difficulty was fortunately easily got over. Section 736 of the Mercantile Shipping Act of 1894 (a Parliamentary Statute) confers powers upon the legislature of a British possession to regulate by an Act or ordinance its coasting trade, subject to certain conditions. Taking advantage of this legislative provision, the Commonwealth of Australia enacted a law which had the effect of conferring on Australian ship-owners a monopoly in Australian coastal trade. The object was accomplished by providing in the Australian Navigation Act a system of control by means of licenses to trade on the Australian coast. The Committee points out that the conditions attached to the grant of a license for the Australian coasting trade apply to all British shipping alike, but the nature of these conditions is such that they have the practical effect of automatically shutting out all except Australian-owned vessels from Australian coast trade. On the strength of the Statute and following the example of Australia, the Committee recorded the following opinion: "It is clear, therefore, that if it is decided to take similar action in respect of the Indian coasting trade in the interests of Indian ship-owners, there is nothing in the British Merchant Shipping Law which would prevent action of this kind being taken, provided the conditions enforced are applicable to British and Indian ships alike." The Law Officers of the Crown in England who were consulted on the matter also stated that it was competent to the Indian Legislature to do what the Australian Legislature did; in other words, there was nolegal impediment to India protecting her interests in coastal trade, in the same way as the other nations have done.

The questions that were thus still left for consideration by the Committee, merely bore on the merits of India's claim to develop her own National Mercantile Marine and to the immediate means that were calculated to lead to the ultimate realisation of that end. The first question that was pressed on the Committee was whether it was desirable and necessary to have an Indian Mercantile Marine at all. The Indian witnesses were unanimous in answering the question emphatically in the affirmative. The representatives of British shipping interests; however, strongly objected to any form of State aid to build up Indian Merchant Shipping Trade, and one of their main arguments is thus summed up by the Committee. "They (the opponents of Indian claims) point out that there has been no complaint regarding either the efficiency or adequacy of the services offered by existing shipping lines (British) and consider it would be a mistake to substitute for them an agency (Indian) the efficiency of which is problematical and in any case has yet to be proved." Two assumptions underlie this line of self-defence adopted by the British capitalist concerns. These assumptions are, curiously enough, self-contradictory. One is that Indian shipping can develop and progress on normal commercial lines on equal terms with the powerful British and other foreign shipping companies. The other is that Indian enterprise is not likely to prove economically more beneficial to the country, either in the direction of efficiency or adequacy of service. If the latter assumption is true, then the former suggestion is patently insincere. But as necessity knows no law, so does the exigency of a desperate argument know no logic. The Committee, however, although its actual recommendations were very halting, found no difficulty in brushing aside the special pleading of the vested interests. Their decision on Indian fitness is thus stated: "In any case, it seems unfair to pronounce an adverse judgment as to the ability of Indians to run shipping companies as successfully and efficiently as the present concerns until they have been given an opportunity of owning and managing ships under more favourable conditions than those prevailing today. Indians have proved successful in other technical trades in which a short time they possessed little or no practical knowledge or experience, and we see no reason why, given a favourable opportunity, they should not prove equally successful in the shipping trade."

DEFERRED REBATES AND THE RATE WAR

The emphasis in the Committee's verdict on Indian talent and capacity to develop a National Merchant Marine, it should be noticed was on the creation of a favourable environment for progress. Where a virtual monopoly exists, it is evident that no such environment can possibly exist. If things stopped with monopoly alone, and unfair methods of commercial warfare and the help of allied foreign interests do not aggravate the strangling effects of monopoly, there might have been still some chance for Indian shipping enterprises to struggle even against odds. But, as a matter of fact, no available device nor adventitious aid has been neglected in order to perpetuate the monopoly. I shall mention a few of them, which, I hope, will serve to illustrate the methods whereby the foreign vested interests daily consolidate their position in such a way as to leave no room for Indian progress. First of all, there is that iniquitous system of what are called "deferred rebates". Deferred rebate is a portion of the freight money which a shipping company returns to the customer, that is to say, to its shippers, at the end of an year in consideration of the customer giving all his shipments to the same carrying company. These deferred rebates are really hostage money collected in advance and kept with British and other foreign companies, to be refunded to Indian shippers only on furnishing proof of their continued and unswerving loyalty throughout the year to the foreign companies. Any lapse into patriotic mood to encourage an Indian company in that period will entail severe penalties, involving sometimes loss of lacs of rupees. The Fiscal Commission's report, which was concurred in by its European members as well, has the following observation on the deferred rebate system: "The system of shipping rebates is one of the strongest buttresses of monopoly. It is clear that an arrangement whereby a certain percentage of freight is returnable to the shipper at the end of twelve months, provided no cargo is shipped by an outside line, is a powerful weapon for maintaining a shipping monopoly. Other countries have recently legislated against this system and we think that the Government of India should make a thorough enquiry into the desirability of initiating similar legislation in India." Will the Conference of shipping interests, which the Viceroy proposes to convene in the near future to consider measures to develop Indian Mercantile Marine after getting the Coastal Reservation Bill out of the way take up this question of legislation against deferred rebates?

Then there is the rate war. The foreign companies exploit the Indian shipping concerns to the fullest when there is no competition in the field, and keep their coastal rates as high as possible. Here is what an expert body like the Fiscal Commission says: "Somewhat parallel to the complaints about railway rates, are the complaints which we have received about coastal shipping rates. The causes are different, but the results are stated to be the same, namely, that Indian goods are handicapped in transmission in comparison with goods from foreign countries. Rates have been quoted to us showing a great disparity between the charges on goods shipped from one Indian port to another and those of goods conveyed between India and foreign countries. Such disparities more than neutralise the natural protection which an industry might expect to receive in its own country by reason of the distance of foreign manufacturing centres. The cause of the high rates in the Indian coastal trade can, according to their critics be summed up in the one word "monopoly". The foreign companies can however afford to bring down the rates of freight on the coasts to an uneconomic and unremunerative level, the moment they discover any sign of Indian shipping enterprise appearing on the horizon; and its effect would be to drive away the Indian tonnage from the field, for no Indian company can afford to work at a loss for a long time. Mr. Walchand Hirachand has exposed the latest phase of the rate war in his address to the shareholders of the Scindia Steam Navigation Company, only a week ago. Mr. Hirachand puts it bluntly when he says that the foreign companies manipulate their rates with the sole view "to prevent, if they can so manage, even a single ton of cargo from being shipped by an Indian vessel," no matter how much they themselves lose in the pursuit of this object. The facts adduced by Mr. Hirachand leave no room for doubt that the rates of foreign companies have been purposely brought down to an uneconomic level and that the coast was deliberately saddled with superfluous tonnage to hit the Scindia Steam Navigation Company and other Indian shipping enterprises. The foreign companies have what is called "tramp tonnage" as opposed to that engaged in regular lines, which can afford to accept cargo at low rates for stray voyages, as it has not to meet the many and varied obligations of regular liners. This has added to the complexity of the rate wars. Notwithstanding the reduction in the rates of freight in coastal trade, the British companies can give high dividends to their shareholders owing to other advantages they enjoy: The Chairman of the Scindia Steam Navigation Company, Ltd., explained the situation in these words: "The real position is that, although the advent of Indian shipping companies on the coast compelled the British shipping companies to bring down rates, they have got today other monopoly routes .and sources of income from Government patronage and mail subsidies, denied to us, whereby they can make large profits which Indian shipping cannot do on the coast." Next, the British shipping companies enjoy incalculable benefits arising from almost the whole foreign trade of India being in the hands of foreign business houses. These houses naturally patronise the foreign shipping companies and never the Indian shipping companies. Then, the facilities for British shipping, companies and British railway companies in India to combine to mutual advantage, also put the Indian shipping companies at a disadvantage. Evidence was tendered before the Mercantile Marine Committee of an instance in which a Shipping Company and Railway Company entered into a contract with a view to attracting trade to a particular port which afforded them peculiar facilities. I have said enough to show that a policy of open door is not conducive to the growth of indigenous shipping enterprises and that the Mercantile Marine Committee are right in laying emphasis on the need to create a favourable field and legitimate opportunities as a sine qua non for Indian shipping progress.

THE COMMITTEE'S RECOMMENDATIONS

Coming to the actual proposals of the Committee, the central recommendation is to secure for India a moderate measure of coastal reservation of Indian trade. The scheme is thus summarised by the Committee itself:

"What we wish to provide for in our coastal trade regulations is that after a time the ownership and controlling interest in the ship or ships for which licenses are required shall be predominantly Indian and we think that this qualification should be held to have been fulfilled if a ship conforms to the following conditions–(a) That itis registered in India, (b) That it is owned and managed by an individual Indian or by Joint Stock (public or private) which is registered in India with rupee capital, with a majority of Indians on its directorate and a majority of its shares held by Indians, and (c) That management of such companies is predominantly in the hands of Indians."

The Committee expressed its inability to provide for the complete Indianisation of officers and engineers or to lay down that ships applying for licenses shall be those built in India, for some time has to elapse before these conditions can be attained. It is, however, gratifying to note that the Committee unequivocally expressed the hope that, in course of time, it would be found practicable to add both these desiderata to the conditions of the license.

The net effect of the Committee's scheme is that no ship shall be entitled to engage or take part in the coasting trade of India unless such ship has first obtained a license and no such license shall be granted to a ship unless its ownership and controlling interest are predominantly Indian. The conditions of the license also constitute a material part of the Committee's recommendations. The obligation to admit and train Indian apprentices and to employ qualified Indian officers and engineers, as they become qualified, at least to the extent of fifty per cent of the total number employed by any company, is one of those conditions. Another feature in the license which is recommended by the Committee is one of very great interest and. importance; the license reserves to the licensing authorities the power to deal with deferred rebates, rate wars and other devices which act unduly as restraints on trade, the nature of which I have dealt with in some detail.

SIR P. S. S. AIYER’S RESOLUTION OF 1926

The Report of the Committee, as I already stated, was made in March 1924. The public anxiously waited for about two years thereafter to see if the Government would take any action on it. There were no signs of any prospect of Government moving in the matter. Sir P. S. Sivaswamy Aiyer again came forward in March 1926 with a resolution with a view to induce the Governor-General-in-Council to recognise the need for training Indians for nautical careers, to accept the policy and measures recommended by the Indian Mercantile Marine Committee, and to announce his intention to adopt in the near future a system of licensing in respect of the coastal trade of India. The utter futility of the resolution is self-evident, for it does not commit the Government to any definite action and is content with the announcement of the Government's future intentions. Indeed, Sir Sivaswamy Aiyer expressly said in the course of his speech that he wanted no more from the Government than a mere assurance of their goodwill towards the Indian aspiration for a Mercantile Marine. Here are his words:

"I do not wish to go into the question of the immediate reservation of coastal trade. All that I ask in the resolution is that the Government should only announce their intention to adopt in the near future a system of licensing in respect of the coastal trade. I hope that the Government may, if not now, at any rate in the future, find it possible to accept this part of my resolution."

What consolation such a certificate of the legitimacy of Indian aspirations would have given to Sir Sivaswamy Aiyer, or the Assembly, or the country, it is difficult to conceive. I have purposely dwelt at some length on the scope of the resolution to show what effect this sweet reasonableness and high degree of moderation, for which Sir Sivaswamy Aiyer has a sustained reputation, produced on the Government spokesmen. Straight came Sir Charles Innes's rebuff: "It is perfectly true", said Sir Charles, "that as Sir Sivaswamy Aiyer has said, the proposed system of licensing was to come into force only on a date to be notified, but the whole principle of that recommendation was "reservation", precisely the thing to which he had numerous objections of a serious character.

The only purpose which was served by Sir Sivaswamy Aiyer's colourless resolution was the announcement of acceptance by the Government of the proposal to set up a training ship in Indian waters which has now culminated in the arrangements connected with the recruitment of apprentices to be trained in the ship called Dufferin. Otherwise, it has tended on the whole to prejudice the Indian case for Mercantile Marine and reservation of coastal trade very considerably. Sir Charles Innes took full advantage of the occasion not merely to condemn the actual recommendations of the Mercantile Marine Committee, but also to undermine all the sound principles underlying all those recommendations. The most cantankerous partisan of British vested interests and the most determined opponent of Indian progress could not have done better. He resisted the proposal for reservation on the novel theory of expropriation which has, since his famous speech, become the main battle-cry of the British shipping representatives. His positions are best expounded in his own words:

"Once you admit on the statute book an Act which embodies the principle that it is right to squeeze out or depreciate the property of those who have built up a trade or industry in order that others may succeed to it, one does not know to what lengths that principle may be carried. . . Once admit that principle, what I fear is that it will give rise to similar demands in respect of other industries like oil, coal, or whatever it may be."

Why fear? If he and his Government are trustees for Indian welfare, why fear Indians asking for protection from the trustees? He once more raises the exploded pleas against distinction between ships owned in a country and ships registered in a country, and flag discrimination, and frightens the Assembly by saying that the pleas are of a technical nature "to which the highest importance is attached in shipping circles" although there is nothing very technical about them except in so far as they are perverted to advance the self-interests of British shipping circles to which he evidently refers when he speaks of "shipping circles". His pompous assertion that "it is a fundamental point of policy that flag discrimination should be opposed in every part of the British Empire" leaves the Indians absolutely cold, for they are not admittedly in love with British Imperialism. He has no answer to give to the Australian example already referred to except to doubt its wisdom. A Royal Commission, however, subsequently upheld the wisdom of the Australian Commonwealth's action in reserving her coastal trade. South Africa is seriously contemplating to replace the Union Jack by a flag of her own. The Indian National Congress is wise in having hoisted her own national flag even at this stage of her political struggle and, if it is any consolation to Sir Charles Innes, Indian ships engaged in coastal trade will fly the tri-colour national flag to distinguish them from the British ships flying the Union Jack. Sir Charles disposed of the unanswerable argument on the Indian side that other nations in their own interest reserved their coastal trade and have thereby admitted the so-called principle of expropriation, if there is one, in a characteristically imperialistic manner. Here is what he said about other countries:

"They had to take that course because, in times of war, they might want their own Mercantile Marine to feed their people and because they wanted that Marine as a second line to their Navy. India is fortunate in that that over-mastering necessity is not present in this country. India's shores are protected for her by the British Navy and, in times of war, she can always rely on the British Navy to protect her communications and her trade."

This argument might with equal propriety be applied word for word to the Civil and Military Services which are vouchsafed by Britain to India. Not content with these grounds of high policy, Sir Charles attempted to convince the country that an Indian Mercantile Marine would involve this country in economic loss. I shall come to this argument when I deal with the objections raised to Mr. Haji's Bill. Finally, Sir Charles thought that unless he also set up the interests of one province against another, his services to this country would not have been adequately discharged, and knowing as he does that Bombay has achieved some success in Indian coastal shipping and that the cry for reservation came mainly from Bombay, he was at considerable pains to tell Burma and Bengal that they will be particularly ruined by the coastal reservation of Indian trade. It may therefore be said without fear of contradiction that the result of the debate is to establish that all attempts, however reasonable, to placate British opinion on matters of £. s.d. are utterly futile and that the attitude of the Government towards Indian Mercantile Marine is not one of mere apathy but hostility.

MR. HAJI'S BILL

Two more years elapsed after the humble prayer of Sir Sivaswamy Aiyer was sternly rejected by the Commerce Member before any definite action was taken by the Assembly. The Government opposition and the hostility of foreign shipping interests to the Indian claim for reservation of coastal trade, did not show any signs of abatement in spite of responsible declarations of India's right to Responsible Government which, it is now stated, was never meant to be anything less than full Dominion Status. It is in such circumstances that Mr. S. N. Haji, M.L.A., introduced his now famous Bill to reserve the Coastal Traffic of India to Indian vessels in the Legislative Assembly on the 9^th February 1928. In due course a motion to circulate the Bill for public opinion was carried in March 1928, and in pursuance of it the Government of India circulated it to various persons and bodies and a large and informing mass of opinion was thus elicited. The Bill was then referred to a representative Select Committee consisting of nearly 20 members among whom were Pandit Motilal Nehru and Sir Purushothamadas Thakurdas on the popular side. The Select Committee reported on 20^th March 1929 making some important changes in the original Bill. There were three Europeans on the Select Committee. Sir George Rainy, who succeeded Sir Charles Innes as the Commerce Member, represented the Government and Messrs F. J. Simpson and W. Stenhouse Lamb the British commercial interests. These three gentlemen, of course, dissented from the principle of reservation as well as from some of the material recommendations of the Committee whose report was otherwise absolutely unanimous.

The provisions of the Bill as amended by the Select Committee follow in their general outline the scheme propounded by the Mercantile Marine Committee. The object in view, namely, the reservation of the coastal trade of India to Indian controlled vessels, is achieved by a system of licensing from such date as the Governor-General-in-Council may, by notification, appoint after His Majesty's pleasure on the Act has been publicly signified in British India by notification. An Indian controlled ship is defined as follows by the Bill:-

"Indian controlled ship" means a ship chartered by the Government, or a ship owned by or, if the ship is chartered, owned and chartered by-

(a)an Indian, or

(b) a company incorporated and registered in British India, or a corporation, partnership or association-
(i) in which, in the case of a company, not less than 75 per cent of the shares or stock, other than debenture stock, or in the case of a corporation, partnership or association, not less then 75 per cent of the capital and the right to not less than 75 per cent of the profits, is vested in Indians in their own right and for their own benefit, free from any trust or fiduciary . . obligation in favour of any person other than an Indian;
(ii) of which the Chairman of the Board of Directors and the Managing Director, if any, and not less than 75 percent of the members of the Board of Directors are Indians;

(iii) in which not less than 75 Per cent of the voting power is vested in Indians.

The actual licensing procedure is briefly this: (a) The Governor-General-in-Council, in each year, will publish by notification an estimate of the total tonnage which is, in his opinion, essential for the needs of the coastal traffic in that year; (b) applications for licenses for the purpose of engaging in coastal trade will then be received and granted to ships of an aggregate tonnage, not exceeding the tonnage determined as above stated; (c) in respect of the first year after the commencement of the Act, licenses will be issued to all Indian controlled ships applying for the same, if they were Indian controlled on the date to be specified; (d) in respect of the 2nd, 3rd and 4th years, the licenses shall be reserved for Indian controlled ships up to an aggregate tonnage of two-fifths, three-fifths and four-fifths respectively of the tonnage determined for the year; (e) in respect of every year after the fourth year, licenses will be issued only to Indian controlled ships. The process of reserving coastal trade to Indian controlled ships is thus completed in a period of five years from the date of commencement of the process. Then safeguards are provided for making up deficiencies in tonnage by issuing licenses to non- Indian controlled ships, if in the 2nd, 3rd or the 4th year, the Indian tonnage applying for licenses falls short of that required and determined as aforesaid. Power is also given to the Governor-General-in-Council to issue permits to un-licensed ships in certain conditions, if no licensed ships are available or the service rendered by licensed ships is inadequate to the needs of coastal traffic or a part thereof. Then follow penalties for breaches of the provisions of the Act, exemptions and Rule-making power. This, in brief, is Mr. Haji's Bill.

OBJECTIONS CONSIDERED

The objections raised to the modest provisions of this Bill are practically the same as those urged against the recommendations of the Mercantile Marine Committee, and were almost exhausted by the witnesses who championed the British shipping interests before the Committee and by Sir Charles Innes in the debates on Sir Sivaswamy Aiyer's resolutions of 1922 and 1926. Among the critics who entered the arena after the Bill was circulated in March 1928, the Bengal Chamber of Commerce and the Bengal Government deserve special mention. It is difficult to say which of these carried away the prize in the competition to damage the Indian case for Merchant Marine in general and Coastal Reservation in particular.

The Bengal Chamber considers that investment on Indian Mercantile Marine is an unwise diversion of capital. It advises Indians to develop their urban industries and concentrate their endeavour to modernise Indian agricultural methods. In fact, the Chamber makes no secret of what it means, for it says in so many words that "the soundest policy is quite clearly to concentrate all available investment money in the sphere of economic activity from which external capital has always held aloof and will continue to hold aloof." In plain language, it means that Indian capital should not be invested in those spheres in which British traders and industrialists have already entered in India. It is needless to attempt to refute a plea so barefacedly selfish. The revenues earned by foreign shipping concerns in Indian coastal trade is about 10 crores of rupees per year, out of the total annual Indian shipping trade revenue of over 50 crores of rupees. The estimated cost of building the necessary tonnage to carry India's coastal trade is somewhere near 10 crores of rupees. It would not have been difficult for India to find this capital if shipping business built up with it had a fair chance of success. Reservation is asked for in order to avoid an annual loss of 10 crores through the domination of coastal shipping by foreign interests. The Bengal Chamber's objection to this proposal merely amounts to asking the Indians to forego this revenue with its incidental benefits, to help the British companies to continue to earn it. Then there is the case of expropriation which has been already answered by me. But are the cries of "expropriation" and "annexation of earnings that rightly belong to others" founded on facts? It is difficult to discover a single clause in the Bill which aims at expropriation. All that the Bill seeks to do is to regulate the coastal trade by means of licenses and it is open to any shipping company to obtain a license by Indianising itself in a certain number of years, by taking a reasonable amount of Indian capital and a reasonable number of Indians on its Board. And how does the grievance of expropriation arise at all? As a matter of fact, have not British companies earned many times their original capital in the long course of years during their virtual monopoly of the trade?

Haji and others possessing first-hand knowledge of the intricate subject of shipping economics in India have carefully answered the objections to reservation based on so-called economic grounds such as the following: (1) There will be unrestrained competition or a shipping ring resulting in enhanced freights; (2) there will be loss of foreign tonnage, and (3) it will be uneconomic, as in the slack season most of the tonnage will be unemployed. It is indeed needless to answer objections which enter into such details, mixing up foreign and Indian interests, if it is established that reservation, is on the whole beneficial to India as it undoubtedly is. It is for Indians to decide what is economically beneficial to India and not for her exploiters. Responsible Indian opinion of Bengal and Burma, by supporting the Bill, effectively disposed of the economic fallacies calculated to provoke inter-provincial jealousies over the principle of Coastal Reservation. The old and the familiar desire to safeguard the interests of Indian consumers by dumping on them cheap foreign goods and utility services is re-stated in the form of a new proposition that reservation of coastal trade will result in rise of freights to the disadvantage of Indian shippers and consumers. This edifice of solicitude for Indian welfare is skillfully demolished by the Chairman of the Scindia Steam Navigation Company Ltd. He asks for an explanation as to the following disparity in British shipping rates, though the coastal trade of India is not now reserved. The rate of freight on iron and steel from Belgium to Bombay, a distance of 6,300 miles, is Rs. 13-12-0 per ton of 20 cwts., while the rate on the same articles from Calcutta to Madras, a distance of 759 miles, is Rs. 18 per ton. Again, the rate on cotton bales from Bombay to Antwerp, a distance of 6,300 miles, is Rs. 10-8-0 per ton of 40 cwts. While the rate on the same commodity from Tuticorin to Bombay, a distance of 815 miles, is Rs. 12-8-0 per ton of the same measurement. Sugar bags are carried from Sourabay to Bombay, a distance of 3,210 miles, at Rs. 10-12-0 per ton of 20 cwts., while they are carried from Bombay to Cochin, a distance of 580 miles, at Rs. 10-2-0 per ton of the same 20 cwts. As the Chairman of the Scindia Steam Navigation Company points out, the fact is that it is not the policy of reservation that decides the rates of freight, but they are based on various factors such as the volume of trade, return cargo expenses of the ports and the like, which are independent of the policy of reservation and which are conveniently ignored in the economic arguments resorted to by vested interests. But, is it any use trying to convince the ‘unconvincible’? The Chairman of the Scindia Steam Navigation Company speaks the bare truth when he says that "it is futile to argue with those who never fail to discover signs of India's economic prosperity in the continuous process of India's economic exploitation by foreigners in league with an alien bureaucracy."

The references to the Coastal Reservation Bill, now pending in the Assembly, in the speech made by the Viceroy before the Associated chamber of Commerce, shows that His Excellency also views the Bill with disfavour. His Excellency made the following among other observations: "I am not one of those who see in such discrimination any possible solution of the problems which now beset India's growth, for the interest of all communities which comprise the population of India are far too intermingled to allow of separatist treatment; nor am I in favour of speeding up the development of Indian enterprise by the heroic, I might even say dangerous, methods advocated by the Bill." The attitude taken up by Sir George Rainy, the successor of Sir Charles Innes, towards the Bill is precisely the same. His Excellency's allusions to "separatist treatment" and "discrimination" have an evident reference to the claim of British ship owners to be treated as British Indian Nationals for the purpose of shipping prerogatives in Indian coastal waters. Colonel Crawford, addressing a Madras audience a few days ago, characterised some of the clauses of Mr. Haji's Bill as being "simply robbery, legalised robbery", presumably basing the British shipowners’ proprietary claim to coastal trade on this prerogative.

The Chairman of the Scindia Steam Navigation Company made a fitting reply to this claim from which I beg leave to quote. "The £. s. d. have such magic effect on the British mind that foreigners during recent months have shouted that they are Indians–sons of the soil –Nationals of the country. With England as his Home, a European subject of the Crown appearing before the Indian Criminal Courts of Justice, insisting upon special benefits like those of the Lee Loot in the Civil and other Services on the ground of his colour, prestige and efficiency, always anxious to vote with the alien Government of the land not only for stifling the legitimate aspirations of Indians but also for forging new fetters–both economic and political–for preventing them from advancing in all directions as free citizens of a free country, it is mockery, nothing but cruel mockery, for the European in India to claim that he is the National of the country only when his pocket is pouched." The simple truth is India is making a humble attempt to regain her lost ground and recover her national assets of which she was deprived by a system in which exploitation and administration worked hand in hand.

A NATIONAL ISSUE

I should have briefly narrated the facilities which other countries had given and are giving to develop their National Mercantile Marine so as to contrast the attitude of self-governing countries with that of the Indian Government, had I not already run to prohibitive length. Since the Great War, no Maritime country having a national Government neglected to develop its own merchant shipping. Italy, Spain, Japan and Germany made in recent years enormous developments by subsidising their navigation enterprise. Italy sanctioned a loan of 45 crores lire at a cheap rate of interest for building new tonnage. Spain recently entered into agreements with one of its Shipping Companies by providing to it facilities to acquire 14 Big Ocean Liners to compete with foreign ships calling at Spanish Ports and specially with those running to Central and South America. The case of Japan's progress was specially urged upon the Mercantile Marine Committee, one of whose European Members was deputed to study Japanese development. Germany's case is phenomenal. The Treaty of Verseilles left Germany in 1920 with practically not a single ship of any consequence in International Trade and her small fleet had no more than a tonnage of 6 lacs. In five years time the German Government so encouraged their Ship building Companies as to enable them to build up 30 to 40 lacs tonnage. Unfortunate India with a vast sea board and other natural facilities for shipping could do nothing along those lines of progress, for her destinies are in the hands of a Foreign Government and her economic enterprises are dominated by foreign commercial interests. We are really indebted to ‘Ditcher’ in the Capital for the following candid warning:- "The Legislative Assembly may pass Mr. Haji's Bill, but the Council of State will almost certainly throw it out. Mr. Haji is a skilled and persistent propagandist. But it is highly improbable that his Bill will reach the statute book unless and until India attains Dominion Status." This warning must serve as a powerful incentive to us to make the Costal Reservation Bill of Mr. Haji a National Issue. If the Bill can reach the statute book only when India attains Dominion Status, let Indians of all shades of opinion unite in demanding in one voice immediate and full Dominion Status for India. The one remedy for India's political and economic ills is Swaraj.

CONFERENCE OF SHIPPING INTERESTS

The Conference of shipping interests over which H. E. the Viceroy presides and which assembles at New Delhi on 3rd January, 1930, affords a splendid opportunity to the British Government and British capitalists in India and England to give early and tangible proof of that "change of heart" which Mahatma Gandhi desires as an earnest for Swaraj or Dominion Status which is promised in Lord Irwin's announcement. The Press Communique announcing the Conference very rightly says that "the question of development of Indian Mercantile Marine is not of interest to shipping firms only but is one in which the whole commercial community is concerned"; and commerce, in its turn, is not of interest to the commercial community only, but is a national concern in which the prosperity of the whole country is involved. The test of real self-government is industrial and commercial independence, and it is in that sphere that Britain can first manifest the genuineness and bonafides of her intentions to emancipate India. She conquered India by commerce and holds India today in economic bondage, partly through political power. The re-conquest of India by herself shall be through commerce once more; without political turmoil, if Britain voluntarily restores to India her economic freedom; or in the wake of a bitter political struggle, if Britain persists in her present economic, industrial and commercial policy. Will Britain aid India in her attempt to remove the causes that obstruct the development of her indigenous commercial enterprises, or will she throw obstacles in India's path to economic Swaraj? That is the question which the Conference has to answer.

The composition of the Conference seems to be fair and unobjectionable. The British interests are represented by a deputy of the Chamber of Shipping of the United Kingdom and two representatives of the Associated Chamber of Commerce in India. The Indian interests are represented by a representative of each of the main Indian Shipping Companies and two representatives of the Indian Chamber of Commerce and Industry, besides Mr. S. N. Haji. The agenda and the list of subjects set down for discussion are not available. The Press Communique, however, gives some indications of the Government's intentions as will be seen from the following passage in it: "The Government of India, for reasons which have been more than once expressed, have been compelled to oppose the Coastal Traffic Reservation Bill now before the Legislature, but they are in full sympathy with the widespread desire that India should possess a merchant fleet of its own and they recognise that under existing conditions, there are several difficulties to be overcome before this result can be achieved." While the reiteration of Government's opposition to Coastal Traffic Reservation is distinctly discouraging, the rest of the passage consists of mere platitudes which carry us no further than the declaration desired by Sir Sivaswamy Aiyer to which a detailed reference has already been made. The representatives of Indian shipping interests are expected by the Indian public not to be satisfied with certain concessions which are calculated to merely ensure the prosperity of the existing Indian companies. Questions like the deferred rebates and rate wars, the consequences of which have been described in some detail, should be dealt with in a fair and equitable manner, so as to effectively do away with the evils of monopoly which powerful vested interests now enjoy. In railway enterprise, the Government have fixed minimum freights and fares to guard against the disastrous consequences of unrestrained competition. Is it possible to place some check on uneconomic rates charged by those who are in a position to kill rival enterprises by recourse to them? Will the recommendations of the External Capital Committee regarding the rupee capital, majority of Indians in the directorates and the like, which have not been so far favoured by the British capitalists, be now agreed to as conditions to be fulfilled for the privilege of shipping in Indian coastal waters? After everything is said and done, an immediate measure to ensure reservation of coastal traffic is the only sure way for the development of Indian Mercantile Marine. If that is ruled out in the discussion, the Conference may be pronounced to be a failure. If it is agreed to and, when the Legislative Assembly meets, the Viceroy is able to announce on the 25th of January 1930, that measures for coastal reservation have been resolved upon, then the value of his political announcement of 31st October 1929, will be greatly enhanced and India's mistrust in Britain's promises and pledges will to a certain extent be removed and her belief will be strengthened in the potentialities of the Round Table Conference to lead India to the Promised Land of Swaraj.