Brahamputra Valley: The Early Years

Dewan Maniram Dutta Barua played a great role in bringing tea cultivation to Assam and can be called our first Indian tea planter

Courtesy: THE SAGA OF INDIAN TEA by Prafull Goradia and Kalyan Sircar

In the earlier pages, we have identified the factors that favored the setting up of tea growing in India, the rising demand for the beverage in Great Britain, increasing difficulties in procurement of tea from China and the evidence of the presence of an indigenous plant in Assam received by the Tea Committee appointed by Lord William Bentinck, the Governor General in 1834. The committee’s recommendation that “the cultivation and manufacture of tea should be left to the enterprise of individuals to pursue the business as an object of speculation” was readily accepted by the Company.

The journey up the river was never wholly free from danger and was often called a one-way-ticket!

In 1839, pamphlets published in London described in fanciful language the commercial potential of investing in Assam tea. Soon, a number of city wholesalers and East India Company merchants got together and The Assam Company came into being in February 1839. There was at the same time much excitement in Calcutta, and another company, the Bengal Tea Association was formed by a number of businessmen. In the euphoria at that time, two companies with identical objectives were founded in a month. Both The Assam Company and the Bengal Tea Association wanted to acquire the government’ experimental station in Assam where tea was made from leaf gathered from trees growing in the wild. They also wanted to occupy other areas suitable for cultivation and manufacture. The Bengal Tea Association had the advantage of proximity and was also the first to apply for the government’s assets in Assam, but it could not match the scale of capital that London was willing to invest in this venture. In any case, competition in the early stages of an untried business was not welcome to either. The answer was a merger of the two enterprises. The Bengal Tea Association was taken over by The Assam Company in London and the name The Assam Company was retained. For the next twenty years, this was the only company in India that grew, made and sold tea.

The Assam Company, assured of a large invest-able fund, began it operations in early 1839. European staff was engaged in Calcutta for the management of plantations in Assam and recruitment of local or neighboring workers and tea makers from China. Orders went out for buying stores an building boats. Agents were posted at intermediate stations on the river rout to Assam. In October 1839, the Company’s Superintendent J W Masters w able to report that he had “squatted on about 100 acres of land at Naziragh and some 100 coolies were clearing jungle and building huts and "golah" (store houses). The company was hoping that the government would prompt transfer its experimental station and other assets, as well as make grants more land on liberal terms. The government, however, took its time, being ignorant of the local conditions in Assam. Initially, the authorities were also in some doubt about the standing of The Assam Company and whether land and other assets should be made over to a single business entity. However, there was no lack of private assurances by government officials that The Assam Company need not fear ejection from any land that it might select, occupy or build on. Eventually, in early 1840, the company was allowed two-thirds of the government’s experimental station, together with a general permission to occupy other land. The government land was occupied by the company, free of rent, for ten years. After that, the levy was to be at par with that of the land for rice cultivation.

The earliest tea made by The Assam Company was in 1840, from leaf gathered from the wild plants in the Sibsagar district. The quantity amounted to 10,201 lb. The consignment was sent to London and auctioned on 26 January, 1842. The price obtained varied from 1/10 d to 4/3 d per lb. In the next sale — that of the 1841 produce amounting to 30,000 lb — the average price realised was just above 2 s per lb.

The early years of The Assam Company and of tea cultivation in Assam were full of optimism and hope. The company declared its first dividend in 1843 (7 s 6 d per share) and immediately asked the shareholders for another installment on their partly paid shares. However, the company soon came to grief. It became evident that the management had almost no idea of the actual cost of production and of transportation to London. The extravagant, unproductive expenditure, coupled with disagreement among the European staff, made the company’s business unsound. By the end of the 1840s, 65,457 pound sterling was sent to India from London. Much of this was absorbed in capital expenditure, and a steamboat and a sawmill were purchased. However, no less than Rs 123,275/- was listed in the Calcutta Board’s report under labour lost and unproductive. According to the company historian, it was in the year 1845 that the most profligate extravagance occurred in local expenditure. The steamer built for the company, as a means of transport to Assam, proved to be a failure. The crop produced in 1842 amounted to only 30,000 ib, while the net cost of the undertaking had been 160,000 pound sterling. The Calcutta directors sent a commissioner to the garden. He found evidence of mismanagement in the growing and plucking method.

In 1847 a doubtful London Board was compelled to consider “the vital question whether it is desirable or not to continue the operation of the company”. However, a Calcutta director, Henry Burkinyoung, and a very able gentleman by the name of Stephen Mornay, who was appointed Superintendent in Assam in 1847, saved The Assam Company and the infant tea industry i India. Under Mornay, work on plantations improved rapidly. In early 184] a Calcutta publication reported: “It appeared that, the zeal, integrity an assiduity of Mr. Burkinyoung have arrested the downward progress of the company, and given the unfortunate shareholders some prospect of future dividend”.

The crop in 1849 amounted to 216,000 lb. In 1852, the first genuine dividend was paid, which was 2.5 percent of profits. This was followed by a dividend of three percent the following year. The same year, Stephen Mornay and Henry Burkinyoung — the two men who had brought the company from despair to a moderate amount of success — retired. The new manager in Assam was George Williamson, perhaps the greatest figure in the development of the Assam tea industry. He later founded the Calcutta firm, Williamson Magor & Co. The Managing Director in Calcutta was William Roberts, later the founder of the Jorehaut Tea Company. In five years, these men transformed a bankrupt Assam Company into an organisation, which, it seemed then, could at least pay its way. Other tea gardens and companies, soon to be established, would follow the improved technical skills and methods of the pioneers, with great profit. From then onwards, the future of tea plantations in India was assured. The year 1856 marked the termination of the pioneering era.

Oh! to be a garden "Burra Babu"...

The success of The Assam Company interested other investors in the field. In the early 1850s, there were a few private gardens near Dibrugarh. In 1853, gardens were opened in the adjoining district of Lukhimpur. In the mid- 1850s the well-known Williamson family started their plantations around Jorehaut. A conviction grew that “tea offers an advantageous investment of capital”, and by the end of 1859 there were 51 gardens in this part of Assam.

In the history of tea, the early 1860s is known as the “period of mania”. It was the time of the American War, when rapid fortunes were being made on both sides of the Atlantic and the attention of the capitalists turned to India. Speculators saw their opportunity and made the best of it. From the positive results achieved in a few private gardens, exaggerated pictures were drawn of the enormous profits that could be made in tea on investment of a large quantity of capital. Companies were hurriedly formed, land was taken up in the most reckless fashion and there was a frantic rush for shares in new concerns. A government report on the “evil days” said:

“The chief objective of speculators during the tea mania was to possession of one or more lots of waste land ... (and) to try and bring portions of their lots under some sort of resemblance to tea cultivation in as short time as possible. Local labour was hired at any rate that the labourers demand Tea seed was purchased at extravagant prices. The earth was scratched up the seed sowed. The speculator then considered himself free to form a company. The process started by buying the land he had scarcely finished clearing sowing on that he looked upon as a full-fledged tea garden. He purchased the undesirable waste at a cost out of all proportions, according to the amount he had agreed to pay to the government. But in time even such pretence cultivation was thought too slow, and more enterprising traders found their account in persuading shareholders to invest in tea gardens that were actually
not in existence at all. Remarkable instance of this occurred in the Nowgong district, where the Indian manager was advised by his employer to clear plant a certain area of waste land for delivery to a company to whom he just sold it as a tea garden.”

Besides the speculative spree of the time, another factor that led to ‘tea mania’ was the government land policy. In the early days of the government was anxious to ensure quick progress. So it was ready to g suitable tracts of land on easy terms. But as the industry developed and number of applicants for land rose, more stringent rules were introduced culminating in the Assam Rules of 1854. These rules were particularly unpopular with applicants as the land was to be leased only for 99 years strict clearance conditions were attached to land grants. Planters complained bitterly. In 1861 the rules were relaxed to include several concessions, air which was the important clause of redemption of land for a simple fee.

The frenzy of speculation came to a halt when several of the unsound companies collapsed and a strong reaction against the tea business set in. The mania was succeeded by a panic. In place of the rush to possess tea property regardless of cost, there was now a more eager desire to get rid of it at any price. Gardens that had been sold for enormous sums now went a-begging at a few hundred rupees. Tea shares that had run up heavy premiums were pressed on the market for nominal value. Those who had borrowed money, which they had no hope of repaying, on account of losses sustained in tea, became bankrupt. The very name of tea became odious.

So heavy was the blow that the industry had received, that it took some time to re-establish confidence. But when the dust had settled, it became clear that tea was not a lost cause. Gardens, if worked properly, were certain to ultimately become valuable property. Many companies went bankrupt and a large number of the so-called gardens were closed down. “But the new men who came in and invested in tea plantations were men determined to give the industry another fair trial (and) with a judicious outlay of capital and a moderate display of perseverance and patience (they) realised the expectations of their purchaser.” By the end of the 1 860s, tea had “settled down in its place as one of the staple products of India, with a fair future before it.”

After the crisis in the mid-1860s, the tea industry in Assam and in other parts of India where there were plantations, developed rapidly, though not without periodic depressions in prices and profits. In 1869, it was said that “a more favorable turn of affairs” had come about, and the industry was attracting investments in those old joint stock companies that had withstood the crisis of 1866-68. More careful attention was now given to cultivation and proper manufacture, under a management interested in laying a durable foundation for the industry.

By 1873, some 75,000 acres of land were under cultivation in Assam and Bengal, producing about 15 million lb of tea. In the Brahmaputra Valley all the five districts were growing tea, although inter-district progress was uneven. The district of Darrang was showing the utmost promise, while the district of Lukhimpur, where small planters were predominant, remained comparatively backward. Sibsagar, the site of the first tea estate, was proving increasingly inferior with respect to soil and climate. In Goalpara and Nowgong districts, tea cultivation had just begun on a small scale.

After a steady growth till 1876, prices began to register a decline as a result of substantial production of inferior tea. The low price however, produced a healthy response from Assam planters. They resorted to more careful plucking. The per acre output fell to 260 lb in 1878 from 286 lb per acre in 1877 and in Calcutta, the prices rose. However, this seemed to be a temporary respite. There were large quantities of inferior tea in the market and the outlook in 1879 was from promising. We read in official reports of unwarranted extension cultivation in new lands and increase in costs of production. Moreover, there was a rumour that the Chinese export in the same year might be 20 million lb less than expected. This led to much over-plucking and the production a huge amount of inferior tea in India. Of the 40 million lb that India export to England in 1880, about 34 million lb came from the Assam and Bent gardens, where the total land under the crop had increased to 153,657 acres. However, with the export of 160 million lb from China and Japan, prices rapidly tumbled and the Indian industry once again went through a sharp, I mercifully short-lived, depression. Although there was a quick recovery, progress in Assam remained modest. With the increase in acreage, the demand for tea seed increased and a number of gardens began to specialise in producing seeds for sale to outside buyers. From this time onwards, there was a healthy move away from the Chinese variety to the indigenous one.

The low average price and modest dividends that continued for the n of the decade, prompted the management in the valley to reduce costs, specially that of labour. Greater attention was also given to the production of better quality tea. The Lukhimpur planters, for instance, were then producing h per acre, but they were manufacturing finer tea than before. Due to the improved supply of labour and further progress with machines, the cost of production fell from eight annas and 7.15 pice in the 1880s to seven annas and 6.24 pi in the early 1890s. In 1891, the total output of tea in north India was 1 million lb, of which 49.5 million lb came from the two Assam valleys. Dun that decade, the dominance of Assam remained unchallenged — the province contributing about 70 percent of the all-India output. The success of the plant was reflected in the healthy improvement in dividends declared by the companies. The dividends of a group of companies in 1893 and 1894 were “higher than any time since the late 1860s”.

In 1900, India produced 197,460,664 lb of tea from 522,487 acres of land. In this, the Brahmaputra Valley contributed 75,287,500 Ib, grown on 204,985 acres. In area and production this region held the premier position. However, the world demand for the beverage was not increasing at a rate capable of absorbing the steadily increasing output coming from India and other parts of Asia. From then on, we began hearing of escalating imbalances between demand and supply, cost and price and of the resulting impact on profits and dividends.