Development of coal mining and its impact on industrial development

The importance of coal mining in industrial economy needs no stress. It is required for efficient
working of railway system and basic in industries like thermal plants, fertilizer and other major
projects. Thermal power and railways being fundamental for every industry operating in the country
for transportation and electrification, for, to depend on windmills, hydroelectric power etc was a
farfetched dream in that period. However, we cannot say that coal mining industry gave impetus to
industrial development; it only supported industries to the extent that their growth was constrained
by the availability of fuel.

In this paper, we would discuss about the how the coal industry developed. Where was the first coal
mine found, first coal firm established? When and how were the upheavals in the coal industry
experienced? Did the causality move from coal industry to industrial development or was it the
other way? Did the coal industry and industrial development support each other to develop? What
section of people were more interested in the coal industry and why?

Coal Mining in India

Coal as an article of trade was unknown to people of India as human needs were little and
abundance of wood was available to back up few demands. However, the existence of coal was not
entirely unknown in India as evident from names of places as Barrakar (standing for chief mine),
Kalipahari (standing for hill of coal), Angarpathra (standing for store of charcoal) and Damodar
(meaning fire in the stomach of bed). These places later became important coal fields. Given the lack
of communication channels and abundance of wood, coal was used as fuel only in places nearby the
coal fields.

First Coal Firm

The first Englishman to find the coal existence in Bengal was Mr. Suetonious Grant Heatly who along
with Mr. John Summer in 1774 opened up Messrs Summer and Heatly coal firm in Pachete and
Birbhum under some specific conditions imposed by the Revenue Council of Bengal. However, the
coal produced proved to be of an unsatisfactory quality, it burned away quick, leaving clinker, slate
and dirt wasting iron a lot. Double of Indian coal was required to do the same work as compared to
the British coal. The industry prospects were blighted by the refusal of government to buy any more
of this firms coal. Later, it was discovered that the surface coal being inappropriate, the dig out
coals would prove to be better and more economical to burn limestone than fuel wood. In 1820,
Messrs Alexander and Company started the first regular operation in the Ranigunj Coal field. The
inland steamers depended on coal received from the Ranigunj; this gave impetus to production of
coal from steam navigation introduced in 1828. It was realised that no decrease in price can increase
demand unless there is improvement in the means of transportation either by (a) canal on Ajoy, (b)
connecting Damodar directly to Hooghly or (c) by railroad as the production of coal was insignificant.

Most of the coal companies were rupee companies, the main being Bengal Coal Company and
Burrakur Coal Company, were under Andrew, Yule and Bird respectively

Introduction of Railways

The East Indian Railway was opened in 1854 and in 1855, they passed through Ranigunj coal field. In
1865, it was extended to Burrakar coal areas and in 1871, Giridih fields. Two main important
industries were laid- Cotton and Jute mills due to the establishment of railways which increased the
demand for coal. Big companies formed and machine mining was introduced. Another notable thing
that happened for Indian Coal Industry was the formation of Indian Mining Association in 1892.
Upto 1870, it was only the the ranigunj coal field which was exploited. The Ranigunj field in 1900
produced half of the Indian Coal production but by 1906 the Jharia field overtook the production of
Ranigunj field.

The coal industry collectively experienced a boom in 1906-1908, when the Bengal coal prices
increased. This boom led to the registration of sixty-two coal companies in Bengal in this period.
However, this does not imply increased investment as managing agency houses of Calcutta bought
existing collieries from private owners and have not added to the total output.

The opening of Suez Canal adversely affected the coal industry of India due to steady flow of imports
of coal after 1870. Due to problem in transportation of coal to the places like Madras presidency and
Central provinces from Bengal and Bihar as they being situated inland and maritime freights were
taxing, the import of coal in 1880 was 800000 tonnes against 1 million tonnes of domestic
production. Although in the central province a coal mine Mohpani was opened up but the output
from it was insignificant. Warora coal field opened up in 1874-75 in central provinces, this supplied
coal to Great Indian Peninsular Railway, however the needs of western Indian Railway System could
not be provided for. But by the end of the nineteenth century, indigenous production increased
leading to fall in imports. Also foreign export trade started picking up with countries like Ceylon,
Straits Settlement, Sumatra, Hong Kong, Singapore and Malaya Peninsula which till today are
markets for Indian coal exports which mainly came from Bihar and Bengal. Though, most of the
external trade was in the hands of European.

In the late nineteenth century, agriculture distress was faced but railway was busier than ever could
not be affected by famines. And coal industry being supplier to railway, could not be affected.

The rate of growth of production was uniform but when considered in relation to the growth of
railways, there would be two distinct periods- first 1895-1908 and other 1908-14. The first period
facing two characters (1) the growing excess of exports over imports of Indian coal, (2) the falling
share of total produce taken by railways. Indian railways used 99% of Indian coal in 1902, as the
railways ousted the use of foreign coal. However ,the proportion of Indian coal demanded by the
railways was diminishing in the period 1895-1906. Thus , it is evident that coal production was
increasing at a higher rate than railways and other coal-consuming industries. After 1908, these
features were absent, exports declined slightly, partly due to the inferior quality. From 1881-95, the
imports of coal was stationary, decreased till 1909 but with the high price of coal in 1908, the
imports of coal started to increase. The exports were still exceeding imports but the deviation
between the two diminished. The other distinguishing feature of this period was the proportion of
Indian coal used in the Indian railways started to diminish inspite of railways consuming a greater
proportion of Indian coal produce as compared to other coal consuming industry. So after 1908 , the
railway expansion outstripped coal consuming enterprise. The railways and other coal consuming
enterprise were together growing at a higher pace than coal. This inability of coal to keep up with
industries it was linked to, was because of two factors, first ,competition with foreign coal and
second, high railway freights made competition worse in parts distant from coal fields. Indian coal
being of an inferior quality, it lost markets to foreign coal. High railway freights made the difference
in price between the Welsh coal and Bengal coal very little.
The First World War

Due to the increased industrial activity during this period, the demand for coal exceeded the supply
leading to a rise in prices though controlled by the government lest the price rise to unprecedented
heights. The steel mills were expanding their production so the demand for coking coal was also
increasing which led to few collieries starting with high grade seams. This period is marked with
introduction of machine mining. Collieries operating in open cast mining shifted to underground
mining. There was electrification of the coal fields and two central power houses were erected. All
this was in the face of increased demand for coal.

Mechanization

Coal extremely labour intensive, human labour being employed on extensive scale to hew and haul
labour and electrical equipment being not in use before First World War. The coal was found in thick
seams near the surface, labour cost being extremely low, owners and managers did not feel the
need to use electrical or mechanical equipment or power to extract coal. But after the first World
War, increased demand along with war period proved disastrous for mining industry, for the
expansion was constrained by the non-availability of plant and machinery needed for electrification
due to war time restrictions. Small collieries suffered but big ones did not wait to equip their plants
with electrical or steam winding engines, haulage engines, coal-cutting machines, pumps, efficient
boilers and screening plants. Few collieries started using electricity as motive power to hauling and
winding coal. The Mines Act of 1901 gave powers to Zonal Mining Boards and Mining Committees
for proper implementation of proper ventilation and sanitation of working places. Much stimulus of
investment in coal industry was dominated by British industrialists came from profits from
expanding exports of coal.

When full potential of the above were realized, the boom in the coal industry came to a climax in
1919. The profits earned during the war period were invested back to enterprises by optimistic
management. Big collieries were established when the demand for good quality and expensive coal
was falling.

Post War Period (1920-38)

Coal Industry was going through a sub-normal trade conditions, it showed the fragility of the
industry or its unfortunate high dependence on the world economy. This problem being aggravated
by the labour issues and decline in export of coal. This coal issue impacted the engineering firms in
the eastern regions.

Loss Of Export Market

The belief was that first Indian market should be facilitated due to prevailing shortage of wagon, also
led to the embargo placed by the government on exports of coal. This caused a bad reputation for
Indian Coal Industry and loss of export market. Trade surplus earlier was shifted to excess of imports
over exports as the west coast could not receive the coal produce because of approximately all
production were in the pockets of Bengal and Bihar and transporting them to the western part of
India was not considered economical. This was a fallacy for the coal industrys prosperity. Post war
depression caused the production to fall and price rise leading to even loss of internal markets to
African countries.

Appointment of Coal Committee

This weakness of the industry bothered the government and led to the formation of Coal Committe
in 1924 to recapture the foreign markets. After investigation, it was found that the loss of market
was due to the absence of proper grading of coal.

Post War Economic Blizzard

In the period as the production was decreasing in 1920-26, later it improved and in 1930 it regained
its position and after 1930, it again was on a declining trend which was due to world wide post war
economic blizzard. This led to a fall in prices along with a fall in demand, which caused many weak
collieries to close down, whereas the bigger ones could survive with an expansion of output rather
exploitation to reduce rising cost of production. . Foreign competition faced by the indigenous
industrialist was facilitated by the railways in which coal industry was helping to progress. But the
industries like iron and steel, cotton, textiles, paper, matches, sugar and some other industries could
survive foreign competition because of discriminating protection and granting of protection in the
post world war I period

Appointment of Coal-Mining Committee

During the late nineties of nineteenth century, local agents were empowered to recruit labour
through contractors were british managing agency houses which were interested in coal along with
jute and tea industries and other Bengal industries. The large scale closing down of small firms led to
the establishment of Coal Mining Committee in 1936 to investigate the economic conditions,
security and safety of labour.

Rise in Internal and External Demand

From 1936 up to around 1943, there was a steady upward trend in the output of the coal due to the
internal demand. As well as China-Japan War and grant in the rebate of port terminal and rail freight
led to increase in the export trade

The Second World War

In the beginning of the period as stated above, there was a steady recovery in industrial activity. But
when the war reached Indian Ocean, there was an increase in the demand for coal outpacing the
growth in production. This is attributed to the shortage of wagons which were used to move the
essential war materials, curtailment of coastal shipments and acute shortage of labour.

Formation of C.R.O.

The military contractors took the unskilled labourers and paid them good wages with other
amenities. To rectify the supply co-ordination committee, the government formed Coalfield
Recruiting Organization in 1947.

War Time Controls

It was proposed that the production in the war should increase for the government promulgated
Colliery Control Order in 1944 which took care of field of production, planning for new development,
distribution and fixation of prices for coal to feed the neediest industries, though it did not have
significant impact. Modern Mining Machine, production and attendance bonus as well as supply of
foodgrains at concessional rates ensured the steady amount of production. This led the government
to believe that the conditions of labour holds the future of the industry, therefore led to the
formation of Labour Investigation Committee in February 1944. But the shortage of labour and loss
of production of coal, the investigations were postponed. When the situation got normal, the
government deputed Mr. S.R. Deshpande to query about the condition of labour in 1945 which
caused the enactment of Coal Mines Labour Welfare Act of 1947.

Concluding Remarks

The coal industry has seen humongous increase in coal output from 6.12 million metric tonnes in
1900 to 30 million metric tonnes in 1946. The existence of coal was not unknown to the people of
India in ancient times but the industrial development needs of the Europeans caused the
exploitation of the coal fields in Bengal and Bihar which yield 95% of the Indian coal. Since, coal
formed the basis of railways which connected domestic and foreign markets, the boom and bust of
other countries brought to India can be attributed to the expansion of coal mines, increase in its
production by use of mining machinery. Coal itself was used to generate electricity which was
needed by all industries and administration to work, for it was not possible to rely on hydroelectric
power and windmills for electrification. So, in a way coal was indispensable for industrial
development. But there was not just forward linkage from coal to other industries, the backward
linkage for other industries to coal industry was significant cause it gave the incentive to capitalists
to open up new mines for the increase in demand from steam shipping, railways, jute, cotton and
other Bengal industry. So, the development of coal, railways and other industries was united.