Thoughts on economics and liberty

Mining reforms in India under Lord Curzon

Extract from India under Curzon and after.

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In his first year in India, Lord Curzon issued revised rules for mining and prospecting; I believe the question had been under consideration before his advent. The extraordinarily obstructive and unjust rules previously in force are scarcely conceivable to-day, but they illustrate very forcibly what I have already said about the former attitude of the Government of India towards private enterprise. One ridiculous rule was that no prospecting licence could be granted to a company or syndicate, although mining enterprises are usually entered upon by associations rather by than individuals. The framers of the original rules seem to have been inflamed by an almost inexplicable intolerance of companies and syndicates. Again, even a prospector for coal was limited to an area of four square miles, and it was further directed that at least eight miles must intervene between any two prospecting grants to the same person!

Prospecting for coal is sometimes an elaborate business, involving heavy initial outlay, and such a rule was almost prohibitive. A disgracefully unjust rule was that “when any area has been explored and its value as a field for mining is sufficiently ascertained,” provincial Governments were empowered to refuse to grant prospecting licences, and to put up the whole of the mining rights for sale by auction. It is hardly possible to estimate all the mischief that single enactment did in retarding the development of the mineral resources of India. By its provisions the Government, after permitting an individual to undertake the arduous work of exploration, were enabled to step in, regardless of the preferential claim established by the explorer’s industry and enterprise, and sell to any competitor all the mineral wealth he had revealed. A Chinese mandarin of the old school would hardly have been capable of more shameless injustice. A ludicrous regulation was that when premises and mines were abandoned, the workings had to be handed over to the Government “in a workmanlike state.” Even an exhausted coal seam had to be delivered up in a proper state for working,” if the rules were insisted on.

The old mining rules were by no means a case apart: they were simply a fair illustration of the normal demeanour of the Government of India towards business men for a period of half a century. The changes made in them by Lord Curzon were the first-fruits of the new policy by which he instilled confidence into every branch of commercial life. All the regulations I have quoted were ruthlessly destroyed; royalties on precious stones and gold and silver were based on net profits instead of on output, and thus an iniquitous provision which had cost the Burma Ruby Mines Company £150,000 while it was working at a loss was abolished; the royalty on coal was reduced from 2d. to a 1d. per ton; an absurd prohibition controlling the assignment of interests was excised from the rules, and in many other ways the whole of the conditions were revised.

The reform gave a great impetus to mining enterprise in India. Sir Thomas Holland, in a lecture to the Royal Society of Arts in April 1911, pointed out that the year 1899 was memorable, in regard to mineral questions, in two ways. In that year not only were the new mining rules promulgated, but a gold standard of currency with a fixed rate of exchange was adopted. English investors knew for the first time the exact nominal value of their outlay and the worth of their dividends; and they ought to have known that the old policy of obstruction was abandoned for ever. Yet so evil was the name of the Government of India in the English money market that it was years before mistrust was allayed, and I have little doubt that even to-day the memory of the second half of the nineteenth century militates against the popularity of Indian investments. Certain flaws in the new rules are now being rectified; but after ten years’ working Sir Thomas Holland was able to testify to the generous nature of the rules as a whole.”

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Sanjeev Sabhlok

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