ASIA! BRITISH INDIA. 379 



This report is based on the exchange value of ths rupee at 32 

 cents. 



I regret not to be able to give more specific answers to the 

 questions submitted, but trust the information conveyed may be 

 interesting to our manufacturers. 



R. F. PATTERSON, 



CALCUTTA, February ij, 1899. Consul- General. 



[Clippings from Capital, May 6, July 7, and August 25, 1896.] 



PAPER MANUFACTURE IN THE EAST. 



Certain company promoters in London have from time to time evinced a strong 

 fancy for the manipulation of paper and pulp mills, and negotiations of a wide- 

 spread character concerning enterprises in India, China, and Japan have been 

 pending lately. Brother Jonathan even had a turn. Only he gave it up reluct- 

 antly, for want of support. 



The true conditions of trade in the East are not generally understood by pro- 

 moters. India is not blessed, like Scandinavia, with natural advantages in fiber 

 and water power of a grand character, in themselves a fortune. Therefore, any 

 addition to the paper mills in India which may be proposed by a clique of London 

 financiers must be wholesomely considered. We think it necessary to sound a note 

 of warning to likely supporters, whether contracting engineers, underwriters, or 

 ordinary " B. P." investors, as any material expansion in manufacturing paper in 

 India will most likely prove disappointing in the shape of money sunk and lost. 

 About the year 1890, which was the zenith of the prosperity of Indian paper mills, 

 the Bally Mills Company paid dividends even as high as 15 per cent, while the 

 Titaghur Paper Mills went i per cent better and boldly declared 16 per cent. The 

 fact, however, must not be overlooked that in respect to the companies mentioned, 

 local influence, connections, and trade advantages preponderated, and some of the 

 directors were in a position to control large local orders for paper in governmental 

 and educational centers. 



Other new mills have, during the last five years, been erected in India, and old 

 ones have increased their output by extension of works and additions to plant, 

 with the result that competition locally has now become quite acute. Mills disad- 

 vantageously located have to their cost found it almost impossible to profitably 

 compete with paper mills on this side of the Indian Ocean, European paper par- 

 ticularly German being imported almost as a surplus from overproduction at very 

 low prices. Considering the cost to-day in India of raw materials chemicals are 

 a heavy item the fall in exchange, and the imposition of an import duty, profits 

 of paper mills in the East have been seriously reduced. 



The conditions of manufacture are continually changing and the price of the 

 product falling. If the profits formerly earned by the popular mills in India were 

 likely to be maintained, paper making in that country would, with reason, be safely 

 regarded as a first-class money-earning industry and a good investment. The 

 changing conditions of manufacture of recent years, however, have resulted in 

 declining profit; therefore, to those paper makers who are committed to the industry 

 willy nilly and are struggling to make ends meet, the prospect of further competi- 

 tion must be simply appalling. The Bally Mills, Bengal, with a capital of 122,200, 

 have been successful in the past; but the conditions of the times will be illustrated 

 when we point out that the 10 per cent paid in 1893 fell to 5 per cent in 1894 and to 



