Business: Fifty Years of Tata

To New York last week came a distinguished Indian visitor seeking money. But unlike some visitors, this one wanted not a handout from the U.S. taxpayer but a private loan. Lean, handsome Jehangir Ratan Dadabhoy Tata, 53, chairman of Tata Enterprises, was looking for an additional $17.5 million of private financing for a 700,000-ton expansion of the Tata Iron & Steel Co. works at Jamshedpur, India. Topping a 500,000-ton addition under way, the expansion will raise steel output from 800,000 to 2,000,000 tons by late 1958, make the plant by far the largest integrated steel mill in the sterling area. No one doubted that the reputation and credit of Tata would win him his additional funds from U.S. banks and investment houses, which the World Bank would match with a loan.

To steelmen and to all Indians (except Communists), Tata symbolizes one of the world’s great success stories. The founder of the family fortunes was Jamsetji Tata (1839-1904), son of a Bombay merchant. Jamsetji went to England to study industrial techniques, went back to India and started a cotton mill. The mill grew into other enterprises. To cap his lifework, Jamsetji dreamed of starting an iron and steel mill. He died before his plans could be carried out, but three years later, in 1907, his sons started such a mill. Informed of their plans, Sir Frederick Upcott, chairman of the board of Indian Railways, said that Indians were incapable of making steel, swore to eat every pound of rail produced. When British banks refused to finance the Tatas, they turned to their own people. Shopkeepers and maharajas stood in line to invest the fabulous sum of $9,000,000.

Crisis for Nationalists. From these small beginnings in the jungle at Jamshedpur, the Tata mill has become the core of a $320 million complex of more than 25 companies with 150,000 employees, 1956 sales of $155 million. Like other Indian businessmen, the Tatas strongly supported Indian independence. When it came, the Indian government was under strong pressure from the left to nationalize Tata Enterprises. Except for the Tata-founded Air India airline and the Tatas’ life insurance business, which the government did take over, nationalization schemes came to naught. The chief reason was that if India bought out Tata Steel it would not have funds to finance more steel capacity. The government decided to call in Russian, West German and British engineers to build three government-owned steel plants, let Tata live.

The Tata company promptly set in motion a $250-million expansion program readily financed in rupees by its stockholders. But trouble quickly developed when the government said it could not provide foreign exchange to cover $130 million worth of goods and services purchased abroad. At this crisis the World Bank agreed to lend $75 million, and J. R. D. Tata set about raising the rest, had just about finished the job last week.

West of Calcutta, where the Tata plan and the three government steel mills an racing to completion, the Tata plant is the one most nearly finished. Kaiser Engineers Division was hired by Tata to handle construction and engineering (since Jamsetj Tata’s time the company has traditionally looked to the U.S. for technicians), assembled a work force of 14,000 Indians who put in 18 or more hours a day. The new section will pour steel next summer.

Voice of Freedom. J. R. D. Tata, who started in the steel company at 18, is the strongest Indian voice raised against efforts to destroy free enterprise. His reports to stockholders warn Indians against being fooled about state control of economic life. Only a handful of men. says he, can be motivated by pure service. The rest must be driven by fear or actuated by hope of gain, as in the United States, which he publicly defends as the ideal of a welfare state that has not sacrificed efficiency or freedom. But Tata is impatient of Americans, feels they do not understand his country’s “mixed economy,” says: “I wish that sometimes in America points of view were expressed not always in terms of jet black or snow white, that someone did not have to be either Communist or antiCommunist, or wholly a socialist or wholly a capitalist.”

The Tatas always mixed social-mindedness with their capitalism. Over the years they led in raising industrial wages, improving the health and housing of employees. Eighty per cent of the wealth of Tata Sons was systematically given away to charitable trusts. When leftists say capitalism is passe, Tata replies: so is socialism. “Considering the remarkable progress made in capitalistic countries, particularly since the war, such a view can only refer to the 19th and early 20th century type of capitalism, which is, indeed, just as out of date as the 19th and early 20th century type of socialism.”