Whitcombe had intended to take his visitors to a nearby dining room, but no one wished to interrupt the discussion long enough to travel there.
Sandwiches, cold meat, bread and tea appeared on a side table. Jinnah confined himself to bread and tea. Chhotu Ram, examining the available food with practical suspicion, found enough to satisfy himself.
The conversation became less formal.
Whitcombe spoke of cancelled orders and the difficulty of planning production when demand shifted without warning. Some departments of the firm remained active, but others had experienced reductions, and the expense of maintaining skilled workers during uncertain periods weighed upon management.
Chhotu Ram listened closely.
In Punjab, he said, a farmer could lose his income because the rains failed, a canal breached, or prices collapsed at harvest. In Manchester, a skilled fitter could lose his livelihood because merchants thousands of miles away no longer ordered machinery.
"The difference is that your man possesses a trade," he observed. "It seems a great waste to leave him idle."
Whitcombe gave him a tired smile.
"Knowing a trade does not help a man very much if no one will pay for it."
"Then we must find someone who will."
"That is easily said."
"Perhaps. But you have heard what we intend to build."
Whitcombe was silent.
Across the table, Jinnah unfolded another sheet.
"We have estimated an initial programme of two hundred Class I productive centres over the period available to us."
The commercial director put down his cup.
"Two hundred?"
"That is the intended scale. The technical characteristics and equipment requirements will vary."
"And you expect them all to be completed?"
"We expect to pursue that scale as rapidly as sound engineering, capital and administration permit."
Whitcombe gave the number the attention it deserved.
Two hundred was not a courtesy order placed by a provincial gentleman wishing to impress his colleagues. Even a limited generating and electrical installation at each location would represent a substantial programme of manufacture, transport, installation and maintenance.
Bennett began calculating on the back of an envelope.
"Fifty kilowatts at every site would give you ten thousand kilowatts installed," he murmured.
"Nominally," Bell corrected. "And I should not like to be responsible for identifying two hundred suitable hydraulic installations before examining the canals properly."
"Nor should we ask you to," Jinnah said.
Whitcombe had already moved beyond the engineering.
"And how do you intend to pay for such an enterprise?"
Jinnah placed his fingers upon the third folder.
At last they had reached the real purpose of the visit.
Whitcombe expected the familiar story.
A provincial development scheme, encouraged by officials, awaiting a government loan or a guaranteed bond issue. Perhaps the India Office would be approached; perhaps the provincial administration would undertake to purchase equipment through a long-term agreement. The British manufacturer would receive the order, arrange shipment, and spend the next several years pursuing payments through an increasingly complicated chain of colonial departments.
He had encountered variations of that story before.
Jinnah gave him something else.
"The ordinary civic works—schools, clinics, roads, administrative facilities—belong within the provincial programme, subject to the required appropriations and approvals. The productive enterprises require separate capital. We do not intend to finance the whole of that capital through public borrowing."
Whitcombe waited.
"Our preference is to invite investment into the productive system itself."
"Private investment?"
"Yes."
"In individual factories?"
"In some cases. But that is only one form of participation."
Jinnah brought forward the accounts once more.
He did not begin by describing securities. He began with money already earned.
The figures moved from raw materials to finished products, from workshops to markets, from operating expenses to surplus. He explained how the Sandalbar system coordinated production and distribution without requiring every participating enterprise to be owned by the same person.
Whitcombe had dealt with investment propositions all his life. He knew the difference between an enthusiastic promoter and a man who understood a balance sheet.
He listened carefully.
Jinnah then described the larger system they intended to build.
A canal-fall centre might contain cotton processing, flour milling, oil pressing, mechanical repairs and dairy operations. Another, in a different agricultural district, might emphasize vegetables, fruit preservation, crafts, perfumes, soap or other suitable manufactures. The products would differ. The organizing principles would not.
The operating enterprises would remain individually accountable, but capital could be invested through arrangements that gave investors participation in a defined portfolio of productive concerns.
Whitcombe had been leaning back in his chair. Now he sat forward.
"You are describing an investment company."
"Among the structures we are considering, yes. The legal form must be settled before subscriptions are invited."
"And dividends would come from several enterprises rather than a single mill?"
"Exactly."
"If cotton prices fell, returns from milling or other activities might compensate."
"Possibly. Diversification reduces dependence upon one product. It does not abolish commercial risk."
Whitcombe was already studying the accounts again.
"And who manages these operations?"
"The individual undertakings manage their businesses. The wider organization supplies common systems where they are economical—accounts, training, purchasing, distribution and other services."
"Under the Sandalbar Trust?"
"Within a structure that we intend to establish with proper legal separation between the productive societies, their common facilities and outside investment."
Whitcombe tapped the table.
"That separation will be essential. British investors will not purchase an attractive dividend only to discover that a village committee has decided to spend their capital on a dispensary."
Chhotu Ram, who had been quiet during Jinnah's explanation, put down his cup.
"Nor will our villagers contribute their land and labour merely to discover that an English shareholder has decided their wages are inconvenient."
The two men regarded each other.
Whitcombe was the first to smile.
"Then there will be some difficult questions about management."
"There should be," Chhotu Ram replied. "If everyone agrees too easily, somebody has failed to understand what is being offered."
Jinnah turned towards the commercial director.
"That is why we are not inviting subscriptions today. The rights of the investors, the productive societies, and the common management must be drawn with sufficient care that none can quietly acquire powers never intended for it."
Whitcombe considered him.
"And if the investor wishes control?"
"Then he may prefer the second arrangement."
There was a brief silence.
Jinnah took another drawing from the folder and placed it beside the canal map.
It showed a compact industrial settlement: a generating installation, common workshops, a small group of productive buildings, storage facilities, and an adjoining area reserved for independent enterprises.
Whitcombe examined it.
"What is this?"
"An opportunity for a manufacturer who wishes to own his own business entirely."
Jinnah explained that a British industrialist might establish a private factory beside a canal-fall centre. The factory would remain his property. He could introduce his own machinery, management and capital. Where legally and technically available, the surrounding industrial system could provide power, water services, access roads, recruitment and trained workers. The factory would pay for those services under contract and sell its products in whatever lawful markets it could reach.
"It might manufacture soap," Jinnah continued. "Or finish textiles, process food, repair agricultural equipment, or undertake other work suited to the district. We do not intend to prescribe every industry from a central office."
Whitcombe's interest became unmistakable.
"And the land?"
"Available under an approved tenure, with the necessary safeguards."
"The power tariff?"
"To be established on a commercial basis."
"The labour?"
"Recruited under lawful agreements."
"And the ownership?"
"The investor retains ownership of his factory."
Whitcombe looked from the drawing to the accounts.
"So a manufacturer might subscribe to your wider investment arrangement and also establish his own undertaking within the same development."
"Yes."
"And the two businesses could trade with one another."
"Where it is advantageous."
Now it was Whitcombe who became silent.
His imagination had moved beyond the equipment contract.
The manufacturer could supply machinery, acquire an interest in the productive centres, and perhaps establish a separate enterprise that purchased local materials and sold finished goods into Indian or overseas markets. The same investment could generate several forms of commercial return.
Chhotu Ram watched the change in his expression.
There it was, he thought.
The moment an English businessman stopped seeing Punjab as a distant agricultural province and began seeing a place in which capital might reproduce itself.
He had encountered the same expression among grain merchants in Rohtak. They looked at a field and saw neither crops nor cultivators. They saw margins.
Such men were useful.
They were also dangerous when allowed to believe that everything possessing value ought therefore to belong to them.
It was Whitcombe who disturbed the agreeable direction of the conversation.
"There is one matter your proposal does not sufficiently address."
He had placed both hands upon the table, his earlier politeness giving way to the more candid tone of a man who had decided the visitors might actually be worth doing business with.
"If our company were to give favourable terms for a substantial equipment programme, we would want some assurance against your purchasing the later installations from our competitors."
Jinnah recognized the opening.
"An agreed schedule of orders could provide such assurance, subject to satisfactory prices and performance."
"Perhaps. But if we invest in establishing the technical arrangements, train your men, and adapt our equipment to your requirements, we shall have incurred costs that another supplier might avoid."
Chhotu Ram examined the director.
"You are asking for exclusivity."
"Not necessarily throughout the whole programme. But we should require commercial protection."
"For how long?"
"That would depend upon the undertaking."
Chhotu Ram leaned back.
"Mr. Whitcombe, I have spent many years dealing with men who seek exclusive rights to purchase a farmer's crop. They always explain that exclusivity is necessary because they have taken some risk. The next harvest invariably discovers that the farmer has taken rather more."
The director flushed slightly.
"We are discussing industrial machinery, not grain."
"The arithmetic is similar."
Jinnah allowed his companion to continue.
"If you supply the first installations successfully, you shall possess an advantage. You will understand our conditions, your machines will already be in service, and our mechanics will know how to maintain them. That is a genuine commercial advantage. Why should you also require the right to charge whatever price your competitors might otherwise prevent?"
Whitcombe glanced towards Bennett, who was studying the drawing with deliberate attention.
"We could agree upon a formula for pricing," the director said.
"Then let us discuss the formula," Chhotu Ram replied. "But not a monopoly."
It was not a refusal of cooperation. Chhotu Ram had already decided that standardizing equipment with a dependable manufacturer could be valuable. What he refused was the notion that standardization required surrendering the ability to challenge a supplier's prices.
Jinnah entered the discussion at the point where the two men's interests might be reconciled.
"A framework agreement for successive orders, with agreed technical standards, transparent adjustments for changes in material costs, and a limited opportunity for the original supplier to match a competitive quotation."
Whitcombe considered it.
"First refusal?"
"For defined classes of equipment, for a defined period. Not an unconditional right over the entire programme."
"And our costs of preliminary engineering?"
"Recoverable through an agreed study fee or credited against subsequent orders."
Bennett finally looked up.
"That would be more satisfactory from the engineering side. I should rather know what we are designing before Mr. Whitcombe sells two hundred of them."
The remark relieved the tension.
Whitcombe laughed, though somewhat reluctantly.
"Very well. We can examine such an arrangement."
But the exchange had accomplished something important.
The British now understood that the two Indians were not desperate purchasers who could be dazzled by an impressive factory or the Governor's personal introduction.
They would bargain.
And they would understand the bargain.
As the afternoon progressed, the engineers returned to the machinery.
The prospect of reconditioned equipment had initially appealed to Whitcombe because it offered a means of converting idle assets into sales. Bennett was less enthusiastic.
Old equipment, he explained, was not automatically economical equipment. A generator that had served a British factory for twelve years might still operate perfectly well, but if its spare parts were unavailable, its insulation had deteriorated, or its bearings required unusual attention, it could become a costly liability once installed in rural India.
Chhotu Ram agreed readily.
"We require machines that can work, not machines that once worked."
Bennett smiled.
That was a distinction he wished more commercial directors would remember.
They discussed the advantages of standard dimensions, replaceable bearings, accessible controls and proper maintenance records. Bell wanted a smaller number of carefully chosen turbine types rather than an assortment purchased merely because the machines happened to be inexpensive.
Jinnah listened, occasionally asking how each technical condition would be reflected in the purchasing contract.
For him the machinery was acquiring a second nature. It was becoming a collection of responsibilities.
Who would certify that a reconditioned generator met the agreed standard? Who paid if damage occurred during shipment? How long would the supplier remain responsible for defects? What happened if the installation could not achieve the contracted performance because the site measurements had been wrong?
Every answer shifted risk from one party to another.
Bennett became increasingly interested in Jinnah's questions. He was accustomed to commercial men who wanted guarantees without understanding the machines and engineers who understood the machines without considering the contracts.
Jinnah insisted that one could not sensibly be separated from the other.
It was almost five when the engineer, having covered several sheets with notes, admitted that he would prefer to examine a limited group of installations before allowing anyone to promise delivery for the full two hundred.
"Choose the best documented sites," he said. "Let us design something that can actually be built. Once the first machines are operating under your conditions, we shall know a great deal more."
Jinnah glanced at Chhotu Ram.