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MEMOIR,
&C. &C.
MEMOIR
ON
THE AFFAIRS
OF THE
EAST-INDIA COMPANY.
LONDON:
PRINTED BY J. L. COX, GREAT QUEEN STREET,
LINCOLN'S-INN FIELDS.
February 1830.
&.& H:
1 I
H&hiRY MORSE STBPHIM3
/ *§ ■" Ml i ^ n ii
.e
1830.
A SELECT COMMITTEE has been appointed by
each of the Houses of Parliament, " to enquire into the
" present State of the Affairs of the East-India Corn-
's pany, and into the Trade between Great- Britain,
; ' the East-Indies, and China, and to report their
" Observations thereon to the House."
It is matter more for regret than of surprise, that so little should
be generally known regarding the East-India Company, and the
character in which they stand with relation to the vast interests
committed (under certain restrictions) to their management and
control.
The means of acquiring information are more ample, and more
readily to be obtained than upon almost any other public question,
whether such information be sought for in the records of Par-
liament, in those of the Company which have been from time
to time printed for and laid before the Proprietors of East-India
Stock, or in the standard histories of the day.
B When
5.10643
When the mercantile interests of the country are suffering
through the alleged want of wider fields for commercial en-
terprize, the abolition of the Company's remaining exclusive
privileges of trade is declared to be the panacea.
When the case of an individual seeking redress at the hands of
the Court of Directors for some alleged grievance inflicted by the
Governments abroad has been rejected, and an appeal made,
either to Parliament or to the Public, the occasion is seized
upon to condemn the system under which the government of
India is carried on, and to denounce it as pregnant with the most
serious evils.
In the absence of either of these causes for public discussion,
little is comparatively heard of the East-India Company. The
Proprietors receive their dividend, the State its revenue, and the
best proof of the adaptation of the parts to the whole is, that the
vast machine works quietly, but effectually, the purpose for
which it has been framed and established.
It must not, however, be supposed, that the existing India
system is the production of a day, or (as has been stated by an
authority entitled to much respect) that " our Indian legisla-
" tion has advanced by springs and jerks," and that in each
renewal of the charter " consideration and enquiry were out of
the question.' ■ The system has grown out of the trade com-
menced by the Company at the close of the sixteenth century,
and prosecuted amidst the most extraordinary difficulties and
political vicissitudes, to the present day, comprizing an unbroken
period of two hundred and thirty years, during which the British
empire in India has been established.
The
The laws under which the system is administered have been
passed from time to time, as circumstances have called for their
enactment. Whenever evils have been found to exist, remedies
have been applied ; and it cannot fail to be remembered, that the
most important parliamentary measure, a measure which may be
considered as the foundation of the present system, was brought
forward, and ultimately passed into a law, not more for the pur-
pose of securing the rights and interests of the Company, than
for the preservation of the constitution of this country.*
It is proposed, in the present paper, to notice the leading facts
connected with the Home Administration of the East-India Com-
pany, and the financial results of the system. This paper is di-
vided into two parts.
Part I. Treats of the Home Administration, embracing the
commercial and political privileges, with the territorial possessions
which have been conferred upon the Company, from time to time,
since its union in 1708.
Part II. Contains Facts and Observations, explanatory of the
accounts laid before Parliament respecting the East-India and
China Trade, and of the Financial Affairs of the East -India
Company.
It may probably be said, with reference to the first part, that
a more limited retrospect would have sufficed. Had that been the
case, much time and labour would have been saved ; but then it
would have been impossible to have arrived at the ground-work
of the present system, or to have given that connected view which
is essential to a correct understanding of it.
B 2 The
* The Act of 24 Geo. III. cap. 25.
The government of the British territories in India is confided
to the East-India Company and to the Board of Commissioners
for the Affairs of India, subject to the control of Parliament.
The affairs abroad are administered by the Supreme Govern-
ment of Fort William in Bengal, and by the two subordinate
governments of Fort St. George and Bombay, under orders and
instructions received from the authorities in England.
The East-India Company,
The Supreme Government in Bengal,
The Board of Commissioners for the Affairs of India,
The Supreme Courts of Judicature, and
The Governments of Fort St. George and Bombay,
were established by distinct legislative enactments, which will be
noticed as the events which gave rise to them occurred.
The East-India Company, under the title of the " London
Company/ ' was incorporated by charter granted by Queen Eliza-
beth on the 30th December 1600. In 1693, that Company having
failed in the payment of a duty of five per cent, on their capital
stock, imposed by the 4th and 5th of William and Mary, doubts
arose whether, in strictness of law, the charters which had been
granted them were not rendered void. A new one, however, was
granted, on condition that it should be determinable on three
years' notice.
In 1698 the necessities of the state led to a loan from the
Public of .§£2,000,000 at eight per cent., and the subscribers
were incorporated by charter into a society, called the " English
Company/ ' with the exclusive right of trade to all countries and
places beyond the Cape of Good Hope to the Straits of Magellan.
The
The Act reserved a power to determine the exclusive trade
September 1711, on three years' notice and repayment of the
loan.
In 1708 the London and English Companies were united, since
which their title has been " The United Company of Merchants
of England trading to the East-Indies."
The East -India Company consists of the Proprietors of the »
capital stock, who, when assembled under the charter of King
William, which is the basis of their present privileges, are desig-
nated " A General Court/ '
All Proprietors of ^500 stock, whether possessing such stock
in their own right or otherwise, or having held it only for an
hour, were entitled to vote, and to take part in the discussions
and proceedings in the General Court. They likewise elected
twenty-four proprietors annually, each possessing ,§£2,000 stock,
to be Directors of the Company. These provisions were subse-
quently altered by the Acts passed in 1767, and the Regulating
Act of 1773.
A Court of Directors, the designation prescribed by the charter,
must consist of not less than thirteen members. They form
the executive body, and carry on the concerns of the Company,
their duties being partly of a political, and partly of a commercial
character.
The personal interests of the Proprietors consist in the se-
curity of their capital stock, of the quick and dead stock at
home and abroad, and of those immunities which they have from
time to time acquired, as a corporate body, in England and in
India.
6
India. These several interests are confided to the care and pro-
tection of the Court of Directors, who, as the executive body,
must be considered responsible to the Proprietors for their pre-
servation.
PART I.
HOME ADMINISTRATION.
This review is divided into five separate periods, each of
which comprizes events that designate it as a distinct epoch in
the affairs of the Company.
FIRST PERIOD,
From the Union of the two Companies in 1708 to the Year 1744 ; — During
which the Acts were passed conferring upon the Company the exclusive trade
until I78O, and declaring also their right to a perpetuity in the trade, not-
withstanding the exclusive privileges might be done away ; — the Acts to
suppress clandestine trade ; — and the rejection by Parliament of a petition
from sundry merchants to advance £3,200,000, to redeem the debt due to the
Company, on condition of being incorporated and vested, in lieu of the Com-
pany, with the whole trade to India,
The first extension of the period for which the United Company
were to enjoy the exclusive privileges of trade took place in
1703. It was for fifteen years, viz. until 1723, in consideration
of which the Company advanced to the public ^1, 200,000, by
way of loan, without interest, the same being added to the two
millions lent at eight per cent., under the 9th and 10th William III,
making a total of s£3,200,000 due to the Company.
In May 1712 the Company presented a petition to Parliament,
representing that they had acquired several forts and settlements,
and privileges in India, which were absolutely necessary for the
carrying on their trade, and were a great security to the British
interests in that quarter, and cost the Company very great sums
of
8
of money: that in order to compete with the Dutch and to secure
the interests of the Company, the period then remaining, viz.
eleven years, was too short to incur a further outlay, and they
therefore prayed for an additional term.
The Act of the 10th Anne, cap. 28, was accordingly passed ; and
in order " that the United Company might be the better en-
" couraged to proceed in their trade, and to make such lasting
" settlements for the support and maintenance thereof for the
" benefit of the British nation," the exclusive trade was continued
to them until three years' notice after the 25thJVlarch 1733.
The Company, at this early period of their union, had to
contend with a clandestine trade which had been carried on by
British merchants under foreign colours. In order to check its
continuance, the Court of Directors presented two petitions to
His Majesty, King George the First, at Kensington, in December
1718, when His Majesty was pleased to give the following answer :
" You may depend upon the continuance of my protection wher-
" ever it may be necessary."
An Act was accordingly passed, prohibiting, under severe penal-
ties, the prosecution of such clandestine trade.
In the year 1729 various attacks were made upon the Company.
On the 26th February a petition was presented to the House
of Commons by several merchants and traders of Great Britain,
offering to advance ,§£3,200,000, to redeem the fund and trade
of the East-India Company, at five several payments, on or before
the 25th March 1733, at an interest of four per cent, from the
times of payment until the 25th March 1735, and two per cent,
afterwards ; provided the lenders might be incorporated and vested
with
9
with the whole trade to the East-Indies and elsewhere, in the
same extensive degree as was granted to the East-India Company,
yet so as not to trade with their joint stock in a corporate capa-
city, but the trade to be open to all His Majesty's subjects, upon
license from such proposed new company to be granted to all
His Majesty's subjects desiring the same, on proper terms and
conditions ; and provided the trade be exercised to and from the
port of London only, and be subject to redemption at any time,
upon three years' notice, after thirty-one years and the repay-
ment of the principal.
The petition was rejected by 223 to 138^
The Ministers at that time were convinced that the trade
could be most beneficially carried on through the Company, the
opposition to the Company was therefore ineffectual : but the
business was again brought forward, the time intervening between
the rejection of the first petition and the presentation of a second,
being employed in the publication of anonymous letters, essays,
periodical papers, and pamphlets against exclusive companies
in general ; and all the arguments which had been ever ad-
vanced against monopolies were retailed on the occasion, and
then, as now, all the benefits which were supposed to result from
a free trade magnified with great art and ability. On the 9th
April 1730, a petition from the merchants, traders, and others,
against confining the East- India trade to the East-India Company
only, and for obliging the Company to grant licenses on proper
terms and conditions, was offered to be presented to the House ;
and on the question for its being brought, the same was nega-
tived by 177 to 77' The same course was followed, but without
C a divi-
10
a division, on petitions to the same purport from Bristol and
Liverpool.
In the month of March the following propositions, which had
been made in the Committee of Ways and Means, relating to
the funds and trade of the Company, were received by the Di-
rectors.
" The United East-India Company to abate out of their present fund of
" £150,000 per annum, £32,000 per annum : the abatement to commence
" from Michaelmas, 1730.
" The further sum of £200,000 to be paid by the Company for the use of
" the Public without any interest or addition to their capital, to be paid on
M or before Christmas next 1730.
" The Company to enjoy the remaining part of their funds of £128,000
" per annum till Lady Day 1736, subject then to redemption upon one
" year's notice, in any sum not less than £500,000 at any time.
" The Company to accept a term of thirty years after 1736, with three
" years' notice, for the whole and sole right of the trade to the East-Indies,
M subject afterwards to the power of redemption.
" The Corporation to continue for ever, notwithstanding the redemption
" of their fund and exclusive trade."
It may here be important to observe, with reference to the last
proposition, that although the Directors were unanimously of
opinion, that by the Act of the 10th Anne the Company had a
right of perpetuity to the trade, notwithstanding the fund should
be redeemed, opinions were divided, both in and out of Parlia-
ment, concerning this material point ; and as it was conceived
that the putting it to a trial might be attended with great hazard
and inconvenience, the Directors submitted that it would be more
for
11
for the Company's interest and benefit to accept of the proposals
before the Court.
The Act of the 3d Geo. II., cap. 14, was accordingly passed, by
which the Company gave to the Public the sum of ^200,000,
and reduced the interest on the ,§£3,200,000 due from the Public
from five to four per cent. viz. ^£128,000, per annum, instead of
^£1 60,000 per annum. The Company, notwithstanding the re-
demption by the Public of the said debt of ^3,200,000 9 was
declared to be a body Politic and Corporate in deed and in
name, by the title of " the United Company of Merchants of
England trading to the East-Indies," and by that name should
have perpetual succession and a common seal.
In January 1744 it was intimated to the Court of Directors,
that if the Company would advance and lend to His Majesty, for
the service of the Government, the sum of one million at three
per cent., it might be the means of procuring the prolongation
of the Company's term in the exclusive trade to the year 1780,
their present term expiring at Lady Day 1766; the Company
to be empowered to borrow the said million on their bonds. The
proposition was agreed to : the three years' notice to be given
from 1780.
The 17th George II. cap. 17, was accordingly passed.
It was at the same time declared, that the Company were to
have the benefit of all Charters and Acts which had been made
in their favour.
This measure secured to the Company the exclusive trade for
the prospective term of thirty- six years from 1744. The several
periods for which, and the terms upon which such exclusive trade
has been extended, will be seen by the following summary.
C 2
12
SUMMARY.
Year.
Reign.
Granted
for Years.
Terms.
1698
9 and 10
The Charter granted from \
10 years,
On lending £2,000,000, at
William III.
the 29th of September f
1701, to 29th Septem- f
ber 1711. )
and
3 years'
notice.
eight per cent.
1707
6 Anne
Ditto extended from 29th "^
14£ years,
On lending £1,200,000, at
September 1711 to they
and
five per cent.and agreeing
25th March 1726. C
3 years'
notice.
to receive only five per
cent, on the two millions.
1712
10 Anne
Ditto extended from the")
25th March 1726 toV
the 25th March 1733. (
7 years,
and
3 years'
notice.
No further terms.
1729
3 Geo. II.
Ditto extended from the~\
33 years,
And a right granted to con-
25th March 1733 to the (
and
tinue a Corporate Body
25th March 1766. (
3 years'
notice.
for ever, giving £200,000,
by the 24th December
1730, and agreeing to
receive from the 29th
September 1730, only
£128,000, or four per
cent, on the £3,200,000.
1744
17 Geo. II.
Ditto extended from the^
14 years,
On lending £1,000,000,
25th March 1766 toV
and
by the 29th September
25th March 1780. }
3 years'
notice.
1744, at three per cent.,
the £3,200,000 to con-
From 29th September")
tinue at four per cent.
Total Loan to Government,
1701 to the 25th March V
78£
£4,200,000.*
1780. (
* In 1749 the Company consented to a reduction in the interest on the ,£4,200,000 from four to three per cent.,
on condition that they were empowered to raise money towards the discharge of their bond debt by the sale of three
per cent, annuities to the amount of the debt due from the public to the Company. The sum of ,£2,992,440. 5s.
was raised, the dividends on which were paid at the East-India House, Government allowing the Company £l,687
per annum for charges of management : these, together with £1,207,559. 15s., being the residue of the debt of
£4,200,000 from the Public form the East- India Annuities, which, by the Act of the 33d Geo. III. cap. 47,
were placed under the management of the Bank, and engrafted on the Three per Cent. Reduced Annuities.
13
SECOND PERIOD,
From 1745 to 1765 : comprises the commencement of hostilities with an Euro-
pean power in India; — the loss and subsequent restoration by treaty of
Fort St. George ; — the events in Bengal which led to the loss of Calcutta ;
its recapture ; — the Act for punishing mutiny and desertion of officers and
soldiers of the Company's service ; — the issue of letters-patent by His
Majesty George the Second, granting booty and plunder to the Company ;
— and of further letters-patent, authorising the Company to hold and enjoy
such lands and fortresses, subject to the sovereignty of His Majesty in and
over the same, and subject, nevertheless, to His Majesty's disposition and
pleasure, as to such lands as might be acquired from the subjects of any
European power*
It will be perceived that the events within the abovementioned
period related principally to the affairs of the Company abroad.
France having joined Spain in the war against Great Britain, the
effects were soon felt in India. The French succeeded in reducing
Madras, by which a loss of a£ 180,000 was entailed upon the
Company. This settlement was restored to the Company in 1 749
by the treaty of Aix-la-Chapelle. These events were followed by
the inhuman incarceration of one hundred and forty- six Euro-
peans in the Black Hole at Calcutta ; the loss of Fort William ;
its recapture by the King's and Company's forces under Admiral
Watson and Colonel Clive, together with the restoration of the
Company's factories in Bengal ; the deposition of Sujeh Dowlah,
and the elevation of Meer Jaffier to the musnud, succeeded by the
victories of Colonel Clive, which led to the extension of the Com-
pany's possessions ; the deposition of Meer Jaffier and succession
of Cossim Ali Khan, and the re- elevation of Meer Jaffier.
The
14
The hostile proceedings of M. Dupleix on the Coast of Coro-
mandel, whose views went to the annihilation of the Company's
authority in that quarter of India, and the acquisition of the
Dewannee obtained by Lord Clive in Bengal, were the promi-
nent occurrences.
The limits of this paper will not admit of any lengthened
review of the principles by which the Court of Directors (then
the only Home authority) were governed, in the instructions
which at that early period they sent to India. The materials for
such purpose are abundant, the matter most interesting, and the
whole tenour of the Court's despatches calculated to remove the
generally received, but nevertheless erroneous opinion, that the
Directors were comparatively indifferent to the events in progress,
and that they withheld the exercise of that control which was
essential to good government, and to the proper conduct of their
servants abroad.
The following extracts will be sufficient to shew the general
character of the Court's proceedings.
In 1744, the Committee of Shipping, who at that time superin-
tended the measures connected with the repair of fortifications,
were instructed to frame regulations for that purpose, and the
Court informed the government in Bengal that " they grudged
l{ no expense necessary for the just defence of the Company's
" settlements." An engineer officer who had been employed in
the fortifications in Flanders, was sent by the Directors with the
rank of Major.
The Court of Directors, in their petitions to the Lords Justices
of the 18th July 1750, 19th August 1752, and in their letters to
the
15
the Earl of Holdernesse of the 10th January and 14th Septem-
ber 1753, had represented the Company's situation with regard
to the French on the Coromandel coast, at those several periods.
In 1754, the Court stated, that notwithstanding all their endea-
vours at home, and those of their servants abroad, they found by
the several advices which they had from time to time laid before
Administration, that the French were daily growing in power : that
at a meeting at Sadras, the French commissaries insisted that M.
Dupleix should be Governor of the whole country from Cape
Comorin to the River Kishna, to which adding the Rajahmundry
and Chicacole countries, lately granted to him, the whole coast
would be his to very near Point Palmiras, an extent of near
fourteen degrees; and that should M. Dupleix succeed in that
object, the Company's settlements and trade upon the Coast of
Coromandel must be in the power of the French, and the British
authorities entirely subject to their pleasure.
The Court pointed out, that since the commencement of those
troubles, they had from time to time sent very large supplies of
men and military stores, and intended to send a further force,
and to exert themselves to the utmost of their power as far as a
trading company could do ; but they thought it a duty they owed
to the Public and to the Company, to lay before Administration
the circumstances and situation they were placed in abroad, not
doubting but that Ministers would represent the same to His
Majesty in such a manner, that proper and effectual measures
might be taken to secure to this nation " so great and valuable a
" branch of their trade as that to the East-Indies."
On the 3d August 1757, the Court of Directors, in addressing
the
16
the authorities at Calcutta in anticipation of its restoration,
wrote :
" Pacific measures must, if possible, be the foundation you are to build on
" as the best means of promoting the commercial interest of the Company,
" and avoiding the heavy expenses which a state of war must necessarily
" produce, and which the Company at this juncture are so little able to
" bear."
In March 1758, after a general review of the investment, ship-
ping, &c, the Court laid down instructions as to the conduct of
servants, the collection of revenues and customs, and the extent
of the military establishment.
The junior servants were ordered to be sent from Calcutta,
where they acquired habits of idleness and extravagance, to the
aurungs, where they might learn the languages and gain a know-
ledge of the various qualities of goods, &c. To encourage the
cultivation of raw-silk, the Court sent out a Mr.Wilder, who was
well qualified to introduce and promote improvement in the manu-
facture of that article.
The Court complained in strong terms of the profuse and ex-
travagant grant of allowances called hatta to the troops at Madras,
and apprehended that some such allowance had been introduced
into Bengal, where living was so much cheaper, and ordered that
it should never be allowed but when in the field.
On the subject of protections under which Europeans resided
in India, the Court wrote :
M Protections were originally intended to secure our property, and meant
" by us to be granted as such to our contractors, brokers, and others, useful
" persons connected with our affairs, and to none else ; but for many years
*« they
17
" they have been given indiscriminately : too often, we fear, to serve pri-
" vate purposes. To remedy this great evil in future, we order that
" every merchant craving our protection shall present a petition to the
" Government and Council, setting forth his motives or pretensions to such
" favour. If his request be granted, the reasons are to be assigned on your
" Consultations. He is then to be registered by the Secretary ; and a list
" of those who have our protection, with a proper description, to be trans-
" mitted us annually."
The injunctions of the Court, at the same time, as to the ne-
cessity of economy in all branches of the Company's affairs abroad,
shew the sound principles which governed their instructions :
" There never surely was a time when the situation of the Company's
" affairs, or that of their servants of all ranks, as well as of those who are
" resident in India under the Company's protection, so loudly called for a
" general reformation, if that regard (which we really look upon to be due)
" is to be paid to the truth of your representation of the distressed situa-
" tion of our once flourishing settlement of Fort William. No attempts
" should be neglected for restoring it to something like its former lustre,
11 and the necessity must now enforce what prudence would always have
" suggested to those who attend her dictates. Should the economy we
" recommend our servants of all ranks be as general as their situation re-
" quires, it must banish that false shame which is too often the attendant
** of those weak minds, whose ill-judged desires in an inferior situation, in
" regard to rank or fortune, put them upon following the examples of their
" superiors, either in their vicious or luxurious indulgences. We will only
" add, that we doubt not that our servants, who are disposed to reflect,
" will be very sensible that we are not acting upon arbitrary or parsimonious
" principles, but on such which have equally for their object the true and
D i " lasting
18
•' lasting interest of the Company, and that of every individual servant
" acting under them."
On the appointment by orders from home of servants to par-
ticular stations in India, the Court wrote on the 11th April
1758:
" As these nominations, in your present critical situation, may put you
" under difficulties, and we may possibly confine our servants to one place
" when they may be more properly employed for our service, we, relying
" upon your integrity and experience, do revoke all our former nominations
" to chiefships and the posts at the Presidency, and commit the whole to
" your direction."
This was the foundation of the subsequent enactments.
In May following, the Court pointed out the great difficulties
they experienced in obtaining recruits ; and in order to secure
efficient instruments to superintend and repair the fortifications
at Calcutta, the Court, through the Duke of Marlborough, then
Master General of the Ordnance, obtained three officers from the
Royal Regiment of Artillery to fortify the Settlements in the
event of future attacks : upon which point the Court gave explicit
directions, and also ordered a Committee to be appointed at Cal-
cutta, whose duty it should be to inspect, once in every three
months, the several articles of military store.
On the subject of the China trade, the Court observed :
" That it had been gradually improving, and had consequently become
" one of the principal objects of the Company's attention ; and although
*' the ships destined for that service were very considerable, yet more
" might be employed ;" adding, " that the Company had determined that
" the supra-cargoes should remain in China the year round."
With
19
With respect to Europeans holding lands the Court wrote to
Bengal, on the 23d March 1759, in the following terms, viz.
" You did very right in forbidding Europeans holding the farms of any
" lands, towns, or villages without the Company's boundaries ; nor do we
" much approve of it within our own jurisdiction. However, as it sometimes
" may possibly prove of public advantage to have monied men, not in our
" service, to be competitors, we do not lay you under restrictions as to such
" persons ; but we absolutely and positively forbid our Covenant Servants
" holding any lands, towns, or villages, directly or indirectly, either within
" or without our jurisdiction, or to be interested in any contracts with the
" Company, for such shall assuredly forfeit our service."
The pressure upon the home treasury by bills on account of
loans and advances to the navy, was such as to call for severe
observations from the Court.
" If you had studied to ruin our credit, worse measures could not have
" been adopted. We can seldom be in a condition to answer large drafts
" at a short date. Formerly, indeed, we might ; but our fortifications,
" large garrisons, and other military expenses, have absorbed and continue
" to swallow immense sums. The Nabob of Arcot's debt, another heavy
" load, and the detention of our ships (during war unavoidable), distress
" us without measure ; for we now furnish annually the cargoes of twenty
" ships or more, with very little aid from returns of the previous year.
" But when we add to all this, what is really fact, that the total amount of
" the invoices of all the cargoes from Bengal and Bombay of the late
" ships falls very short of the amount of the bills drawn upon us by the
" ships on which such cargoes are laden, it cannot but inevitably increase
" our distress."
In April 1760, in adverting again to the great pressure upon
the financial means of the Company, and the subserviency of
D 2 their
20
their commercial concerns to the supply of men and stores, in
order to support and maintain their acquisitions in India, the
Court wrote :
" We ourselves look back with wonder at the difficulties we have sur-
" mounted, and which, with our contracted capital, must have been im-
" possible, if the Proprietors generously, and without a murmur, had not
" consented to reduce their dividend twenty per cent. But with all our
" economy and care, unless our servants attend studiously to lessen their
" charges and increase our advantages, the burthen will be too great for us
" to bear much longer."
The additional charge which had been entailed upon the Com-
pany for war extraordinaries during hostilities with France ex-
ceeded a million sterling.
In April 1760, the first consignment of copper, to the extent
of one hundred tons, was sent out, together with some samples
of Cornish tin ; and the President and Council were earnestly re-
commended to make a particular enquiry how those articles
would answer for the Bengal market, as the Court stated they
were always extremely desirous of increasing the vend of the
products of Great Britain, and accordingly expected the Council
to encourage, to the utmost, their export. The same wishes
were expressed as to broad- cloth.
In alluding to the measurement of the newly acquired lands,
the Court observed :
" Sensible and judicious is your conduct in pursuing lenitive measures
" and easing the tenants of real oppressions and burthensome taxes. By
" adopting these salutary maxims, our acquisitions, and Calcutta also, will
" in
21
" in time be filled with numerous and useful subjects, attached to our
" government from interest and affection."
" Great care must be taken that the farmers do not injure or oppress the-
" inhabitants. The people should be assembled in every pergunnah, the
" terms and conditions published, and they publicly told where they are to
" apply for redress of all grievances ; and by kind and humane govern-
" ment numbers may be encouraged to fix their residence in these terri-
" tories, and in time all our waste lands may be occupied and greatly im*
" proved."
With regard to the revenue from salt, the Court wrote :
" Establish this branch in a manner that may appear to you equitable,
" always remembering, that if any part of our revenues tends to distress
" the poor, it is our intention that they should be abolished. At
" Bombay the imports, with all kinds of grain, are encouraged, and only
" three per cent, customs charged ; but if grain is exported, six per cent.
" is levied. We recommend this practice to your consideration, as a certain
" method to secure plenty to the poor of Calcutta ; for it is such a lucra-
" tive trade, subject to so few obstacles, that the exports are often beyond
" reason, creating such distresses that the inhabitants of no well-governed
•• colony ought now to feel."
The Court again, adverting to the trade with China, wrote :
" As the China trade is our principal source for valuable returns, it is of
" the utmost importance to feed it with as plentiful remittances as circum-
" stances will admit of: we therefore recommend it to you in the strongest
" manner, to take every opportunity to send to Fort St. George what trea*
" sure you can possibly spare, from time to time, that it may be consigned
" thence to our agents at Canton."
On vacancies happening in Council, the next person standing
upon
22
upon the list of Civil Servants, if qualified, was to succeed. The
Military Commanding Officer was to have a seat in Council,
whenever military affairs were discussed.
On the treaty with France, the Court, in December 1 762, wrote
" You will observe that the tenth article, which relates to the East-
" Indies, is improperly and loosely worded. We have made the necessary
" applications to His Majesty's Secretary of State to have it settled in the
" definitive treaty, in a manner agreeable to our sentiments ; and as the
'• Duke of Bedford, His Majesty's Plenipotentiary at the court of France,
" has instructions thereupon accordingly, we are in hopes of suc-
" ceeding."
Under this treaty, all the French factories were restored ; but
it was stipulated, that they should not erect any fortifications or
maintain any soldiers in such settlements.
The Court remarked :
" We are sorry to observe, that many informations relative to the Com-
" pan/s affairs have been sent to His Majesty's Ministers and other great
" men from our servants belonging to your and our other Presidencies, some
" of which, particularly of the late transactions with the Dutch in Bengal,
" have much embarrassed us. We will not say that such communications
" are made with a view to lessen the authority of the Court of Directors,
" but they certainly have a great tendency that way : you are, therefore,
" to use all means possible for putting a stop to this practice : and as the
" Court of Directors is the only channel through which Government re-
" ceives all information concerning the Company's affairs, if private infor-
" mation therefore are sent from any of our servants or others under our
" protection, we shall deem such persons unworthy of the Company's ser-
" vice, and they shall be certainly dismissed, whatever their rank or station
" may be."
In
23
In December 1763 the Court wrote :
" Although General Caillaud, as Commander-in-chief, is to have a seat
" at the Council Board or Committee next below the Governor, it is not
" meant that he is to succeed to the Government at any of the Company's
" Presidencies, on any account or pretence whatever, as upon any vacancy
" in the Government, the same is to be filled up by, and confined to
" one of our Civil Servants, according to the custom of the Company,
" which is to be the next in standing below General Caillaud, unless we
" have given or shall give any orders to the contrary."
This principle has guided the several enactments which have
been subsequently framed on the point.
" No schemes for military operations are to be adopted, unless they are
" evidently and most materially necessary for the Company's interest
" Conquests are not our aim ; and if we can secure and preserve our
" present possessions in Bengal, we shall rest satisfied.
" For the same reasons, we are well pleased that you have engaged no
" further in assisting the Rajah of Meekly for obtaining redress for some
" grievances he complained to have suffered from the Burmahs ; for
" although the advantages offered by the Rajah may be specious, and you
" might have an opportunity of getting redress for the repeated ill-treat-
" ment of our settlement at the Negrais, yet the distance of the object, the
" general weakness of our forces, and the uncertainty of success, surely are
" sufficient reasons for not proceeding upon new hostilities. We do not
" disapprove, however, of your ordering the detachment of Company's
" sepoys to take post at Moneypoor, under the direction of the chief and
" council of Chittagong, provided it may have been the means of culti-
" vating a friendship with the said Rajah, and giving you an opportunity
" of being acquainted with the strength, nature, and dispositions of the
" Burmahs, that such future use may be made of these circumstances as
" may
24
" may be really and essentially necessary for the Company's interest, and
" on no other account whatsoever ; but we shall still be always well pleased
" with, and applaud your endeavours for opening any new channels of
" commerce."
It would appear that the Court at this period fully appreciated
the character of the Burmese, and that their orders have proved
somewhat prophetic.
On the 27th April 1763, the Court acknowledged the advices
received on the 15th, announcing the surrender of Manilla, the
island of Luconia, with the rest of the Philippine islands dependent
thereon.
The expedition originated in a report sent home to Lords
Anson and Egremont by Colonel Draper of His Majesty's service,
who had gone from Madras to Canton for his health. He there
acquired full information on the state of Manilla, and it was
deemed of sufficient importance by Ministers to inflict a blow on
the interests of Spain by reducing her settlements in the China seas.
The British nation being at that moment at war with France and
Spain, could neither supply ships or troops ; but the Company's
means were to be made available, and they were to have one-
third of the booty, and the government of the acquisitions. The
expedition left Madras the 2d August 1762, and arrived before
Manilla the 24th September, which place was taken by storm on
the 7th October. These circumstances have been noticed, because
it will be found that the Company preferred a claim for reimburse-
ment to a considerable amount on account of the expedition.
The foregoing extracts from a vast mass of interesting docu-
ments afford sufficient proof that the Court of Directors exercised
vigilant
25
a vigilant and judicious control over the Company's affairs and their
servants abroad-
With regard to measures at home, on the 8th February 1754,
Mr. Fox and Mr. Hume were ordered to bring in a bill for punish-
ing mutiny and desertion of officers and soldiers in the Company's
service.
It is important to mark the sentiments expressed by the Solicitor
General Murray (afterwards Lord Mansfield) in reply to a speech
of the Earl of Egremont in opposition to the measure.
" I do not rise to follow the Noble Lord through the whole of his long
" argument ; for, in my opinion, the most of what he has said was quite
" foreign to the present question, which is plainly and in short this, — are
" the East-India Company to have troops in any of their forts or settle-
" ments in that country, or no ? and I couid not observe that the Noble
" Lord said one word against this question. Indeed it is so evident that if
" the Company must have forts, they must have garrisons to defend those
" forts, that it is impossible for the wit of man to invent an argument
" against it. The Company must have troops in that country, and if they
" must have troops they must have martial law : without such a law, there
" never was an army kept up or sent out in any part of the world. It is
" true their troops have lately behaved very gallantly : considering what
" sort of troops they are, they have really done wonders. But we know
" that many of their common men have lately deserted, and we know that
" they have a near neighbour, who will not only receive but encourage
" every deserter from them in particular. When we know that they are so
" powerfully attacked, can we refuse giving them all the assistance we can,
" either by laws or otherwise ? For this reason I think we cannot enough
" applaud His Majesty's assisting them with some of his troops. The
" sending of such troops thither, can no way alter the course of transactions
E " in
26
" in that country, for though they are His Majesty's troops, they will, in
" every thing there, act in the name of the Company, and consequently
" cannot involve the Crown in any of the Company's disputes with the
" Princes or Nabobs upon that coast. It might as well be said, that the
" sending our men-of-war there would involve the Crown in those disputes :
" yet we know it never has, nor indeed ever can, because all transactions
" with the Great Mogul or any other potentate in the East, are carried on
" in the name of the Company and not in that of the Crown : and as to
" the King's troops having any dispute with the Company's troops, we have
" experience for supposing that no such thing can happen ; because in the
" late war a much larger number of the King's troops were sent thither,
" without producing any such accident."
The question, upon a division, was carried in the affirmative,
by 245 to 50.
The Act of the 9th George II., founded upon this bill, was the
only law that existed, under which the Company held courts-mar-
tial for the punishment of mutiny and desertion, until the Conso-
lidating Act of 1823 (4th Geo IV., cap. 81).
In November 1755, the Court of Directors felt it necessary to
recommend to the Proprietors a reduction of dividend on their
capital stock from eight to six per cent. : — In consequence of the
number of foreign nations engaged in the trade to India, and the
extensiveness of the trade, having greatly enhanced the prices of
all East-India commodities imported to Europe: — The additional
duty of five per cent, laid upon dry goods by the Act of the 21st
George II., whereby the cost of those commodities, and particu-
larly of the tea, was advanced to the Company without finding any
benefit on the sale, or any drawback on the export of the last-
men-
27
mentioned article : — The reduction in the interest payable by the
Government to the Company, the same having been reduced at
Christmas 1750 to three and a half per cent., and from Christmas next
reduced to three per cent. : — The troubles among the Indian Go-
vernments, which had been promoted by the French under the
name of auxiliaries, and which made it therefore unavoidable for the
Company, for the support of their trade and settlements, to take
part with their allies. These events had put them to a very great
and unusual expense, naval and military, more than could be
maintained by a trading company : and although His Majesty had
been graciously pleased to assist the Company with his ships and
forces, yet even that assistance was attended with a considerable
charge to the Company ; and although from the late prosperous
arrival of the Company's ships with valuable cargoes, and advan-
tageous disposal of them at the Company's sales, the Court of
Directors flattered themselves that a reduction of one per cent,
might have been sufficient, yet upon considering the circumstances
before-mentioned, and from the decrease of the trading stock of
the Company for the preceding two years, occasioned by their
great expenses abroad, and which the Court considered must con-
tinue till a final accommodation could be effected between this and
the French East-India Company, and which expenses must be
necessarily augmented in case of war with that nation, the Court
of Directors were clearly and unanimously of opinion that the
dividend ought to be no more than after the rate of six per cent,
per annum, until the affairs of the Company were in a more favour-
able situation.
The General Court concurred in the reduction of the dividend.
E2 In
28
In the course of the operations in Bengal, considerable booty
and plunder had been made by Admiral Watson and by the Com-
pany's troops. It had been arranged by the Admiral, that all
booty which might be taken in that expedition should be depo-
sited until his Majesty's pleasure should be known.
Applications were accordingly presented by the Company to the
King in August 1757, praying that His Majesty might be pleased
to grant to the Company a moiety of the booty taken in Bengal.
The matter being referred to the Law Officers of the Crown,
they reported * that the Act only related to captures made in the
then existing war with France, and had no concern whatever with
the disputes in India, and that the case was to be judged of by
general rules of law and the King's prerogative ; and consequently,
First, That all such places as were retaken, returned to the
old dominion ; and therefore, that the town and settlement of
Calcutta, within the former territorial limits, must be restored
to the East -India Company.
Secondly, That all such places, &c. as might be newly con-
quered in that expedition, accrued to the Sovereign, and was
vested in His Majesty by right of conquest.
Thirdly, That with respect to moveable goods retaken, the pro-
perty of all such was altered by the capture, and totally lost to
the original owners after a possession by the enemy for a limited
period; and consequently, every thing within that description
belonged to His Majesty, in whose name, and under whose pro-
tection, and by the aid of whose fleet, the same was regained.
Fourthly, That by a stronger reason, all moveables and plunder
of
* Signed " Geo. Hay ;"
" C. Pratt," afterwards Lord Camden, Attorney-General ;
" C. Yorke," Solicitor-General.
29
of any kind first taken and acquired from the enemy by land or
sea, were vested in His Majesty, subject to his power of disposing
by virtue of his prerogative ; and that, upon those grounds, His
Majesty, if he should think fit in his royal wisdom, might comply
with the Company's request.
In pursuance of this opinion, His Majesty was pleased to issue
letters-patent, dated the 19th September 1757, granting the re-
served authority to the Company.
The Company, on the restoration of their authority at Cal-
cutta, soon acquired from the Nabob and from the French some
districts of land, which were very convenient for the prosecution
of their trade : but being advised that it was doubtful whether
such land and districts did not belong to the King, the Court
of Directors, on the 30th November, presented to His Ma-
jesty a petition, in consequence of which letters-patent were
issued on the 14th January 1758, by which the Company might
hold and enjoy to them and their successors, subject to His
Majesty's right of sovereignty in and over the same, all such
fortresses, districts, and territories, within the limits of their
trade, as they had acquired, or might thereafter acquire from any
nation, state, or people, by treaty, grant, or conquest; with
power to restore, give up, and dispose of the same, as they
should from time to time see occasion ; subject nevertheless to
His Majesty's disposition and pleasure, as to such lands as might
be acquired by conquest from the subjects of any European power.
On the 12th March 1764, a Special General Court was held
at the requisition of nine proprietors (the first name affixed to
the requisition being that of Lord Clive), to consider the state
of
30
of affairs in Bengal After various despatches had been read, it
was resolved, ?' that it is the desire of this General Court that
" Lord Clive be requested to take upon him the station of
" President of Bengal, and the command of the Company's mili-
" tary forces there/'
It has been erroneously stated, that his Lordship was appointed
by the Court of Directors, and that eleven members of the Court
out of the twenty-four voted against the measure ; whereas the fact
is, that the appointment was made by the General Court alone.
It was to the independent powers with which it was proposed to
invest his Lordship that the eleven members dissented.
At the same Court a proposition was made for restraining
persons from voting who should not have held their stock at least
six months. The consideration was deferred to the 21st March,
when it was resolved that a petition be presented to Parliament
for that purpose.
In June 1764, the Court, adverting to the intelligence an-
nouncing the reinstatement of Jaffier Ali Cawn, wrote :
" In former letters we have given our sentiments on the frequent revo-
" lutions in the government of Bengal, and we still are of the same opinion,
" that they must be productive of the greatest mischief and prejudice to
" the Company's affairs, and therefore are at all times tobe avoided. This
" last, therefore, by the reinstatement of Jaffier Ali Khan in the Subah-
" ship, will require your utmost care and attention to make it permanent
" and prevent any future disturbances in the country ; in order to which,
" we repeat what we have directed in our letter of the 9th May. Jaffier
" Ali is to be effectually supported in his government, consistently with
" the treaties between the Company and the said Subah and the interest to
" the Company, of which you will be the best judge. It is proper to
" observ°
31
" observe, in this place, that we are well satisfied with our present posses-
" sions, and are by no means desirous of adding to them : their security,
" therefore, the preserving the country in a state of tranquillity, and the
" promotion of our commercial interests, are the objects which must be
" constantly in your view ; and it is our positive order that no military
" enterprizes or expeditions be undertaken or carried into execution, unless
" the Company's interest really or immediately requires them.
" In several of our letters since we have been engaged as principals in
" the politics of India, and particularly during the last two or three years,
" we have given it as our opinion, that the most prudent system we could
" pursue, and the most likely to be attended with a permanent security to
" our possessions, would be to incline to those few chiefs of Indostan who
" yet preserve an independence of the Mahratta power, and are in a con-
" dition to struggle with them ; for so long as they are able to keep up that
" struggle, the acquisitions of the Company will run the less risk of dis-
" turbance.
" The Rohillas, the Jauts, the Nabob of the Deccan, the Nabob of
" Oude, and the Mysore Chief, have each in their turn kept the Mahrattas
" in action, and we wish them still to be able to do it : it is, therefore,
" with great concern we see the war continuing with Hyder Naigue, and a
" probability of a rupture with Sujah Dowlah and Nizam Ali. In such
" wars we have every thing to lose and nothing to gain ; for supposing
" our operations be attended with the utmost success, and our enemies
" reduced to our mercy, we can only wish to see them restored to the
" condition from which they set out ; that is, to such a degree of force and
" independence as may enable them still to keep up the contest with the
" Mahrattas and with each other. It would give us, therefore, the greatest
" satisfaction, to hear that matters are accommodated, both at Bengal and
" on the coast : and in case such a happy event shall have taken place,
" you will do your utmost to preserve tranquillity.
« We
32
" We shall not attempt to give positive directions for your conduct,
" which in such critical cases ought seldom to be done, and in which the
" situation of affairs may be varied by unforseen events at the very moment
" we are writing : but having given you, with as much precision as possible,
" a general view of the system by which we wish to see our affairs regu-
" lated, we must leave to you to improve to the utmost of your power every
" opportunity of drawing towards that point; and whenever you think
" yourselves obliged for our security, upon emergent occasions, to adopt
" measures of a contrary tendency, you are to give us very full reasons for
" such a deviation, and endeavour to return to the path we have marked
" out, as soon as circumstances will admit.
THIRD PERIOD.
The third period, which is now entered upon, commences with the year
I766 and ends in 1793. It is that in which Parliament began to legislate
generally upon the affairs of the East-India Company, and comprises the
Acts limiting the dividend, regulating the qualification of Proprietors, and
vesting in the possession of the Company for a given time tlie territorial
acquisitions and revenues ; — The appointment of three gentlemen as Super-
visors who were lost on the passage to India ; — the rejection of a bill pro-
posed by the Directors for better regulating the Company's affairs ; — the
nomination of two Parliamentary Committees, one Secret and the other a
Select Committee, to inquire into the affairs of the Company / and the recom-
mendation by the former that a bill should be brought in to restrain the Com-
pany from sending out other Supervisors ; — the Regulating Act ; — the Acts
for making a temporary arrangement between thePublic and the Company ; —
the rejection of Mr. Fox's India bill ; — and the Act of 1784, establishing
the Board of Commissioners, and vesting in the Company the territory and
exclusive trade till 1793.
The Court of Directors, shortly after the receipt of the intelli-
gence
33
gence announcing the acquisition of the Dewanny in 1 766, waited
by appointment on the Duke of Grafton, and met many of His
Majesty's Ministers, when it was intimated that the affairs of the
Company would, in all probability, come before Parliament in the
ensuing session.
At the Quarterly General Court in September, the Court of
Directors, who had anticipated that a motion would be made for
an increase of dividend, laid before the Proprietors the following
Minute, which they had recorded : —
" The Court of Directors have examined into the present situation of
" the Company's affairs, in order to form a judgment whether such a
" measure is at this time proper to be adopted ; and they have, accordingly,
" in addition to their general state of the Company's affairs, as drawn out
" in the month of June last, agreeably to the twenty-ninth By-law, caused
" an estimate to be made of the money that may probably be received into
" your Treasury, and the payments that, in justice, ought to be issued
" thence, from this time to Midsummer next ; by which it appears that
" the Company are not at present in circumstances to declare any increase
" of dividend on their stock : and although the revenues, particularly at
" Bengal, are very large, they have not yet, in any great degree, centred
" in England, so as to enable the Directors to discharge such debts and
11 incumbrances as have been unavoidably incurred, through a long series
" of difficulties which the Company has been struggling with, and are
" absolutely necessary for their credit and interest to clear off. Your
" Court of Directors, therefore, upon the whole, offer it as their unanimous
" opinion, that it will not be for the interest of the Company, nor prudent,
" at present to declare any increase of dividend. At the same time, your
" Court of Directors take this opportunity of assuring the General Court,
** that whenever the circumstances of the Company will admit of an
F " increased
34
" increased dividend, they will be ready to propose and promote such a
" measure."
Notwithstanding this opinion was offered to be supported by
accounts which the Court of Directors had caused to be prepared,
the Proprietors declined to enter into a consideration of them,
but resolved that the half-yearly dividend should be five per cent.,
being an increase of four per cent, per annum.
Parliament met on the 11th November 1766.
On the 25th of that month a motion was made in the House of
Commons, and the question being put, " That a Committee be
rt* appointed to enquire into the state and condition of the East-
" India Company, together with the conduct of all or any persons
(i concerned in the direction or administration of the said Com-
" pany." — An amendment was proposed to be made to the ques-
tion, by leaving out all the words from the words " East-India
"Company;" and the said amendment was, upon the question
put, thereupon agreed to by the House.
Then the question being put, " That a Committee be appointed
*' to enquire into the state and condition of the East-India Coin-
" pany ;" the House divided : — yeas 129 : noes 76.
Negociations were commenced with Ministers for the settlement
of the territorial acquisitions, and carried on from time to time
until the 10th April 1767, when ten propositions were submitted
to them : one of which having for its object the extension of the
exclusive trade for thirty-seven years from 1780 ; and another,
the setting apart an annual sum of «s£400,000 out of its profits, to
be disposed of in dividends to the Proprietors, or in such other
way as they may see fit.
His
35
' His Majesty's Ministers declined to agree to these stipulations;
and the Court of Proprietors, notwithstanding the declared indis-
position of His Majesty's Ministers to admit of any increase in
the rate of dividends, resolved on the 6th May, that the dividend
should be increased to twelve and a half per cent, per annum.
This measure, contrary both to the opinion of Government and
the Court of Directors, occasioned a rupture in the negotiation^
and led to a petition from the Company to the Housg of Com-
mons.
In the course of the discussion which followed that petition,
questions of much moment arose ; amongst others, the right of
the Company to their territorial acquisitions. It was argued, that
they had no right by their charters to any conquest :— that such
possessions in the hands of a trading corporation were improper
and dangerous ; and even if it were legally and politically right
that they should hold these territories, yet the vast expenditure of
Government in protecting the Company, gave it a fair and equi-
table right to the revenues arising from the conquests. Those who
maintained the rights of the Company denied that the Crown
had made any reservation of such acquisitions : — that it was a
dangerous infringement on property and public faith to question
them, as the Company had purchased its charters fromthe Public,
and those charters were confirmed by Parliament :— that if the
Crown had any right to the possessions of the Company in India,
the courts were open for the trial of the claim : —that the House
of Commons was not, by constitution, the interpreter pi the laws
or the decider of legal rights : — that it would be of the most fatal
consequence to the liberties of Great Britain if ever they should
F 2 assume
36
assume it : — that as to the equitable right pretended from the
expenses incurred by Government, the Company stood as fair in
that light as the Crown, they having expended much greater sums
in acquiring the disputed territories and revenues. The point was
frequently debated, but the House appeared disinclined to the de-
termination of a question teeming with such important conse-
quences.
The Acts of Parliament consequent upon the foregoing dis-
cussions were those of the 7th George III., cap. 48, 49, 56,
and 57.
Cap. 48 regulated the qualifications of Proprietors : a measure which had
long been called for, from the most unfair and mischievous practice which
had been introduced, of splitting large sums of stock, for the purpose of
multiplying or making occasional votes immediately before the declaring of
a dividend, choosing a Director, or deciding any important question. The
Act required that each Proprietor shall have held his stock six months
before voting.
This measure, as has been already noticed, was first proposed
on the occasion of Lord Clive's appointment by the General Court
as President and Commander-in-chief in India in 1764; but the
attempt to carry it forward failed in the House of Commons.
Cap. 49 declared that it would become peculiarly necessary to secure, at
all events, as well the permanent interests of the Company, as the state of
credit, both private and public, from the mischiefs which would ensue from
an improper and improvident increase of dividends ; and therefore enacted,
that after the 24th June 17 67, no dividend should be made but in pur-
suance of a vote carried by ballot in General Court, and seven days' notice
at least of such meeting was to be fixed upon the Royal Exchange. No
ballot
37
ballot was to commence in less than eight hours after it was determined that
any question should be put by the ballot, nor later than twelve o'clock at
noon, or to close earlier than six o'clock in the afternoon. No dividend
beyond ten per cent, was to be declared between the 8th May I767 and the
beginning of the next Session of Parliament.
Cap. 56 related to the exportation of tea to Ireland and America.
The last-mentioned Act was solicited by the Company under
the following circumstances. On the Company's acquiring the
revenues of Bengal, it became necessary, in order to realize those
revenues in Great Britain, to encrease their investments in India.
This could not be effected to a sufficient extent in the manufac-
tures of Bengal, because their consumption in this country was
greatly circumscribed by the use and encouragement given to our
own manufactures of cotton and linen, and by the prohibition of
the wear of all foreign printed, painted, and stained goods.
The Company, therefore, naturally turned their thoughts to the
article of tea, their importations of which were encreased, and by
means of their revenues remitted to China ; and in order to pro-
mote a proportionate legal consumption, they procured an Act
taking off the duty of one shilling per pound on all black and
singlo teas for five years, viz. till July 1772, undertaking to in-
demnify the revenue for any deficiency on a calculation of the
average for the five years preceding, in hopes that the other
duties of customs and excise, on the extraordinary quantity they
might sell, would be more than sufficient for that purpose.
This experimental law failed of the intended object : the con-
sumption was not encreased and the revenue fell off.
Cap.
38
Cap 57 established the agreement with the Company, who were to pay
£400,000 for the term of two years into the Exchequer ; for which term
the territorial acquisitions and revenues lately obtained were to be and
remain in the possession of the Company or their successors.
In February 1768 a bill was introduced, which renewed for
another year the restrictions as to the declaration of a dividend
beyond ten per cent. The Court of Directors concurred in the
expediency of such restriction, but the Proprietors ineffectually
opposed it by a petition to Parliament.
In the month of August following the negotiations commenced
for a further agreement with the Public as to the territorial acqui-
sitions, and were carried on until .the 9th February 1769; on
which day the Chairman and Deputy Chairman waited on the
Lords of the Treasury, when their Lordships signified that it
would be proper to petition the House of Commons, that a new
agreement might be entered into between the Public and the
Company, respecting the acquisition and revenues lately obtained
in the East-Indies.
The Company petitioned accordingly, and the Act of the 9th
George III. cap. 24, was passed,
" Continuing the agreement for the term of five years, the Company
" paying to the Public the annual surii of £400,000, and engaging to
" export during that term British goods equal in value, on an average,
" to those exported annually for the preceding five years.* If any surplus
■ " cash
* Amounting to £380,837 in each year. This was the first enactment which made it
imperative upon the Company to export any given value. of British goods.
39
" cash of the Company remained after payment of certain specified
" debts, it was to be lent to the Public at two per cent."
The principal events in India during the beforementioned
period were the acquisition of the Northern Circars, the treaty
with the Soubah of the Deccan, and the first war with Hyder.
In the month of June 1769, the Court, in order to establish
peace at the Company's several settlements in India on a perma-
nent and advantageous footing, and to correct abuses of every
kind, resolved to send out a Superintending Commission.
The determination to send out the Commissioners was notified
to India in the following terms, in a despatch of the 30th June :
" Upon a general view of the Company's affairs in India, the alliances we
* are engaged in with the country powers, the frequent change of these
" alliances, and the succession of wars in which we are thereby involved,
" we find it absolutely necessary to take some effectual measures to regulate
M the political system of the three Presidencies upon one uniform plan : the
" first object of which will be, a general pacification of the troubles in
M India upon a solid basis ; or if, unhappily, circumstances should be such
" that some military operations must be continued, we shall make it easier
" to bring the forces of the Presidencies to co-operate, and reduce our
" enemies the sooner to submit to reasonable terms.
" The vast increase of charges in every department is another object
" requiring extraordinary powers of reformation, and the establishment of
" a better mode of collecting the revenue (duannee) ; no less so, not only as
" it immediately effects the Company's interest, but as being essential to the
" ease and happiness of the people, the security of their property, and the
" consequent encouragement of cultivation and manufactures.
" The directions we have hitherto given upon these important points
" have produced, in return, many arguments but few effects : and as, by
" this
40
" this mode of proceeding, we may never be able to establish the necessary
" regulations, we have resolved to appoint Commissioners to proceed to
" India, to carry our orders into execution without loss of time.
" That you may be acquainted in general with the nature of the com-
ft mission, you are to understand that the Government of all the Settle-
" ments is left in its usual course and channel ; but the Commissioners have
" a superintending and controlling power over the whole, in like manner as
" if we, the Court of Directors, were ourselves present on the spot, and
" they are to proceed from Presidency to Presidency to make the desired
" orders and regulations.
" The union of interests between the nation and the Company by the
" participation of revenues, under the present agreement with the Govern-
" ment, having made us in some measure responsible to the Public for our
" conduct, it became necessary that His Majesty should be informed of
" our intention of appointing this extraordinary Commission ; and we have
" had the satisfaction of receiving the royal approbation, with a strong
" recommendation to pursue every measure for the reform of abuses, and
" the due management of the important interests which we have in charge
" in the several parts of India."
A lengthened correspondence took place between Lord Wey-
mouth and the Court, as to the powers which the Commander-in-
Chief of His Majesty's ships in India was to possess. The several
points being arranged, the Commissioners sailed in His Majesty's
Ship Aurora on the 15th September, and were never afterwards
heard of.
The reasons which led to the appointment of the Commission suf-
ficiently evinced the necessity for the adoption of decided measures,
to enforce obedience in the servants abroad to orders from home.
Nothing took place until the opening of Parliament in January
1772.
41
1772, when the King's speech referred directly to the affairs of
India. - On the 30th March Mr. Sullivan, the Chairman of the
Court of Directors, moved, and after a debate, in which Lord
Clive took part, obtained leave to bring in a bill for regulating
the affairs of the Company and their servants in India, and for
the due administration of justice in Bengal.
The bill was read the first time on the 13th April, when Colonel
Burgoyne moved for the appointment of a Select Committee of
thirty- one members, for instituting an inquiry
" Into the nature, state, and condition of the East-India Company, and
" of the British affairs in India."
In the course of his speech he stated, that he felt the present
motion called for, in consequence of leave having been given for
bringing in a bill to apply a remedy, without any information of
the disease. — He said :
" By the first part of the motion I mean to give powers to a Committee to
" enquire into the constitution of the Company ; into the purposes for which
" it was framed, and the powers with which it was invested. I would
" then proceed to the management of those powers and purposes ; see
" where there have been deviations, where abuses, where the evils have
" unavoidably risen from the latent errors in the constitution, where they
" have flowed from the casual misconduct of servants ; and the inquiry
" will be thus naturally brought, by the last part of the motion, to a view
'* of the present disorders, civil, military, moral, and political. To sift
" and examine these several materials, many of them excellent in them-
" selves, and dangerous only by being confounded, will be the only
" means to enable the controlling and creative power of Legislature to new-
" model and arrange them, and to give them, for the future, permanent
" regulation and direction to their proper ends.
G " I shall
42
" I shall perhaps, be told, that the object and end of my inquiry is to throw
" the whole affairs of the Company into the hands of the Crown, from which
" the death-blow to the constitution is most to be apprehended. — I have no
" such purpose. — If Legislature has not powers and wisdom so to model
" and regulate the sovereignty of the state in India, or so to delegate its
" powers as to prevent the influence of the Crown in England, let it never
" be attempted. I will join issue with the gentleman who, upon a former
" occasion, asserted that India and Great Britain had better be swallowed
" up in the sea, than liberty be endangered by any exercise of undue weight
" given to the Crown, that might make it preponderate over the other
" branches of the state."
Mr. Burke observed :
n Their authority I would not have diminished in India by any severe ani-
" madversions. Let the people of Bengal be not taught to despise them, by
" finding their authority limited and circumscribed. It is enough that we
" provide for the good government of that country for the future — when
" they have so widely extended our empire and commerce, when they have
" so greatly augmented our naval power."
The bill was dropped after the second reading.
In August 1772, the Court resolved to send out a second Super-
intending Commission.
On the 14th October 1772, the Chairman acquainted the Court,
that in a conversation he lately had with the Earl of Rochfort,
one of His Majesty's principal Secretaries of State, his Lordship
desired to be informed whether the Company intended to send a
Commission of Supervision to the East-Indies, and if so, whether
the Commander-in-chief of His Majesty's ships was to have a
seat and voice in the Council of the Commission.
On the 21st the Court resolved,
" That
43
" That it would not be equitable or advantageous to depart, if it could
r * possibly be avoided, from the neutrality which had hitherto been main-
" tained during the war between Hyder AH and the Mahrattas (and which
" the Company were most anxious to preserve throughout Hindostan), so
" long as Hyder Ali should continue to observe the conditions of the
" treaties entered into with them ; and that no positive orders could at that
" time be given to the Governor and Council of Fort St, George on that
" most important subject on tlte part of the Company, further than to
" recommend a perseverance in forbearing to join either Hyder Ali or the
" Mahrattas (unless it should appear to the said Governor and Council
" absolutely necessary for the Company's interest to take part with either
" of them), until the Commission, with extraordinary powers for the regu-
" lation of the Company's affairs in the East-Indies, then in preparation,
" should be completed : and that, thereupon, the persons who should be
" appointed to execute that Commission be instructed to examine into and
" investigate the rights, pretensions, and interests of the contesting powers,
" and on the most impartial consideration thereof to act as should appear
" to them most becoming the honour and advantage of the nation and of
" the Company ; and that the Chairman and Deputy Chairman be desired
" to represent the same to Lord Rochfort accordingly."
The draft of the Special Commission was approved on the 19th
November.
A negotiation had commenced with Government relative to the
Company's affairs. The debts due by them to the Public, under
the agreement entered into in the ninth year of George the Third,
had increased to £1,200,000. This the Company proposed to
meet by setting off their claims on Government.
Lord North objected to the proposal, and in November called
G 2 upon
44
upon the Company to state whether they had any propositions to
make, to enable them to discharge their debts, and to entitle the
Proprietors to any dividend at the ensuing Christmas and Mid-
summer, upon which sundry accounts as to the state of their
affairs were transmitted to his Lordship.
The Minister, disappointed in the receipt of the ,£400,000,
which he had calculated upon as a sure part of the revenue of
the state, notwithstanding the repeated declaration to the Duke
of Grafton and himself during the negotiation, that such sum
exceeded the Company's means, was indisposed towards the Com-
pany. The King's speech, at the opening of the session on the
26th November, called upon Parliament to inform itself of the
true state of the Company's affairs, and to make such provision
for the common benefit and security of all the interests concerned
as might be found best adapted to the exigencies of the case.
Lord North accordingly moved for the appointment of a Secret
Committee, and thirteen members were chosen.
On the 7th December the Secret Committee made its first
report to the House : it related to the intended appointment of
Commissioners. It was followed by a bill to restrain the Com-
pany, for a limited time, from sending them out.
The Company were heard by Counsel on the 18th against the
bill, after which Mr. Dempster, a member of the House and
also a Director, in reply to a speech from Lord George Germaine,
observed :
" As far as I know or am capable of judging, the Direction have, ever
" since I had the honour to be an unworthy member, acted with propriety.
" Orders
45
%t Orders, as positive and binding as the authority lodged in the Directors
" will admit, have been sent to India, to make various regulations and
" savings. In short, nothing that could be done for the salvation of the
" Company has been omitted. The Directors, sensible that the efforts of
* f gentlemen on the spot were necessary, meant to send out Supervisors.
" Why then are the Directors held forth as culprits ? Why is the Company
" now treated as criminal ? Is it that they have embezzled and squandered
" away the territorial revenue ? Sir, the Company has not divided more
" than what the profits of their encreased trade has yielded, and the terri-
" torial revenue has not enriched it a single sixpence. That fund has been
" exhausted by Government, by the Company's servants, and by a Noble
" Lord, who, not to say a word of his friends, has reaped more of that
" harvest than the Company.
" Having thus, in some measure, justified the Company and the Direc-
" tion, let me ask, in my turn, what the Noble Lord has done in his own
" department? Is he not a member of the Select Committee: and is it
" not incumbent upon him, as a member, to mention any enormous act
" of tyranny, peculation, or cruelty, that appear in the course of the
" enquiries of that Committee ?
" I do not pretend to be very well informed ; yet, Sir, I did attend that
" Committee two or three days, out of mere curiosity, and I likewise
" perused some parts of the report made by them and left on your table ;
" and, from what I read and what I have been told, I have reason to think
" that the enquiry furnishes proper grounds for an impeachment. Why
" then, Sir, did not the Noble Lord step forth and adopt a measure which
«' was beyond the reach of the Direction ? Accusation, Sir, is a serious
" matter, especially when exalted criminals, sheltered behind the Throne
" and protected by the plunder of whole kingdoms, are to be attacked.
" When delinquents fly into the arms of Majesty for refuge and find a
" gracious reception, it is not for the East-India Company to drag them
" from
46
" from the lion's den : they may be torn to pieces in the attempt. No
" power, inferior to a Committee of this House, is equal to the task."
The second Report from the Secret Committee, relating to the
financial state of the Company, had been presented on the 17th
December ; by which it was made apparent to the House that the
Company's embarrassments arose from bills drawn on them beyond
the authorized amount, to the extent of ^£1, 063,067, for the year
1771, of which advices had only been received in August of that
year. They had already paid to Government for indemnity in
tea .§£281,000, and owed ,§£200,000 more on that account : they
had also paid to the buyers of tea ,s£21 0,000, and they had sold
thirty-one millions of pounds for less profit than they had pre-
viously disposed of twenty-one millions. That, in accordance
with the agreement with Government, they had paid .=£1,800,000;
and that .§£200,000 were drawn on that account in September,
and a similar sum would become due on the 25th December.
That the nett duties to Government for the five years had been
,§£1,109,065. The Proprietors had received ,§£918,296, more than
six per cent, on their stock to Midsummer last, and that the
whole sum received by them since the agreement with Govern-
ment was .§£1, 972,342, and that the nett profit of the Company's
trade preceding the acquisition of the Dewannee, was more than
sufficient to divide twelve per cent.
In this Report the item of dead stock was adverted to. The
Committee remarked :
" They are far from thinking that the same ought not to be considered
" as of great use and value to the Company in carrying on their commerce
" and protecting their several settlements."
Reference
47
Reference is made to this circumstance, as the repeated in-
structions of the Court will have shewn the serious and heavy
charge which was thrown on the home finances by the erection
of their fortifications and buildings in India.
The bill restraining the appointment of the Commissioners
passed the House of Lords. Several peers recorded protests
against the measure.
The two sums adverted to under the description of indemnity
to the revenue on account of tea duties, and sums due to the tea
buyers, arose out of the provisions of the Act of the 7th George
III. cap. 56, already noticed.*
In pursuance of that Act the Company enlarged their sales.
The prices declined in proportion ; and the ad valorem duties of
customs and excise keeping pace with those prices, did not
amount to more money on the encreased quantity sold, than they
would have amounted to on a less quantity sold at higher prices.
The buyers, on the other hand, looking forward, insisted
upon being indemnified by the Company for the one shilling
per pound on all teas bought at their sales that might remain
uncleared after the expiration of that Act. This the Company
complied with until their sales in March 1772, when they refused
to grant such indemnification any longer.
It had been fully ascertained by the experiment made at the
expense of the East-India Company, that a reduction of the inland
duties could not, by an increase of the consumption, indemnify
the revenue, and therefore it might be hazardous to attempt any
new modification of those duties.
* Vide page 37.
Meanwhile
48
Meanwhile, from the gradual accumulation of teas on hand,
beyond the ordinary consumption, there seemed to be an indispen-
sable necessity of looking out for other markets to take off the
extraordinary quantity. At the same time, the situation of the
Company's affairs called for an immediate attention to the only
natural means of relief from the growing want of cash : a want
which, in place of being diminished , would even be increased by
the arrival of the ships from China expected in the course of the
two ensuing years, whose freights alone amounting to about
^400,000 the Company must pay, while their cargoes would
remain a dead weight upon their hands.
It was suggested that immediate advantage would result to the
Company from a temporary law allowing the exportation of tea to
the foreign markets of Europe ; and that such advantage would
not be alone confined to the preservation of their credit in trade,
but would extend to the probability of profit, arising from the dif-
ference of prices in teas at the last sales, compared with those of
Sweden, Holland, and France.
It was accordingly resolved to make application for an Act of
Parliament to enable the Company to export to foreign dominions,
with an allowance of the drawback of all the duties of customs, a
part of their surplus quantity of tea, and also for taking off the
three-pence per pound duty in America.
On the 14th January, 1773, the Court of Directors having taken
into consideration the state of the Company's affairs, and the
demands that were and would become due, and to provide for such
others as might be incurred, and adverting to the resolution of the
General Court of the 7th, it was resolved, that the Chairman and
Deputy
49
Deputy Chairman be desired to apply to Administration for the
loan of £1,500,000, to be repaid in four years.
The negociations which followed the communication of this reso-
lution to Lord North, and which were carried on until the 2d
March, led to sundry propositions being submitted to Parliament.
On the 9th March Lord North moved :
" That the sum of £1,400,000 will be sufficient for the present relief of
'* the Company :
" That it may be expedient for the Public to advance the Company the
" said sum of £1,400,000, provided, at the same time, due care be taken
" to secure by proper regulations the future good government of the Com-
" pany's affairs."
Which, after a considerable debate, was carried.
On the 5th April Lord North called the attention of the House
to the territorial acquisitions ; and after moving :
" That it would be for the mutual benefit of the Public and the East-India
'• Company, that the territorial acquisitions and revenues lately obtained in
" .India should, under proper restrictions and regulations, remain in the
" possession of the Company for six years :
" That during the said term the Public should forego all participation in
" the produce thereof, until the Company should have repaid such sum of
" money as should be advanced by the Public for their relief:"
And submitting a proposition for the disposal of the surplus
nett profits : observed,
" The point to which I shall confine myself at present is the territorial
" possessions : and I think it necessary, in this part of the affair, to drop
" all examination or declaration of the right which the Crown has to these
" possessions, since, from the motion which I have read, there is no want
" of such examination, as the territories are left under certain conditions
H " entirely
50
" entirely in the Company. J think they ought to be left for ever in the
" Company. I am fully and clearly of that opinion ; if not from right, at
" least from policy. But this depends upon their conduct. If they in
" future govern them no better than they have hitherto done, my opinion
" will be very different. Nay, I shall then think it advisable, notwith-
" standing the term mentioned in the motion, to reject their having the
" possession, at the end of two, three, or four years. But it may be said,
" why six years ? The reason of this period being named, is on account of
" the charter* expiring in I78O ; and as this agreement with the Company
" is to commence in February 1774, both will expire together."
Alluding to their pecuniary difficulties his Lordship observed,
with reference to the general distress which then prevailed :
" No man could, more than myself, regret the period of receiving
** £400,000 a year from the Company, It was an object of great import-
" ance, and such a one as enabled us, and would have yet more enabled
" us, to ease the Public by lessening the national debt."
The resolution was agreed to without a division.
The Company's petition against the limitation of the dividend
was presented to the House on the 3d May, when Lord North
proposed the outline of the intended Regulating Act, and leave
was given to bring in a bill for that purpose.
On the 10th May, General Burgoyne brought up a further
report from the Select Committee, and after commenting upon
the exactions made by several persons in India, proposed the
following resolutions ; and said that, if they met with the appro-
bation of the House,, he should move, that persons who had ac-
quired sums of money by presents or otherwise in India, if they
had acquired such sums by virtue of their acting in a public
capacity, should be forced to make restitution.
. . "1st.
* Exclusive privilege of trade.
51
" 1st. That all acquisitions made under the influence of military force,
" or by treaty with foreign princes, do of right belong to the state.
" 2d. That to appropriate acquisitions so made to the private emolument
" of persons entrusted with any civil or military power of the state is
" illegal ; and
" 3d. That very great sums of money and other property of value have
" been acquired in Bengal, from princes and others in that country, by
" persons entrusted with the civil and military powers of the state ; which
" sums of money, and other valuable property, have been appropriated to
" the private use of such persons."
These resolutions were agreed to.
They have been viewed as setting at rest the right of the state
to the territorial acquisitions. Leaving the merits of the question
to be decided hereafter, when the period shall arrive (if ever) for
a settlement of the respective claims of the Crown and the Com-
pany, it may be observed, that these resolutions appear to have
been moved with the view of making the offence one against the
state, in order that the accused party, if found guilty, should be
punishable for a misdemeanor or otherwise, which he would not
have been under the then existing law as regarded offences
against the East-India Company. Moreover a marked distinction
was made by the resolutions, between acquisitions obtained under
a free grant and by cession, and those made under military force
or by treaty.
The opinion that such was the main intent of the resolutions,
is considerably strengthened by what passed on the 17th June,
when Lord North brought in the Loan Bill, varied in its pro-
visions and as it ultimately passed ; and also by the speech of
H 2 Mr.
52
Mr. Fox, when he first brought forward his India Bill in Novem-
ber 1783. Lord North stated :
" The claim of the Public to a participation in the territorial revenues
" was intended to be given up for the present ; and that when certain
" reductions were effected, the whole of the territorial revenues and com-
" mercial profits should remain with the Company, and be applied, in the
" manner most conducive to their interests, to those of the Public and the
" security of their creditors."
Sir Richard Sutton
" Approved of the bill as intended to be altered. His opposition to it
" before arose from the implied decision of the right to the territorial acqui-
" sitions ; and that invincible objection being removed, he supported the
" bill."
Petitions against the bill had been presented on the 28th May
from the City of London and from the Company.
Protests were recorded by fourteen Peers on the passing of
the bill.
These proceedings terminated in the following Acts, viz,
13th George III. cap. 44, to allow a drawback of the duties of customs
on the exportation of tea to any of His Majesty's colonies or plantations in
America ; to increase the deposit on bohea tea to be sold at the India Com-
pany's sales ; and to empower the Commissioners of the Treasury to grant
licenses to the East-India Company to export tea duty free.
13th George III., cap. 63, commonly called the Regulating Act, under
which the Directors were to be chosen for four years, instead of being
elected annually as before.
Under this act no person employed in the East-Indies can be chosen a
Director until he shall have been resident in England two years.
No Proprietor to vote at any election of Directors in respect of stock
amounting
53
amounting to less than £1,000, nor until he shall have been possessed
thereof twelve calendar months.
An oath was prescribed for every Proprietor to take before admitted to vote.
A Governor-General and four Councillors were appointed, in whom the
whole civil and military government of Bengal, Bahar, and Orissa, was
vested.
The other Presidencies were made subordinate to the Supreme Govern-
ment, who are to obey the Directors and to transmit to them intelligence
of all occurrences.
The Directors, within fourteen days, were to transmit copies of what
related to the revenues, to the Treasury, and of what related to the
Government, to one of His Majesty's Secretaries of State.
His Majesty might, by letters-patent or charter, establish a Supreme
Court of Judicature at Fort William.
No person holding a civil or military office under the Crown or the Com-
pany in the East-Indies, allowed to receive from any native prince or his
minister any donation or gratuity.
No person to take on loan of monies above the rate of twelve per cent,
per annum for interest.
The Directors not to compound or discharge sentences of any court of
justice, nor restore persons dismissed without consent of three parts in four
of the Directors, and the like majority of Proprietors in a General Court.
The Governor General and Council may make such regulations as may
appear just, provided they be not repugnant to the laws of the realm.
13th George III. cap. 64, for granting to His Majesty a sum of money to
be raised by Exchequer Bills, to be advanced and applied for the relief of
the East-India Company.
On the 30th January 177^, Lord North addressed a note to the
Chairs, stating that the circumstances which induced the Public,
by
54
by the Act of the 13th George III., to agree to forego for a time
all participation in the profits arising from the territorial acquisition
and revenues in the East-Indies having ceased, and the purposes of
that Act being completed, it was become necessary to bring that
matter before the consideration of Parliament ; and that, as there
were several provisions in other Acts respecting the Company that
were near expiring, and further regulations appearing to be
expedient, his Lordship desired to know whether the Directors were
prepared to state any proposition upon any of those subjects, so
important to the Public and the Company.
On the 4th May a paper was received from his Lordship,
proposing that the provisions of the Act of the 13th George III.
should be continued until 1780 : the Company to lend to the Public
s£l,500,000 at four per cent.
The Company to be allowed to borrow that sum on their bonds,
and to be allowed a dividend of eight per cent, on their capital
of ££3,200,000.
Difficulties having arisen in the course of the negociation on the
terms proposed by Lord North, and the same being stated to his
Lordship by the Chairs on the 6th May, his Lordship replied :
" Well, then, I find I cannot have the money of the Company, I
" must get a short act passed without it."
The 19th George III. cap. 61, was accordingly passed, which
recited that the Company had paid off the debt of ^1,400,000 lent
them in 1773 : that the territorial acquisitions were to continue
till the 5th April 1780 : that the Governor General and Councillors
were to remain in office during the continuance of the Act ; and
if vacancies occurred, the same were to be supplied by the Directors.
The
55
The rights of the Crown and of the Company were not to be
affected.
In January 1780 the negociation for a further agreement between
the Public and the Company was commenced, and ended in the
territorial acquisitions and revenues being continued until the 5th
April 1781. By this Act, accounts of the profits and loss upon the
trade were to be transmitted half-yearly to the Lords of the
Treasury, and the Company were to be indemnified in the cost
of building three ships of the line for the public service.
In March 1780, the House of Commons resolved that notice be
given, that the capital stock, debt, or sum of ^4,200,000, and
arrears of annuity payable in respect thereof, due from the Public
to the Company, would be redeemed and paid oft* on the 10th
April 1783, agreeably to the power of redemption in the Act. It
was then
" Ordered, That Mr. Speaker do, on the 7th day of April next, signify
" by writing to the United Company of Merchants of England trading to
" the East-Indies the said resolution of this House."
On the 3d April 1781, a note was addressed by Lord North to
the Chairman and Deputy Chairman, stating that, in the present
situation of affairs, he should find it necessary to move in the
House of Commons for copies of the propositions made by the
Court of Directors or Proprietors, and submitted as a basis of an
agreement for the prolongation of the Company's Charter, together
with the proceedings had thereupon ; also stating his intention to
move on the ensuing Monday, for the House to resolve itself into a
Committee on the 25th, to take into consideration the state and
condition of the East-India Company.
The
56
The same was communicated to the General Court on the 10th
April, when the Court of Directors were requested to prepare
propositions for an agreement, and a Committee of nine Proprietors
was appointed to inqure into the chartered rights of the Company.
A series of propositions was submitted for the consideration of
the General Court by the Court of Directors on the 15th May, on
which day a report from the Committee of Proprietors was laid
before the General Court. After contemplating the repayment by
Parliament of the sum of 5^4,200,000 (at different times advanced
by the Company to the Public) and all arrears of annuities in
respect thereof, the Committee found that on such payment the
Company's right to the whole, sole, and exclusive trade to the
East-Indies would cease and determine on the 10th April 1783 ;
but that the Company would, after that period, retain a right
to trade in, to, and from the East-Indies, in common with the
other subjects of Great Britain, for ever.
The* Company's several territorial acquisitions were then stated
at great length ; after which the Committee observed :
" Great as the profits arising from the territorial acquisitions of the
" Company may have been deemed, your Committee think it their duty,
" in this place, to remark that the Public only are benefited by the same ;
" for the Company are not yet, by millions, reimbursed the expenses of
" the acquisition. This will appear very evidently from an examination of
" the duties, customs, and excise that have been received by Government on
" account of the Company's trade, for fifteen years antecedent to the
" acquisition of the Dewanny, and for a like number of years immediately
" subsequent thereto: in the former of which periods the amount was
" only £13,443,448, and in the latter £19,890,616; which demonstrates
" that
57
" that the total of the revenues in these articles has increased to the
" amount of £6,447,16*8, during the whole period from the grant of the
" Dewanny to the present time.
" It appears also, that Government has received from the Company the
" sum of £2,169,398. 185. 9\d. on account of the territorial revenues, in
" consequence of agreements made in the year 1767 and I769 for the
" payment of £400,000 per annum to the Public, which is more than
" four and a half per cent, per annum on the capital stock of the Company
" for fifteen years ; and that the Proprietors, by the increase of their
" dividends above what had been usually received merely from the profits
" of their trade, have received no more within the same period than
" £496,679. 45., which is only, on the average, 45. 6d. per cent, per
" annum.
" Your Committee also find, that the military expenses incurred by the
" Company from 1754 to I766, in the acquisition of the revenues which
" were requisite to support the expenses absolutely necessary for the safety
" and protection of their commerce, has amounted to £8,510,360.105.;
" and the expenses, during the said period, on account of fortifications
" erected for the security of those possessions, to £1,040,989 : which
" large expenditure in the necessary pursuit of those acquisitions has been
" principally supplied from commercial profits, insomuch that in the year
" 1765, when the Dewanny was granted to the Company, there was a
" balance of five millions and upwards in favour of commerce. The
" possession of the Dewanny produced a balance in favour of revenue,
" the accumulated amount of which for the last fifteen years has not
" exceeded a million and a half. It appears, therefore, that the territorial
" possessions in India have actually incurred a charge to the Company of
" three millions and a half beyond the amount of their produce.
" Upon the whole, your Committee have satisfied themselves with
" reporting the substance of what appears to them upon evidence re-
I " specting
58
" specting the chartered rights of the Company, and the nature and
" extent of its rights to the territorial acquisitions in India, and hope to be
" prepared to offer an opinion concerning the means of supporting those
" rights, should the negotiation of the Court of Directors with the
" Minister fail of producing the desired accommodation. But while they
" are in expectation of an amicable agreement being concluded, they
" think it unnecessary to state the mode of defending the Company's
" rights and properties against adverse claims, or to bring forward the
" reasoning which occurs to them on every branch of the subject : neither
" does it appear to them important, at this crisis, to point out in detail
** the just compensation to the Company for risk and expenses, should
" an idea at any future period be entertained, of vesting the Company's
" territorial property in the state ; or should a measure be adopted here-
" after, so dangerous to the commercial interests and to the revenues
" of this country, as the opening of the trade to India."
The negotiations, which were carried on until June 1/81? ended
in a series of propositions submitted by the Company in a petition to
Parliament, upon which was founded the Act of the 21st George III.
cap. 65, continuing to the Company the exclusive trade and territo-
rial revenues, until three years' notice, to be given any time after the
1st March 1791, and on repayment of the sum of ^4,200,000 due
from the Public to the Company. By this Act the Court of Directors
were required to deliver to the Commissioners of the Treasury and
one of the Secretaries of State, copies of all orders and letters pro-
posed to be sent out relative to the management of their concerns,
which in any way related to the civil or military affairs or revenues,
and as to making war or peace ; and if no orders or instructions
were received by the Court of Directors within fourteen days from
the transmission of such proposed despatches to the Lords of the
Treasurv
59
Treasury and Secretary of State, the Company might send off such
letters or orders to their Governments in India.
During the negociation for the settlement of a further agreement
with the Public, two Committees were appointed by the House of
Commons : one a Select Committee, consisting of fifteen members,
on the 12th February, for the purpose of taking into consideration
the appeals against the jurisdiction claimed by the Supreme Court
at Calcutta ; the other a Secret Committee, on the 30th of April
1781, to enquire into the causes of the war in the Carnatic. Mr.
Dundas (then Lord Advocate of Scotland) was appointed Chairman
of the Committee. The Select Committee made a report on the
23d May, when a bill was brought in, modifying and explaining the
powers of the Supreme Court, which was passed into an Act on the
18th July 1781, 21 George III. cap. 70.
The reports from the Secret Committee, together with further re-
ports from the Select Committee, were laid before the House of
Commons in April 1782, and referred to a Committee of the whole
House. They were very voluminous, and allowed to be drawn up
with great judgment and ability.
On the 15th of that month Mr. Dundas moved forty-five resolu-
tions: the first of which was,
" That the orders of the Court of Directors of the East-India Company
" which have conveyed to their servants abroad a prohibitory condemna-
" tion of all schemes of conquest and enlargement of dominion, by pre-
" scribing certain rules and boundaries for the operation of their military
" force, and enjoining a strict adherence to a system of defence, upon the
" principle of the treaty of Illahabad, were founded no less in wisdom and
" policy than injustice and moderation."
I 2 This
60
This resolution, which was passed without a division, fully cor-
roborates the remark already made, as to the principles which go-
verned the Court of Directors in the instructions they sent out in the
early periods of their political history.
On the 28th May, on the motion of Mr. Dundas, the House of
Commons resolved that it was the duty of the Directors to recall
Mr. Hastings, Governor-General of Bengal, and Mr. Hornby, the
President of the Council at Bombay.
The Court of Directors, on the 22d October, resolved,
" That it is the opinion of this Court, that a steady perseverance in
" the system of conduct so frequently enjoined by the Court, cannot be
" expected from those servants whose ideas of extension of dominion,
" either by negociation or conquest, have led them to depart from orders
" so often enforced, and therefore, that it is expedient to remove Warren
" Hastings, Esq. from the office of Governor-General of Bengal."
On the 31st the General Court passed a resolution, recommending
to the Court of Directors to rescind the above-mentioned resolution
for removing Mr. Hastings. The Court of Directors appealed to
the Company's Standing Counsel to decide,
" Whether the power of the Court of Proprietors to control the Court
" of Directors in the management of the Company's affairs, given by the
" charter, was taken away by the Act of the 13th George III., or any
" other Acts of Parliament respecting the removal of a Governor-
" General."
The Counsel gave his reasons for thinking that the charter rights
of control in the Court of Proprietors was a subsisting power.
It was then moved, on the question being put by the ballot,
" Resolved, That in compliance with the direction of the Court of
" Proprietors,
61
'* Proprietors, the resolution of the Court of Directors of the 22d October,
" respecting the removal of Warren Hastings, Esq., Governor General of
" Bengal, be rescinded."
The despatch proposed by the Court of Directors to be sent to
the Governor General and Council on the subject of Mr. Hastings,
having been sent in conformity with the provisions of the Act of
the 21st George III. cap. 65, to Mr. Townshend, the Chancellor
of the Exchequer, for approval, he intimated that the resolution
of the Court of Proprietors was so repugnant to the sense of the
House of Commons, expressed in their resolution of the 28th May,
as well as to the opinion of the Court of Directors, as appeared by
their resolution of the 22d October, that he had received His
Majesty's commands to withhold any approbation to the draft before-
mentioned ; and informed the Court, that it was His Majesty's
intention to order all the proceedings relative to this business to be
laid before Parliament, and instructed the Chairs, at the same time,
to suspend the sending of the draft to India, till the matter
should have undergone the consideration of Parliament.
The same was communicated to the General Court on the 22d
November, when they passed a resolution appointing a Committee
of nine Proprietors to watch over the Company's interests : and as
it was becoming and desirable that a good understanding should
at all times exist between His Majesty's Ministers and the East-
India Company, the Directors were thereby instructed not to
transmit to India the paragraphs respecting the late proceedings
until further consideration.
The injudicious interference of the Proprietors may be inferred
from the foregoing proceedings : they led to the curtailment of
those powers which the charter had vested in them.
On
62
On the 14th April 1783, Mr. Dundas obtained leave to bring in
a bill for the better regulation and government of the British
possessions in India. He stated the outline of his intended plan,
part of which was to invest the Governor General with more
extensive powers, and to authorize him to act even against the will
of his Council. He urged the necessity of recalling Mr. Hastings,
and of making such regulations in future as should prevent the
Court of Proprietors from acting in direct opposition to the sense
of Parliament ; and he then named Lord Cornwallis, as the
nobleman on whom the late Administration had fixed for Governor
General. Leave was given to bring in the bill : the matter,
however, from the recent change of Ministers, dropped.*
In the King's speech at the close of the session was the following
passage :
" The consideration of the affairs of the East-Indies will require to be
" resumed
* The calamities attendant upon the prosecution of the American war, and other events,
led to a motion in the House of Commons on the 15th March 1782, " That this House can have
" no further confidence in His Majesty's Ministers." It was negatived by a majority of only
nine ; the yeas being 227, the noes 236.
On the 20th March Lord North intimated to the House, that His Majesty had determined on
a change of ministers : on which occasion Mr. Fox and other members spoke strongly against
ministers, declaring that the good of their country made their retirement necessar}\
The Marquis of Rockingham became Prime Minister, Lord John Cavendish Chancellor of
the Exchequer, and Mr. Fox succeeded Lord Stormont as Secretary of State for Foreign Af-
fairs. Lord Shelburne succeeded to the Home Department.
Lord Rockingham died in July, and was succeeded by Lord Shelburne, and Lord John
Cavendish by Mr. William Pitt. Mr. Fox resigned.
In February 1783, the House of Commons, on the motion of Lord John Cavendish, having
censured the terms of the late peace with Fiance, by 207 to 190, Lord Shelburne retired from
office. Mr. Pitt, on the 7th March, in a debate on the American Intercourse Bill, declared
that he held his office simply till a successor was appointed. In the beginning of April the new
ministry was formed : the Duke of Portland First Lord of the Treasury, and Lord North
and Mr. Fox, who had formed a coalition, were appointed Secretaries of State.
63
'• resumed as early as possible, and to be pursued with a serious and
" unremitting attention."
And at the opening of the ensuing session of Parliament, on the
11th November, His Majesty stated :
" Enquiries of the utmost importance have been long and diligently
" pursued, and the fruit of them will be expected. The situation of the
" East-India Company will require the utmost exertion of your wisdom, to
" maintain and improve the valuable advantages derived from our Indian
" possessions, and to promote and secure the happiness of the native
" inhabitants of those provinces."
On the 18th November, Mr. Fox moved for leave to bring in his
East-India Bills, for the better government of our territorial
possessions and dependencies in India. After drawing a deplorable
picture of the state of the Company's affairs abroad and at home,
and animadverting on the conduct of the Proprietors regarding the
recall of Mr. Hastings, he observed :
" The great difficulty lay in choosing the mode of remedying the defects
" that had been so fully ascertained. On former occasions, doubts had
" been started on this question: — to whom belong the territorial acqui-
" sitions in India? Many and grave persons were of opinion that they
" belonged to the Crown, and they argued that it was absurd that a body
" of merchants should be supposed capable of managing and governing
" great territories, and entering into all the mazes and refinements of
" modern politics. He was aware, also, that very weighty persons had,
" on the other hand, maintained that the territories belonged of right to
" the Company; and they retorted, very justly, saying that it was equally
" absurd to suppose that mere statesmen were qualified to enter into and
" conduct the complicated branches of a remote and difficult trade.
" To this latter opinion he was himself inclined to lean, His idea, there-
" fore,
64
" fore, with regard to India, was to form a mixed system of government,
" adapted, as well as the nature of the case would admit, to the mixed
" complexion of our interests in India. He was willing, in the first
" instance, to leave the question of right to the territorial possessions just
" as it now stood ; that is to say, undecided. It was generally thought
" that if Government should ever take the territorial possessions into their
" hands, they would be under the necessity of keeping up a Company to
" carry on a trade, by which alone the revenues of India could be converted
" to the benefit of Great Britain."
These opinions have been stated at length, as they are important
in shewing what were Mr. Fox's views as to the territorial posses-
sions, and as to trade being the only means whereby the revenues of
India could be brought home.
The following is a brief outline of the nature of the bills, their
objects, and the grounds upon which they were brought forward and
opposed.
The first bill vested the whole government and management of the
territorial possessions, revenues, and commerce of the Company,
together with all the powers before vested in the Court of Directors
and Proprietors, in seven Directors named in the list for four years.
Nine Assistant Directors, being proprietors of .^2,000 stock each,
were to be appointed for the sole purpose of managing the commer-
cial concerns of the Company, to act under the orders of, and be
subject to the seven Directors.
All vacancies in the offices of Directors were to be filled by His
Majesty, and those of the Assistant Directors by the Proprietors, at
an election by open poll.
The Assistant Directors were to be removable by five Directors.
The
65
The Directors and Assistant Directors were to be removable by
His Majesty, upon an address of either House of Parliament.
The Directors were to have authority to remove, suspend, appoint,
or restore any of the officers in the Company's service, either civil or
military.
The second hill went to explain the powers vested in the Governor-
General and Council by the Act of 1773, and forbad the exchange,
acquisition, or invasion of any territory in India, &c.
The arguments urged in opposition to the bills were, first, the
arbitrary defeasance of the chartered rights of the Courts of Pro-
prietors and Directors, without a justifiable plea of necessity ; and,
secondly, the dangerous power lodged in the hands of the new Com-
missioners.
In support of the bills, accounts were brought forward to shew
that the Company were on the verge of bankruptcy : whilst, on the
other side, it was averred that these accounts were absolutelv false :
' ml "
and another account was presented to the House, prepared by the
Court of Directors, shewing a balance of nearly four millions in the
Company's favour.
The second head of abuses brought forward related to the govern-
ment in India.
Although the evils were allowed to exist, still the picture drawn
of them was deemed to be much exaggerated ; but whilst remedies
were admitted to be necessary, a total change of system was most
strongly opposed. It was insisted on, that the Company's despatches
to India were, for the most part, consonant to policy and humanity ;
and, as a check upon any collusion between the servants of the
K Company
66
Company and their masters had been given by Act of Parliament, it
was stated that, by amending a few errors and supplying a few
defects, a control might be established over the Company sufficient
for the purpose of good government, without the violent demolition
of its rights, as aimed at by the proposed bill. But the argument
most strongly insisted upon was, the creation of a new and uncon-
stitutional power — a kind of fourth estate in the realm ; and by the
enormous influence it lodged in the hands of a faction for four years,
might, in the end, annihilate the power of the Crown and subvert
the constitution.
The bill excited the immediate and warm opposition of the Direc-
tors and Proprietors. An appeal against it was agreed to in the
General Court, on the 21st of November 1783. A petition from the
Company was accordingly presented to the House of Commons on
the 25th of that month, setting forth that the proposed bill destroyed
the constitution, and wholly subverted the rights and privileges given
to the Company by their charter, made for valuable considerations,
and confirmed by divers Acts of Parliament, confiscating their pro-
perty, and seizing and taking possession of all their lands, tenements,
houses, warehouses, and other buildings, books, records, charters,
letters, and other papers, ships, vessels, goods, wares, merchandize,
money, securities for money, and other effects belonging to the
Company (a proceeding most contrary to the sacred rights of British
subjects), and praying to be heard by counsel. Messrs. Rous and
Dallas were appointed counsel.
In the debate on the 27th November 1783, Mr. Pitt stated
" That he had pledged himself to the House, and to the world at large,
to
«7
" to point out the dreadful tendency of the bill on every thing dear and
" sacred to Englishmen, to prove its inimical influence on the constitution
" and liberties of the country, and to establish, by undeniable evidence,
" the false and pernicious principles on which it was founded. The
" alleged bankruptcy of the East- India Company, he contended, was not
" proved; but had it been founded, he denied it to be a fit plea to
" warrant the passing the bill. He trusted the House had too much regard
" for its own honour and dignity, too scrupulous an attention to justice,
" and too conscientious an adherence to their duty to their constituents,
" to support the Minister in one of the boldest, most unprecedented, most
" desperate and alarming attempts at the exercise of tyranny that ever
" disgraced the annals of this or any other country."
Alluding to Mr. Fox, he observes :
" The right honourable gentleman, whose eloquence and whose abilities
' would lend a grace to deformity, has appealed to the passions, and
" pressed home the distressed situation of the unhappy natives of India, a
" situation which every man must deeply deplore and anxiously wish to
" relieve : but ought the right honourable v gentleman to proceed to the
" protection of the oppressed abroad, by enforcing the most unparalleled
" oppression at home? Was the relief to be administered in Asia, to be
" grounded on violence and injustice in Europe ?"
Mr. Pitt afterwards justified the financial statement set forth by
the Court of Directors, and moved the adjournment of the debate :
which motion was negatived by 229 to 120. On the 8th December
the bill passed the Commons, on a division of 208 to 102, and was
the next day carried to the Lords.
It had been remarked, that on the division, several of the members
well known as the friends of His Majesty gave their votes on the
K 2 side
68
side of opposition. It was, however, generally imagined that Minis-
ters were too strong to be affected, and it was deemed to the last
degree improbable that they should have adopted a measure of such
infinite importance, either without knowing, or contrary to, the
inclinations of the King. The Company lost no time in presenting
a petition to the House of Lords, similar in import to that which
had been laid before the House of Commons ; and here the appeal
was more successful. On the first reading, which took place the
11th December, Earl Temple, Lord Thurlow, and the Duke of
Richmond, expressed their abhorrence of the measure in the most
unqualified terms. The second reading was fixed for Monday the
15th December. Various rumours began to circulate. It was con-
fidently affirmed that Earl Temple had been ordered to attend the
King, and that a written note had been put into his hands, in which
His Majesty declared that " he should deem those who should vote
" for it, not only not his friends but his enemies, and that if Lord
" Temple could put it in stronger words, he had full authority to do
« so."
Circumstances which took place on the second reading of the bill
on the 15th December, appeared to confirm the truth of the reports.
— Several peers who had entrusted their proxies to the Minister and
his friends, withdrew them only a few hours before the House met,
and others voted in opposition to him, so that he was left in a
minority of 79 to 87- In the debate on the question for adjournment
moved by the Duke of Chandos, for the purpose of hearing counsel,
Lord Temple acknowledged
" That he had been admitted to an audience of the King, and con-
tended
69
"'tended that, as a peer of the realm, he had a right to offer His Majesty
V such advice as he might think proper. He had, he said, given his
"' advice: what that was he would not say — it was lodged in the breast of
" the King; nor would he declare the purport of it without his Majesty's
" consent, or till he saw a proper occasion. But though he would not
" declare affirmatively what his advice to his Sovereign was, he would
"' tell their Lordships, negatively, what it was not — it was not friendly
" to the principles and objects of the bill."
In the House of Commons reference was made to the above-men-
tioned reports, and a motion was submitted by Mr. Baker, —
" That it is now necessary to declare, that to report any opinion, or
M pretended opinion of His Majesty, upon any bill or other proceedings
i( depending in either House of Parliament, with a view to influence the
" votes of the members, is a high crime and misdemeanor, derogatory to
" the honour of the Crown, a breach of the fundamental privileges of
" Parliament, and subversive of the constitution."
Lord Maitland seconded the motion : which was strongly opposed
by Mr. Pitt, who, with reference to the criminality of the facts which
were the subjects of these reports,
" Denied that it was criminal in any of the peers, who were the ac-
'** knowledged hereditary counsellors of the Crown, to give his advice to
<( the King in any case whatever ; and as to the breach of privilege of
44 Parliament, he contended that the precedents which had been read
*\ from the Journals, though selected from the glorious times of King
° Charles the First, were in no wise applicable to the present case."
After a warm debate, the motion was carried by 153 to 80. It
was then resolved, that on the Monday following the House would
resolve itself into a Committee of the whole House, to take into
consideration the present state of the nation.
As
70
As a change of Ministers appeared to be determined on, and, con-
sequently, a dissolution of Parliament, immediately after these reso-
lutions Mr. Erskine moved,
" That it is necessary to the most essential interests of this kingdom, and
" peculiarly incumbent on" 4 this House, to pursue with unremitting atten-
" tion the consideration of a suitable remedy for the abuses which have
" prevailed in the government of the British dominions in the East-Indies ;
" and that this House will consider as an enemy to his country any person
" who shall presume to advise His Majesty to prevent, or in any manner
" interrupt the discharge of this important duty."
The motion was opposed as factious, and touching on the un-
doubted prerogative of the Crown without any justifiable cause. A
member observed, that the true meaning and intent of the motion
was :
" That it is necessary, for securing the present Administration's con-
" tinuance in office, that no dissolution of Parliament should take place at
" present."
The motion was, however, carried by the same majority as the
former. On Wednesday, the 17th December, the bill was rejected
by the Lords, on a division of ninety-five to seventy-six.
At twelve o' clock on the following night, the 18th December, a
messenger delivered to the two Secretaries of State His Majesty's
orders, " that they should deliver up the seals of their offices, and
" send them by the under Secretaries,*Mr. Fraser and Mr. Nepean, as
" a personal interview on the occasion would be disagreeable to him. ,,
Lord Temple received the seals from His Majesty, and his Lord-
ship
71
ship sent letters of dismission to the Cabinet Council the following
clay. At the same time, Mr. Pitt was appointed First Lord of the
Treasury and Chancellor of the Exchequer.
On the fate of the bill being communicated to the General Court,
on the 19th December, a motion was made.
w That the thanks of the Court be presented to fourteen members of the
" Court of Directors (naming each), for their steady, virtuous, and manly
" fortitude, in adhering to their duty, and opposing the late violent at-
" tempts made upon the chartered rights and franchises of the Company ;
" also for the assistance thus rendered to the Committee of Proprietors,
" appointed by the General Court to watch over the rights of the Company
" and maintain their privileges.
An amendment was moved,
" To leave out the names of the fourteen members, and insert the words
" * the Court of Directors :' "
Which was lost, and the original motion carried by a very large
majority*
* Nathaniel Smith, Esq. Chairman ;
William Devaynes, Esq. Deputy Chairman ;
Benjamin Booth, Esq.
William Bensley, Esq.
Jacob Bosanquet, Esq.
Charles Boddam, Esq.
Lionel Darell, Esq.
John Hunter, Esq.
William Mills, Esq.
Thomas Parry, Esq.
John Roberts, Esq.
Samuel Smith, jun. Esq.
Lawrence Sulivan, Esq. ; and ^
John Townson, Esq.
Previously
72
Previously to detailing the subsequent measures which ended
in the adoption of the bill proposed by Mr. Pitt, it may be impor-
tant to remark, that the necessity which was urged by Mr. Fox for
some legislative provisions to remedy abuses and to enforce obedience
on the part of the Company's servants abroad, was felt and acknow-
ledged as strongly by the Directors as by the Ministers of the day —
but it was contended, that there was nothing to shew that the Court
of Directors, as then constituted, could not govern India as well as
the proposed seven new Directors ; there was no one proof advanced
that the twenty-four Directors, when aided by regulations, restrained
in some political measures by the control of Ministers and of Parlia-
ment, and relieved as to the appointing and recalling officers from
the control of the Court of Proprietors, were not as able to govern
India, in as perfect a manner as a distant dominion so peculiarly
circumstanced is capable of being governed. Parliament, indeed, had
recorded only a few months before,
" That the orders of the Court, which had conveyed to the Company's
" servants abroad a prohibitory condemnation of all schemes of conquest
" and enlargement of dominion, by prescribing certain rules and boun-
" daries for the operation of their military force, were founded no less in
11 wisdom and policy than injustice and moderation."
And it will be seen, that the suggestions offered by the Court on the
provisions of the bill brought forward by Mr. Pitt, which suggestions
were adopted by that lamented statesman, evinced a knowledge of the
subject, which satisfied all parties that a permanent authority, not
liable to political fluctuations and changes, was best adapted for
carrying on, under proper control, the executive government of
India.
Thero
73
There was, however, another, and not less important object
involved in the proposition of Mr. Fox ; and that was, to vest in the
hands of the seven Directors, so appointed by the Minister or by the
Crown at his recommendation, and consequently under his control,
the whole influence of filling up the offices and patronage, in India and
at home, belonging to the Company ; thereby creating a state engine,
which, it was considered, would have produced very serious effects
upon the constitution of the country : whereas it was felt, that such pa-
tronage in the hands of the Company, was divided among twenty-four
gentlemen instead of seven, and those twenty-four consisting of very
different descriptions of men, with different, and often opposite con-
nexions, not named by one man or one party, but chosen bythejProprie-
tors, to whom alone they feel themselves indebted for their situations.
And that it was not employed to effect any influence on Government,
but to testify gratitude to those who assisted in their election ; it was
distributed among their private friends and connexions, and diffused
very generally over the kingdom, with no regard to the distinction of
state parties.
A report being prevalent of an intended dissolution of Parliament,
the House of Commons went into a Committee on the State of the
Nation, on the 22d of December, 1783, and agreed to supplicate his
Majesty not to dissolve the Parliament ; urging among other consider-
ations, the necessity for " reformation in the government of the East-
" Indies at home and abroad."
His Majesty was pleased, on the 24th December 1783, to signify
his acquiescence in the request of the House of Commons ; and in his
reply, his Majesty obseved,
" The state of the East-Indies is an object of as much delicacy and
** importance as can exercise the wisdom and justice of Parliament."
L A resolution
74
A resolution having been proposed by LordBeauchamp, and agreed
to by the House, restricting the Company from accepting bills of
exchange excepting under certain conditions, and another resolution
moved bytheEarl of Surrey for an address to His Majesty, praying that
His Majesty would not grant the office of Chancellor of the Duchy
of Lancaster to any person, otherwise than during pleasure, before
the 20th January, the House adjourned to the 12th of that month.
Conferences had been held between His Majesty's Ministers and
the Court of Directors, with the view of framing a bill to be submitted
to Parliament for the future government of the Company : the same
having been agreed upon, it was communicated by the Court of
Directors to the Court of Proprietors on the 8th of January 1784.
On the 1 4th Mr. Pitt moved for leave to bring in a bill, " for the
" better government and management of the affairs of the East-India
u Company." Such bill was accordingly introduced on the 16th
and read a second time on the 23d ; but, on the motion for its being
committed, was lost : the numbers having been, 214 for, and 222
against the motion.
No sooner had this decision taken place, than Mr. Fox gave notice
of his intention to bring in another bill, " for the better regulation
" and management of the affairs of the East-India Company/ '
On the following day, as an impression prevailed that a dissolution
of Parliament would take place, Mr. Powys asked the Minister
whether he could pledge himself that the House should meet there in
Parliament on Monday next. The Minister was also called upon to
give the House some satisfactory reasons for his continuing in office
after repeated resolutions had passed against him. Mr. Pitt ob-
served,
That
75
" That although a Minister continuing at his post after the House of
" Commons had declared him undeserving of their confidence was novel
" and extraordinary, yet it was by no means unconstitutional. He con-
" ceived, that, by the constitution, neither the appointment or removal of a
" Minister, rested with that House. That he neither could or ought to
" remain long in such a situation j but it behoved him to consider who were
" likely to be his successors ; and he was bound in honour and duty so far
" to support the prerogative of the Crown, as not to quit a situation
" because it was become difficult or dangerous, till he saw some prospect of
" its being filled in a manner more acceptable to all the parties concerned."
With the view of promoting a reconciliation of parties, a meeting
of nearly seventy members took place on the 26th January at the St*
Alban's Tavern; but the Duke of Portland declined having any
interview with Mr. Pitt, so long as the latter held the situation of
Prime Minister, in defiance of the resolutions of the House. Mr.
Pitt still declined resigning, either virtually or actually, as a preli-
minary to a negotiation.
On the 2d February, in the House of Commons, Mr. Coke moved
a resolution, having for its object the reprehension of Mr. Pitt's
refusal to resign, declaring,
" That the continuance of the present Ministers in office was an obstacle
" to the forming a firm, efficient, extended, and united administration."
This motion was strongly opposed, on the grounds of the growing
popularity of the new Administration, and the House was adjured
not to provoke the people to go to the foot of the Throne and implore
the Crown to rescue them from from its tyranny. Mr. Pitt
" Threw himself on the candour and justice of the House, but de-
" clared firmly that he would not by any management be induced to
L 2 " resign.
76
" resign. To march out of his post with a halter about his neck, change
" his armour, and meanly beg to be readmitted and considered as a vo-
" lunteer in the army of the enemy, was an humiliation to which he
<; would never submit."
In the House of Lords, on the 4th of February, Lord Effingham
brought forward a motion, declaring,
" That, according to the known principles of this excellent constitution,
" the undoubted authority of appointing to the great offices of the executive
" government is solely vested in His Majesty, and that this House has
" every reason to place the firmest reliance in His Majesty's wisdom in the
" exercise of this prerogative."
It passed without a division ; and an address, founded thereon,
was presented to the King.
It appears that His Majesty wrote to Mr. Pitt on the day this ad-
dress was expected to be moved in the House of Lords, and expressed
himself in the following manner, after lamenting the length to which
the House of Commons had gone :
" I trust the House of Lords will this day feel that the hour is come
" for which the wisdom of our ancestors established that respectable corps
" in the state, to prevent either the Crown or the Commons from en-
" croaching on each other. Indeed, should not the Lords stand boldly
" forth, this constitution must soon be changed; for if the only two
" remaining privileges of the Crown are infringed, that of negativing bills
" which have passed both Houses of Parliament, and that of naming the
" Ministers to be employed, I cannot but feel, as far as regards my person,
" that I can be no longer of utility to this country, nor can with honour
" continue in this island."
On the 11th of February, in a debate in the House of Commons,
on
77
on the necessity of a Ministry being formed which should embrace
members of both administrations, Mr. Fox avowed his opinion that
the House of Commons had, and ought to have, a real and sub-
stantial negative in the nomination of a Minister of state. Mr. Pitt
declared, that he would not recede from his former determination.
He denied that there were any constitutional means to force him
to resign ; the proper method was by an address to the Crown.
During these transactions, addresses from the corporation and
merchants of London, and from various parts of the country, were
presented to the King, strongly expressive of their confidence in
the Ministers, condemning the violent proceedings of the House of
Commons in consequence of Mr. Fox's dismissal from office, and
promising support to His Majesty in the exercise of his constitutional
prerogative.
Endeavours to bring about an amicable negotiation being still
persevered in, it was suggested that the Duke of Portland should
be requested by the King to have a conference with Mr. Pitt, for
the purpose of forming a new administration. This proposition was
reluctantly acceded to by the King, who on the 15th February 1784
wrote to Mr. Pitt :
" My present situation is, perhaps, the most singular that ever occurred,
" either in the annals of this or any other country ; for the House of Lords,
M by a not less majority than near two to one, have declared in my favour,
" and my subjects at large, in a much more considerable proportion, are
" not less decided ; to combat which, Opposition have only a majority
" of twenty, or at most thirty, in the House of Commons, who, I am sorry
" to add, seem as yet willing to prevent the public supplies. Though I
" certainly have never much valued popularity, yet I do not think it is to
" be
78
" be despised when arising from a rectitude of conduct, and when it is to
" be retained by following the same respectable path which conviction
" makes me esteem — that of duty, as calculated to prevent one branch of
" the legislature from annihilating the other two, and seizing also the
" executive power, to which she has no claim. I will, though reluctantly,
" go so far as to authorise a message in my name to be carried to the Duke
" of Portland, expressing a desire, that he and Mr. Pitt may confer on the
" means of forming an administration on a wide basis, as the only means
" of healing the divisions which stop the business of the nation. Should
" the Duke of Portland, when required by me, refuse to meet Mr. Pitt,
" more especially upon the strange plea he has as yet held forth " (a refusal
to resign), " I must here declare, that I shall not deem it right for me ever
" to address myself again to him. The message must be drawn on paper,
" as must every thing in such a negociation, as far as my name is con-
" cerned."
A message was accordingly sent by Mr. Pitt to the Duke ; but
misunderstanding as to the terms of the message rendered all hopes
of a coalition illusory. On the 18th February, Mr. Pitt, in reply
to some questions put to him, informed the House,
" That His Majesty, after a consideration of all the circumstances of the
" country, had not thought proper to dismiss his Ministers, and that his
" Ministers had not resigned."
A warm debate ensued, in which it was remarked, that the only
course would be to refuse the supplies ; and it was proposed to defer
the ordnance estimates by the question of adjournment, which was
carried by 208 to 196. On the following day, Mr. Powys, who had
voted with Mr. Fox, stated that he was ready to vote the supply,
relying with the utmost confidence that His Majesty would attend
to
79
to the voice of his faithful Commons, and gratify those wishes with
which their anxiety for the constitution inspired them. Mr. Pitt
declared
• " That he would not enter into any compromise ; he would not stipulate
" any condition for the passing of the supply. When any proposition
" should be submitted to the House, it would be for the House to dispose
<5 of it as they should think proper ; but he would never compromise upon
" the subject."
The ordnance supplies appear to have gone on in the usual course.
On the 20th of February, a resolution was moved by Mr. Powys
for an address to His Majesty, having for its object the removal of
Ministers. On this occasion Mr. Pitt, in reply to Mr. Fox, who had
reprobated the numerous addresses presented to the King in support
of Ministers, observed,
" The right honourable gentleman is exasperated and surprised at the
" manly spirit of the people, who will not wait till their charters are pros-
" tituted to the purpose of Ministers, and then seek relief by yielding them
" to the Crown, but who boldly resist the violence in the first instance, and
" who are as hardy in their resistance as the right honourable gentleman
" has been in his attack. The right honourable gentleman asks, how
" should the people understand the India Bill? Do they know the abuses
" in India? True, they may not have read all the voluminous reports;
* neither, perhaps, have one-half of the members of the house : but they
" know that no correction of abuses in India, not even the rescuing India
" from loss or annihilation, could compensate for the loss of the constitu-
" tion. The plain sense of this country could see that the objection to the
" India Bill was, that it raised up a new power in the constitution ; that it
" stripped at once the Crown of its prerogative and the people of their
" chartered rights, and that it created the right honourable gentleman the
* dictator of his king and his country."
The
80
The address was, however, carried by a majority of twenty, the
numbers being 197 to 177 > ana " presented to the King on the 25th.
His Majesty's reply was reported to the House by the Speaker
on the 27th, in which His Majesty declared that he could not see
that the divisions and distractions of the country could at all be
remedied by the dismission of Ministers. On the 1st March His
Majesty's answer was considered by the House of Commons, when
another address was agreed to, in which the House claimed as a
right, to advise His Majesty on every proper occasion touching
the exercise of his royal prerogative, and urging the removal of
Ministers. The numbers for the address were 201 to 189. It was
presented on the 4th. His Majesty's reply expressed a conviction
that the objects contemplated were not likely to be obtained by the
dismission of Ministers, His Majesty's answer was ordered to
be taken into consideration on the 8th of March. On that day
Mr. Fox moved that a representation be presented to His Majesty,
in which it was stated, that it had been the practice of the House
to withhold supplies until grievances were redressed, and that the
continuation of the administration was an innovation upon the
system which had till then prevailed. The motion was carried
by a majority of one only, the numbers being 191 to 190; upon
which it was ordered, without a division, that the representation
should be presented to His Majesty by such members as were Privy
Counsellors.
Mr. Pitt sent to His Majesty at Windsor an account of what
had passed. In the answer which he received were the following
passages :
" The
81
" The avowal that all negotiation is at an end, gives every reason to
" hope that by a firm and proper conduct, this faction will be deserted by
" many, and at length be forgot I shall ever with pleasure consider, that
" by the prudence as well as rectitude of one person in the House of Com-
" mons, this great change has been effected ; and that he will ever be able
" to reflect, with satisfaction, that in having supported me he has saved the
" constitution, the most perfect of human formation."
The Mutiny Bill and some other bills as to supplies, were passed,
and nothing of moment occurred till the 22d of March, when, upon
the Secretary at War moving the order of the day for a Committee
on the army estimates, Sir Grey Cooper mentioned the report of an
intended dissolution of Parliament, which measure he termed daring
and unwarrantable. Various inquiries were made of the Minister by
several members, who took no notice of them. On the following day
Mr. Eden, Lord North, and General Conway successively mentioned
the subject -> but Mr. Pitt remained silent.
On the 24th the King went to the House of Lords, and after
giving the royal assent to several bills, delivered a speech, in the
course of which His Majesty stated that,
" On a full consideration of the present situation of affairs, and of the
" extraordinary circumstances which have produced it, I am induced to
" put an end to this session of Parliament. I feel it a duty which I owe
" to the constitution and to the country, in such a situation, to recur as
" speedily as possible to the sense of my people by calling a new Parlia-
" ment. I can have no other object but to preserve the true principles of
" our free and happy constitution, and to employ the powers entrusted to
" me by law for the only end for which they were given, the good of my
" people."
M The
82
The dissolution took place on the the 25th March.
The new Parliament met on the 18th May.
On the 19th, after approving Mr. Cornwall as Speaker, His
Majesty addressed the Houses of Lords and Commons. The speech
contained the following passage on the affairs of India.
" Whilst the affairs of the East-India Company form an object of de-
" liberation deeply connected with the general interests of the country —
" whilst you feel a just anxiety to provide for the good government of our
" possessions in that part of the world, you will, I trust, never lose sight
'" of the effect which any measure to be adopted for that purpose may have
" on our own constitution, and our dearest interests at home."
On the 2d July Mr. Pitt obtained leave to bring in a bill, to allow
the Company further time for the repayment of certain sums due from
them to the Public ; and another bill, authorizing the Company to
make a dividend at the rate of eight per cent, for the half-year
which ended the 5th July.
On the 6th Mr. Pitt brought forward his India Bill. A copy was
laid before the Court of Directors on Monday the 12th, when it was
resolved that the Chairs should wait on the Chancellor of the Exche-
quer to obtain a copy with the blanks filled up, in order that it might
be read to the Court of Proprietors on the 15th. The same having
been obtained, the Court, on the 14th, took the same into considera-
tion, and resolved that a series of observations thereon should be sub-
mitted for the consideration of Mr. Pitt.
On the 27th July the Chairman stated to the Court, that the bill
had gone through the Committee of the House of Commons, and
that the several suggestions of the Court of Directors had been
adopted.
These
83
These important suggestions will now be noticed.
Section 11 of the Act, as it originally stood, provided that copies of all
despatches which the Court of Directors might receive, should be trans-
mitted to the Board.
The Court expressed in unequivocal terms, that it had been their
firm determination to reserve to themselves the entire control of
their trade, and only to give to Government a control respecting the
civil or military government and revenues of India. It was altered
accordingly.
Section 13, as it originally stood, left it to the Board to transmit, when-
ever they might see fit, to the Court, draughts of despatches, without wait-
ing for any copies of despatches intended to be sent by the Court.
The Court were of opinion, that whilst the government of their
possessions in India remained vested in the Company and adminis-
tered in their name, under any degree of control whatsoever, a
power to originate orders and instructions could not be vested in
any other body of men, consistently with the principle of such a
government, or without at once annihilating the executive power
of the Company ; and that the power thereby given would not only
destroy the principle before- mentioned, and tend to introduce a
doubt which of the two bodies would stand responsible for delay or
negligence, but might become highly dangerous in times of poli-
tical contest and unsteady administration, when it might be very
inexpedient that new men, just vested with the power of controlling
the most important acts of the Company, should decide upon
materials digested, and with the aid of those reasons and explana-
tions which a previous discussion by men of experience must ever
afford, rather than be led to commit the credit of their board by
M 2 precipitate
84
precipitate orders, which once issued would not he easily given up :
and moreover, it did not appear that any use whatever would arise
from that power, hecause it would still he necessary that both the
Board of Control and the Court should deliberate on every mea-
sure, and no time would therefore be saved by originating the
orders in one branch rather than another. The Court were very
ready to concur in any regulation which might enforce the despatch
of business, and tend to prevent negligence or inefficiency in its
own operations ; but whilst the government remained vested in the
Company, the power so given appeared at once destructive and
useless : the Court therefore submitted their decided opinion, that
the clause should be altered, by making the same to take place only
whenever the Court of Directors should omit to forward to the
Board their intended despatches on any subject within fourteen
days after requisition made. It was so altered.
Section 15, as it originally stood, vested the Board with the power to
send secret orders to the Government in India on any subject relating to the
civil or military government, as well as respecting peace or war, withholding
the knowledge of the same from the Court of Directors, as well as the
replies which might be received from India, as the Board might see fit.
Upon this the Court remarked, concerning secret orders,that they
were of opinion, that to the extent stated in the clause, the powers
thereby given would at one blow annihilate the Company's govern-
ment. They were ready to recommend to the General Court to consent
to vest powers in His Majesty's Ministers to issue secret orders, being
first communicated and afterwards transmitted through the Secret
Committee of the Court of Directors, concerning the levying of war
or making of peace, or negociations respecting war and peace, to the
several
85
several Governments or Presidencies in India, and binding those Pre-
sidencies to obey the same, in like manner as if they had been issued by
this Court : but beyond this they could not conceive a case in which
such power would be useful, and many in which it would be impro-
per and dangerous ; and they especially observed, that the giving
orders at any time, or on any subject, to the Commander-in-chief of
the Company's forces, otherwise than through the medium of the
executive Government of the Presidency in which he serves, could
hardly fail of producing the most dangerous convulsions in such
Government, and hazarding the Company's possessions in India.
Section 20, as it originally stood, gave the King the absolute appoint-
ment of Commander-in-chief, and also of the Second in Command, with
something like independent authority.
The Court earnestly requested, that their subordination to the
supreme civil authority, of which they were constituted members,
in all cases and under all circumstances whatsoever, might be ascer-
tained by some clause in the bill, so as to obviate all future claims
of any officer in His Majesty's service to an independent command
or authority, it being understood that his pay and appointments
would remain under the direction of the Court and that of the
Board, and needed not therefore to be regulated by the bill. The
Court were of opinion, that the appointing of the Second in Com-
mand by the Crown would be a great discouragement to the officers
in the Company's service, as well as a heavy expense, and they
therefore submitted, whether that point might not be given up.
The Act was framed in accordance with these suggestions.
The powers of recall in Sections 22 and 23 were originally confined to
the Sign-Manual.
On
86
On this point the Court submitted, that the power of recalling
every officer appointed by the Company was, in their opinion, essen-
tial to the existence of their authority over their servants abroad,
and that it ought not to be taken away.
The powers originally proposed to be given in sections 31, 32, and 35,
to the Supreme Government, extended to making regulations for the sub-
ordinate Presidencies, and to empower them to interfere in all matters
connected with the internal administration of such Settlements.
The Court observed, on the power of the Bengal Government
in the other Presidencies, the clause as it here stood rendered the
orders of the Bengal Government paramount to those which might
have been sent out to the Presidencies by the Court under the
superintendence of the Board of Control, which it was presumed
could not be intended, and that an exception ought to be intro-
duced accordingly. And further the Court were of opinion, that
it would be highly improper to subject Presidencies so distant as
Madras and Bombay to the interference of the Bengal Govern-
ment, in the interior detail of their administration. Such a regu-
lation would reduce those Presidencies to mere subordinate facto-
ries, and deprive them of all that respect and energy which, in
many instances, it might be very necessary for the public welfare,
that they should possess and exercise, in instances where the Ben-
gal Government was precluded by its distant situation from an
efficient interference. The Court therefore submitted, whether it
might not be better to confine the control of the Bengal Govern-
ment to matters relating to war and peace, and the application of
their resources in time of war, and transactions with the country
powers,
87
powers, provided the orders of the Court should not have pre-
viously been given thereon.
If it was meant to give legislative authority to the Bengal Go-
vernment in matters relating to the interior police and administra-
tion of the affairs of the other Presidencies, it was submitted that
the same regulations could by no means apply to the manners or
circumstances of the different places, and that all such legislative
regulations should be digested and proposed by the respective
Presidents and Councils ; and also, whether the final sanction
thereto might not more usefully be reserved to the home authori-
ties than vested in the Government of Bengal.
Section 34, as it originally stood, ordained that the communication of
the reasons for unauthorized hostilities should be made to the Hoard.
The Court submitted that the immediate communication of those
reasons ought to be made to the Court of Directors. It was so altered.
Section 39, as it originally stood, declared that certain Rajahs, Ze-
mindars, and Polygars and other land-owners, had been dispossessed of,
and compelled to abandon their respective lands, with their rights, &c.
&c. ; and as an indiscriminate restoration might introduce confusion and
disturbance, the Court of Directors were required to take the case into
consideration, and transmit explicit orders to their Governments on the
subject : and in order to prevent future oppression, the Governments were
to be instructed to fix an unalterable tribute and rent.
The Court represented, that however consonant those clauses
might be to popular opinions, grounded upon the laws, manners,
and constitution of England, it was a duty which the Court owed
to the trust vested in them and to their country, to declare their
unanimous and clear opinion, that if those clauses passed into a
law
88
law to be promulgated throughout the Company's possessions in
India, they would produce the utmost degree of confusion, and
endanger the subversion of all government. If any individual
had been dispossessed of his rights by British subjects otherwise
than by the laws of his country, the courts of justice were com-
petent to administer relief. If any prince had been oppressed by
the Government in India, it was not to that Government that he
would resort for justice, but to the Company, under the superin-
tendence of the Board of Control. The clause would lead to the
supposition that the Court had before them appeals from Rajahs,
Zemindars, Polygars, &c. complaining of all the multiplied oppres-
sions, with the recital of which the public mind had been in-
flamed. No such complaints were before the Court, and therefore
there was nothing for them to transmit special orders upon. They
feared that the power of restoring possession upon the hearing of
ancient claims in a summary way, would prove a far more fruitful
source of corruption and oppression than any that had yet been
complained of; and whilst they sincerely wished to establish the
principles of justice, as the rule by which their servants abroad
were to administer the government of the country, they could not
but be apprehensive of the very worst consequences, from de-
priving the Government on the spot of those powers which grew
out of the nature of the constitution, religion, and manners of
the inhabitants, and fixing permanent rights inconsistent there-
with, and which the inhabitants, of whatever rank, never held
or pretended to hold under their native sovereigns. The Court
therefore submitted, that all those points should be left to the
Government upon the spot, under the most vigilant superin-
tendence
89
tendence of the Court and the Board : and further, that the rents
of lands must in their nature vary, and that the Government which
had it not in its power to provide for war and other exigencies,
by varying taxation, of whatever nature it might be, according
to circumstances, wanted much of the power essential to its con-
tinuance ; and that Zemindars and others, to whom the govern-
ment of the common people, and the distribution of justice in
their several districts, was committed by the laws and constitution
of the country, could not be rendered independent of ;he supreme
authority, without exposing the multitude to oppression ; or freed
from increasing expense in case of war, without taking away a
great inducement for their endeavouring to preserve peace and
tranquillity. And to their earnest wish that those clauses might
be left out of the Bill, the Court added an observation, that if
thenceforward the government of their possessions in India should
be oppressively administered, the Government of this country must
be equally culpable with the Court, and neglect abundant means
of controlling it.
The suggestions of the Court were adopted, and the clauses
last-mentioned were left out.
Section 45, as to presents being brought to account, was enlarged at
the suggestion of the Court, so as to include ceremonial presents.
Section 63, as originally proposed, precluded absolutely the re-appoint-
ment of any person who had been absent five years from India.
The Court submitted, that whilst they readily admitted the
salutary tendency of that restriction, they could not but recol-
lect cases, in which it had been highly expedient, and might again
be expedient, to send out in cases of emergency men of eminent
N merit
90
merit, reputation, and services ; and therfore, whether power
should not be lodged somewhere, upon the application of the
Company, to dispense with that regulation.
It was altered accordingly.
Sections 64 to 81 had reference to the establishing a jurisdiction, for the
trial of offences committed in India, more effectual than proceeding by
common law, for prosecuting and bringing to speedy and condign punish-
ment persons guilty of extortion or other misdemeanor.
With respect to that part of the bill, the Court were of opinion
that it was more particularly an object of attention for the Legisla-
ture at large than for the Court of Directors, and they felt also the
odium that might attend any interposition they might presume to
offer against the particular clauses in the bill respecting delinquents,
by it being alleged that they were unwilling to assist in establishing
any effectual mode for punishing the servants of the Company
offending.
This, however, was far from being the case ; for while they con-
fessed the difficulty of effecting the purpose, they were neverthe-
less very desirous to contribute all in their power to render any
establishment which might be proposed, efficient to the end. They
confessed, that the trial by jury was inadequate: they were convinced
that parliamentary proceedings, whether by bill or impeachment,
were equally so. They also allowed that the strict rules of evidence,
as established by common law proceedings, could never answer in
bringing any delinquent in India to punishment in England ; but
they submitted, whether the great principles of the civil law, which
they apprehended to be fully adequate to the reaching of any case,
should, be departed from, and whether the calling upon a man
unaccused
91
unaccused or unsuspected, to do an act which might bring sus-
picions on his conduct when he might he perfectly innocent, was
expedient ; or whether bringing a person to trial without a specific
charge, and making him liable to a species of evidence which no
civilized countries have yet admitted fthat of letters written without
his knowledge, and where the party accused had no opportunity to
examine their truth or authenticity) was fit ; or whether loose
affidavits taken before any description of men entitled to administer
on oath, in a country where it is notorious such species of evidence
is so easy to be obtained, without any commissioners named on the
part of the accused, or any power given him to cross-examine the
evidence, should be adopted, as a means of bringing a British sub-
ject to punishment, to the satisfaction of the community, without
which, it was submitted, such a conviction could answer no good
purpose. The Court of Directors approved of the intent of the juris-
diction proposed to be established, and applauded the spirit of dig-
nity and impartiality which was held forth in the manner of consti-
tuting the court ; but they doubted extremely the possibility of the
execution of the purposes which were intended, from the manner
in which the different clauses were drawn, unless great alterations
should be made in them. On the clauses which related to the
Nabob of Arcot and the Rajah of Tanjore, the Court submitted,
that their power under the superintendence of the Board of Con-
trol, would be adequate to the settlement of those affairs ; and
as they entertained great doubt whether the clauses would answer
the purpose intended, they submitted whether those clauses should
not be left out.
N2 Any
92
Any comment on the foregoing suggestions, which were generally
adopted, would be superfluous : they evinced an intimate knowledge
of the leading principles upon which the government of India should
be conducted ; and it will be admitted that they fully confirmed the
opinion advanced by the Court of Directors, as to the benefits to be
derived from the existence of a permanent body, whose experience
would at all times be of the utmost importance in the conduct of
the vast and complicated concerns connected with our Indian
empire.
The Act of the 24th George III. cap. 25, was founded on this
bill.
This Act formed a new era in the Indian system. The Board of
Commissioners for the Affairs of India was then first established, and
invested " with a superintendence and control over all the British
" territorial possessions in India, and over the affairs of the Company in
" England."
The Board were authorized and empowered to direct and control all
acts, operations, and concerns, which in any way related to the civil
or military government or revenues of India. The members of the
Board were authorized to have access to all papers and muniments of
the Company, and to be furnished with copies or extracts thereof, as
they might require.
Copies of the proceedings of the Courts of Proprietors and Directors
were to be sent to the Board within eight days after the holding of such
courts.
Proposed despatches were to be sent up to the Board for approval,
and to be returned, approved or altered, within fourteen days : and for
the readier despatch of the civil and military concerns of the Company,
whenever
93
whenever the Court of Directors failed to forward to the Board, within
fourteen days after requisition, any despatch on a subject connected
with the civil or military government or revenues, the Board might
frame and direct the transmission thereof to India.
The Secret Committee was first established. They were required to
send to India, in duplicate, such despatches as they might receive from
the Board ; and answers from the Governments in India were to be
forwarded to the Board through the Court of Directors.
The Government of Bengal was to consist of three Counsellors in-
stead of four, and the Commander-in-chief was to be the second
member.
The Presidencies of Madras and Bombay were first established as
Governments. The Governor General and Governors were to have the
casting vote in Council. The King might remove or recall any British
subject holding office under the Company in India.
All vacancies, with the exception of Governor General, Governors,
and Commanders-in-chief, were to be filled up from amongst the co-
venanted servants of the Company. If the Court of Directors neg-
lected to supply vacancies within two months from the notification of
such vacancies being received by the Court, His Majesty might supply
the same, and the party appointed subject to recall by the King only.
Orders or resolutions, when agreed upon by the Court of Directors and
Board of Commissioners, were not revokable by the Court of Pro-
prietors.
The Supreme Government was to control the other Governments.
Schemes of conquest were declared to be repugnant to the wish, honour,
and policy of the nation ; and the Governor General was not to make
war against any Indian power, except hostilities shall have been com-
menced, or preparation made for such, against the British power. The
Governors,
94
Governors, &c. of the subordinate Presidencies liable to be suspended
from office by the Governor General.
The Court of Directors were required to take into consideration all
the establishments in India, with the view to all possible reductions ;
and a list of all offices in the civil and military establishments of the
Company, with the emoluments of such, was to be laid before Par-
liament within fourteen days after the commencement of each session.
Officers and servants of the Company were to be promoted in regular
succession ; and where the rule was deviated from, the Government
were to record the reasons fully on the minutes and proceedings of
Council.
Company's servants dismissed by any competent courts were not to
be restored.
Governor General in Council might issue warrants for seizing persons
suspected of illicit correspondence.
Rights of the Company and of the Crown as to the territorial acquisi-
tions again reserved to each.
The General Court of Proprietors had hitherto taken an active
part in almost every question, whether connected with the foreign or
domestic affairs of the Company. They had conferred and revoked
appointments of Governors, Councillors, and Commanders-in-chief,
and the commissions of Government were subject to their approval.
They had restored servants who had been suspended or dismissed by
the Court of Directors for improper and reprehensible conduct.
They had passed resolutions staying prosecutions which had been
instituted by order of the Court of Directors against Company's
servants. They had relieved commanders from penalties incurred for
flagrant breaches of trust and gross dereliction of duty ; and they had
also
95
also frequently defeated other measures which were recommended by
the Court of Directors, as essential to the well-being of the Com-
pany's interests, and to the support of their authority in India.
The Act of Parliament relating to the dividend and the qualification
of the Proprietors, the Regulating Act of 1773, and the institution
of the Board of Commissioners for the Affairs of India, by the
24 George III. cap. 25, section 29, by which it was declared that no
order or resolution of the Court of Directors touching the above-
mentioned points shall be liable to be rescinded, suspended, revoked,
or varied by any General Court of the said Company after the same
shall have been approved by the Board of Commissioners ; all tended
to lessen the power of the Court of Proprietors, and they may be
said, at the present time, to confine their proceedings generally to the
exercise of those rights which are more distinctly defined, viz.
The election of Directors ;
Framing By-laws ;
Declaring the dividend ;
Originating or confirming grants of money beyond
,3^600, or pensions beyond ,§£200 per annum ; and in the re-
commendation of any subject to the consideration of the Court of
Directors.
Occasions, however, have occurred, wherein the General Court
have entered on discussions, in which the measures of the Indian
Governments and of the Court of Directors have been freely canvassed ;
and motions of approbation or censure proposed, as it has accorded
with the views of the parties bringing the same under discussion.
By the Act of the 24th George III. cap. 38, the Company were for
the
96
the first time required to keep a stock of tea on hand sufficient to meet
one year's consumption. The mode was also prescribed as to the
quantities to be put up, and the manner of bidding at the sales.
In 1786, the Act of the 26th George III. cap. 16, was passed,
for the purpose of amending certain provisions contained in the Act
of the 24th George III.
It confirmed several appointments (made by the Court of Directors) of
persons, then resident in Europe, to be Councillors, and ordained iiiat, in
future, no persons were to be appointed to Council under twelve years*
service. It also repealed so much of the 24th George III. as ordained
that the Commander-in-chief should be Second Member of Council, and
left it at the option of the Court of Directors to appoint him to such
office. It conferred on the Governor-General and Governors the power
to act, in certain cases, without the concurrence of their respective Coun-
cils, and all orders of Government were to be expressed as made by the
Governor-General in Council or the Governor in Council. It regulated
the emoluments to be derived by civil servants according to length of
service ; and it provided that the members of the Secret Committee,
established by the Act of 1784, should be sworn.
Another Act was passed in the same year (26th George III. cap. 25),
declaring that His Majesty's approbation was not necessary to the ap-
pointment by the Court of Directors of Governor-General, Governors,
and Members of Council.
Another Act was likewise passed (cap. 57), amending the provi-
sions of the Act of 1784, for appointing a distinct court of judicature to
be chosen in each session of Parliament, for the trial of persons accused
of offences committed in India. A clause was also inserted, declaring
that
97
that offences against the Company's exclusive right of trade, which could
only be tried at Westminster, might be tried in the East-Indies. Persons
whose licenses of residence had expired, were to be subject to the same
penalties as unlicensed persons, and power was vested in the Governments
to seize unlicensed persons and ships.
The exclusive trade had hitherto been vested entirely in the Com-
pany; and although various attempts had been made by individuals to
participate in it, it was not until the year 1788 that any organized sys-
tem of opposition to the Company's exclusive privileges was acted upon.
In the early part of that year, the manufacturers of calicoes and
muslins in England and Scotland sent up to London delegates, for
the purpose of inducing His Majesty's Ministers to interfere in pro-
tecting them against what they stated to be ruinous to their trade,
from the idea which prevailed, that it was the intention of the East-
India Company to increase their importation of India piece-goods ;
and certain propositions were submitted by the delegates, to confine
the quantity to be put up to sale in any one year to that sold in 1787.
That measures should be taken by the Company to import forth-
with at least 500,000 lbs. of the best Ahmood and Bengal Cotton,
in the cleanest and most perfect state for the manufacturers ; and
that the Company should gradually increase the importation of
such fine cotton and of the raw materials, as much as circumstances,
and as the state of the market would admit.
That orders should be sent out to ship no more eotton-yarns of
India in future, to be sold, used, or consumed in Great Britain.
That the mulmul handkerchiefs should, in future, be diminished
gradually, in proportion to the increase sale of cotton-wool.
O The
98
The Court, in reply to these demands, satisfactorily shewed that
only one-twentieth of the calicoes, and two-fifths of the muslins
which were imported by the Company, remained for home consump-
tion : according to which, the total number of Indian white goods
consumed in Great Britain, calculated on the sales of 17&7 (which
the delegates themselves stated to be the largest), amounted to
133,000 pieces, in the manufacture of which not quite 700, OOOlbs.
weight of cotton was required, which was only about one-sixteenth
part of the quantity expended in the goods of a similar description
manufactured in this country. The Court most distinctly disavowed
the charge of having, in any way, conducted their commercial
concerns upon a system which had a view, either immediately or
ultimately, to crush or distress manufacturers at home. The Court,
however, consented to limit the amount to be brought to sale for
1789 and 1790 to the sales of 1787, amounting to 272,000 pieces,
including private-trade. The Court consented to withhold any
future importation of cotton-yarn. In order to encourage the
trade in indigo, the same was laid open to Company's servants
and others for the term of three years ; and the Court sent orders
for procuring and sending to England 500,000 lbs. of the best
Broach and Surat cotton, or cotton of a similar description from
Bengal, and to continue the same annually, provided that the
Company were not too great losers thereby.
In 1790, in consequence of the great increase of illicit trade from
India on foreign bottoms, the Court of Directors intimated to the
Bengal Government, that they had resolved upon conceding to indivi-
duals the privilege of lading goods upon the Company's shipping.
The
99
The difference, however, of the rate of freight required by the Com-
pany and that by the foreign vessels was so great, as to induce the
merchants to incur any risk to which they might become subject by
infringing the laws of their country, rather than submit to what they
deemed so unreasonable a charge.
About the same period, the attention of the Court of Directors
had been called by the Lords of Trade to a consideration of the
export trade from Great Britain to India, and their Lordships had
expressed a desire to receive from the Court every information that
could be procured, respecting exports of the produce and manufac-
tures of Great Britain to India, and the probability of increasing
the amount of those exports under any mode that could be devised.
A Select Committee was accordingly appointed by the Court,
which Committee made three Reports. The first, dated in September
1791; the second, in December of that year; and the third, in
January 1792.
In the first Report the Committee express the satisfaction it would
have afforded them, had they been enabled to suggest any means
for increasing the export trade.
The Committee stated that it was only by the natives of India that
an increased consumption of British manufactures could be looked for,
but that history afforded no ground for such expectation. The uniform,
unvaried narrative of complaint was, that Europe has ever been drained
of bullion for payment of the luxuries of the East.
If the situation of the Company was referred to previous to the
acquisition of the Dewannee, when their views were purely commer-
cial, and when India abounded in wealth, the Committee stated, it
would be found that they laboured under extreme difficulty in the
O 2 disposal
100
disposal of the manufactures and produce which they exported ; and
they were further obliged to send large sums in silver, sometimes to
the amount of £400,000 or £500,000, to complete the investment for
Europe.
In the second Report the Committee entered upon a consideration
of the trade with China.
From the peculiar character of the Chinese, and their indisposition
to admit Europeans beyond the bounds of Canton, the Committee
stated as their opinion, that the only mode of increasing and extend-
ing the consumption of British articles in China was by means of the
accustomed channel.
In the third Report the Committee had reference to the export
trade to Japan and Persia.
The Committee trusted they should prove, that the Company had
never been deterred by the want of a spirit for enterprize, and still
less by a false principle of economy, from using every endeavour to
extend the trade, and to cultivate knowledge and science, in every
way that might prove beneficial to the British empire. The Company,
the Committee observed, had long granted Mr. Orme an annuity due to
his merits as an historian. Major Rennell received an annual allowance
from the Company, in return for some of the ablest publications in
geography which have appeared in any country. Mr. Dalrymple had
been constantly employed by the Company to examine the ships' jour-
nals in the pursuit of nautical objects, and for the general improvement
of navigation ; and in consequence of that gentleman's unremitting
attention and voluminous publications of Sea Charts, &c, the navigation
of the Indian and Chinese seas was almost as well known to the Com-
pany's officers as that of the British Channel.
As
101
As the only permanent mode of establishing a considerable commerce
between distant countries consists in the mutual exchange of the com-
modities which each produces, the Committee expressed their opinion,
that the expectation of being paid in gold and silver for the manufac-
tures of Great Britain, in places where those metals are not produced,
was chimerical. The Company had directed their particular attention
(and at considerable expense) to the establishment of botanical gardens
in Calcutta, Madras, and St. Helena : they had increased the culture
of silk and indigo to a very great extent : they had made experiments
with almost every article which India afforded, or which could be pro-
cured from the more Eastern countries ; and they trusted that their re-
cent attempts with regard to sugar would finally be crowned with suc-
cess. The Literary Society established at Calcutta, under the protec-
tion of Sir William Jones, and carried on with great ability and spirit,
not only embraced the literature and science of the ancient and modern
inhabitants of the East, but likewise their arts, manufactures, and com-
merce. Indeed, the Committee stated, with regard to commerce,
every commander of a Company's ship considers himself to be so far upon
an exploring voyage, as to exert himself in contributing towards that
large portion of nautical and commercial knowledge, compiled and pub-
lished by Mr. Dalrymple.
That the great expense arising from the pursuit of those objects was
not confined to regular and established disbursements, but was in-
creased by accidental losses. The Committee restrained themselves
from a more ample detail of the liberal and comprehensive plan pur-
sued by the Company : they trusted that the specimen already given
would evince that spirit of perseverance which distinguishes the system
of an exclusive Company, and which had ever been directed by the
East-India Company to the prosperity and welfare of Great Britain.
The
102
The aid and patronage of the East-India Company in the promo-
tion of the various branches of science, more especially in those
relating to botany and agriculture, connected with their territorial
possessions, have been continued to the present day. The advantages
arising therefrom have not been confined to this country, but have
been extended throughout the Continent of Europe, from whence
the strongest expressions of acknowledgment have been received by
the Court of Directors.
With regard to Persia, the Committee stated,
That the returns could not be made in bills, and that gold and silver
would augment the loss : they therefore took a short review of what
Persia afforded, in order to ascertain whether any other means existed
of making returns for the sale of European articles.
And under all the circumstances, the Committee were decidedly of
opinion, that the export of British manufactures and produce to Persia
by sea could not be increased, either by the Company or by individuals,
until that empire, or the countries which surround it, should obtain the
blessings of a regular and established government.
FOURTH PERIOD.
From 1793 to 1808 —comprising the Act continuing the exclusive trade and
territorial possessions in the Company until 1814; granting salaries to the
Board of Commissioners ; — revising the provisions as to the powers of the
Board, also providing for the allotment of three thousand tons for the use of
the private trade ; — the subsequent measures of the Indian Government and
the Court of Directors on the subject of the private trade and India-built
shipping ; — the war in Mysore ;-~ the fall of Seringapatam ;— the Mahratta
war ;
103
war ; — the reduction of the French force in India ; — the treaty of Bassein ;
— also the treaty between France and Great Britain, as affecting the posses-
sions of the former power in India ; — the Report of the Committee of the
House of Commons in 1805, on the accounts between the Public and the Com-
pany ; — the appointment of a Select Committee of the House of Commons,
who submitted, in a series of five reports, between 1809 and 1812, statements
relative to the Company* s affairs.
In January 1793 Mr. Dundas wrote to the Chairman, that as the
due parliamentary notice had been given, and that the exclusive
charter of the Company actually expired in the course of the ensuing
session, he was desirous of having the most candid and full discussion
with the Company on the different heads which would naturally sug-
gest themselves on so important a subject.
The Company, on the 17th January, transmitted some* hints which
had been prepared by the Committee of Correspondence for the
basis of an agreement.
The subjects for consideration were :
First, The government of India, with the conduct and manage-
ment of the territorial revenues.
Second, The continuation of the Company's exclusive trade.
Third, The regulations and detail which attach to India and to
Europe.
On the 17th February Mr. Dundas submitted to the Court his
general ideas on the subject, but without concert with the rest of His
Majesty's confidential servants.
On the first head, viz. i( the government of India, with the conduct
" and management of the territorial revenues," Mr. Dundas
stated :
" I find
104
" I find it unnecessary to trouble you with any detail in the present stage
" of the business. If the mode at present adopted for the government of
" India is to be examined on any principles of general theory, it may be
" liable to many criticisms; but it has been proved by experience to answer
" the purpose of a successful and prosperous administration of our Indian
" affairs ; and under these circumstances, it seems much wiser to found on
" the basis of established systems, than to substitute in their room the most
" plausible untried theories. It may, perhaps, be thought right to make
" some variations on the present form of the Board of Commissioners for
" India Affairs ; but as these will not vary any of the general principles by
" which the business is at present conducted through a Board of Commis-
" sion and the Court of Directors, it is unnecessary, in the present general
" sketch of the subject, to enter more minutely into that detail."
On the second head, Mr. Dundas
" Considered that, under all circumstances, the advantages of continuing
" the trade under an exclusive charter did, in his judgment, greatly out-
" weigh the force of any objections which had reached him on the subject
" of Indian monopoly ; and that he believed that, when the subject was
" canvassed to the bottom, the merchants and manufacturers of Great
** Britain and Ireland, supposed to be the most interested in the dis-
" cussion of the question, would concur with him in that opinion. But
" that in delivering such opinion, he meant to be distinctly understood
" as speaking of a regulated monopoly, so as to ensure to the merchants
" and manufacturers of Great Britain certain and ample means of exporting
" to India, to the full extent of the demand of that country for the manu-
" factures of this ; and likewise a certainty, that in so far as the produce
if of India affords raw materials for the manufactures of Great Britain or
«' Ireland, that produce should be brought home at a rate as reasonable as
" the circumstances of the two countries would admit of.
" The
105
" The great exertions and improvements which the Company had made
*' in the conduct of their commerce were fully admitted ; but still the clan-
" destine trade continued to a great extent, and it was deemed indis-
" pensable that the Company should afford additional tonnage, adequate to
" the exports from Great Britain and Ireland, and to the imports from
" India, and at a rate of freight so reasonable, as to satisfy the merchants
" and manufacturers of this country, that the effect of the monopoly of the
" East-India Company was not calculated to bring an unnecessary, and of
" course unjust, burthen on the manufacturing interests of Great Britain
" and Ireland.
" Looking at the general state of the Company's affairs under the third
" head, the surplus might be taken at £1,200,000.
" The disposition of this, it was proposed, should be made by an increase
" of the dividends from eight to ten per cent., in consideration of the many
" struggles in which the Company had been engaged, and the many risks
" their possessions and trade, and consequently their capital, had under-
" gone ; and moreover that the eight per cent, was rather less than their
" commercial dividend, upon an average, before they had obtained the ter-
" ritorial revenue."
After other financial arrangements, the question came as to the
right of the Public to participate in the free surplus, who, it was
stated, were considered to have an irresistible claim to an ample
share of the remaining surplus ; and Mr. Dundas thought
" The Public justly warranted in expecting a sum of participation not
" less than £500,000, if that sum should remain after answering the other
" claims to which he had allowed a preference.
" Any further surplus, it was proposed, should be appropriated so as to
" operate as a guarantee for the capital stock of the Company, if from any
P " accident
106
" accident or unforeseen calamity, either the capital itself should be dete-
" riorated, or there should not be the means of keeping up a dividend
" equal to that proposed. If such a collateral security could be carried
" into practical execution, it would tend in the highest degree, it was con-
" sidered, to preserve the credit of the Company's stock, and to protect the
<r Proprietors from the danger which the uninformed or unwary amongst
" them must always be exposed to, when the stock was liable to sudden
" and unexplained fluctuations."
Pending this correspondence, the manufacturing interests engaged in
the cotton trade at Manchester and Glasgow re-urged the arguments
which had been advanced by them in 1788, against the importation
by the Company of piece-goods from India.
The Court of Directors contended, that the circumstance which
gave birth to the clamour against Indian manufactures in 1788 was
not any unusual exertion on the part of the Company, any unusual
quantity of Indian goods exposed to sale, nor any disposition on the
part of the Public to prefer Indian to British goods, but solely the
distress which involved many individuals, in consequence of their
having pushed their enterprizes too far, by raising fictitious credits
and circulations to an extent unprecedented.
It was urged by the cotton manufacturers, that stipulations should
be made in the charter to prevent, as much as possible, the exporta-
tion and use of cotton machinery in India, invented and used in this
country.
On the 25th March, Mr. Dundas forwarded the resolutions which
he proposed to submit to Parliament, if he was warranted in sup-
posing that the East-India Company acquiesced in the encouragement
thereby
107
thereby given to the trade and manufactures of Great Britain and
Ireland, and in the suggestions held out for putting an end to the
clandestine trade carried on between India and Europe ; and ob-
served :
" I have an opinion that the manufacturers will find themselves mistaken
" in the prospect they have formed ; but they very naturally are disposed
" to confide more in their own speculations than in mine.
" I am likewise free to declare to you, that I think the East-India Com-
" pany greatly overvalue the advantages of an exclusive trade to India,
" for the same reasons which induce me to be satisfied that the merchants
" and manufacturers of Great Britain and Ireland are under a delusion in
" their expectations from a freedom in trade.
" You will observe, that in all I have said, I desire to be understood as
" speaking of India, properly so called, exclusive of the China trade ; for
" a very superficial view of the subject must satisfy every body, that a
" different mode of reasoning is applicable to these two channels of trade."
The principal point upon which a serious difference of opinion
appeared to exist arose out of the clandestine trade.
On this subject it is to be observed, that the original source of the
interest which British residents in India obtained in the trade be-
tween that country and Europe is to be traced to the Company's
acquisition of territorial dominion in the East. Before that era the
number of residents was small, they were confined solely to com-
mercial pursuits, and the few moderate fortunes which, in a slow
course of years, were to be remitted home, easily found a con-
veyance by the bills of the Company. The vast wealth which poured
P2 into
108
into the coffers of individuals upon the ascendancy of the English
power in India, at the same time that their numher in consequence
of this great change rapidly increased there, soon overOowed the
usual channel of remittance through the Company, who not having
immediately adjusted their measures to the policy which this new
situation of things ought to have dictated had it been regarded as
permanent, nor indeed being well able at first to invest in goods even
the great revenues which came into their own hands, many of the
fortunes acquired by individuals found their way into Europe by
foreign channels ; and these channels being once opened for the re-
mittance of British property, continued to serve, in a greater or less
degree, for the same end, though the modes varied. Foreigners, at
first, gave bills on Europe for the money advanced them in India,
with which money they purchased the investment that carried on
their Indian trade and provided the funds for the payment of those
bills ; but, in process of time, British resident merchants not con-
fining themselves solely to the original object of paper remittance,
became clandestinely and unlawfully parties in the trade carried on
to Europe (foreign) ; and at length, as is supposed, in many ad-
ventures, the real though concealed principals. In which case,
remittance was rather the medium of trade than the primary motive ;
so that they, in fact, came to stand in the place where foreigners
who first received the fortunes of British subjects for bills on Europe
had stood : and thus was the monopoly of the Company grossly
invaded, and the trade of foreign Europe from India greatly carried
on with British capital ; which was an issue so little consonant with
the protection and prosperity enjoyed by British residents through
the
109
the Government of the Company, that to trace it to its remote cause
is certainly not to make any sufficient apology for it.
Prohibitions were enacted, but they did not prevent the continuance
of it, and the example of laws, inefficient and disregarded, became
a new evil.
It was proposed, that it should be lawful for British subjects, and
others living under the protection of His Majesty in India or else-
where, to purchase goods from, or sell goods to the subjects of all
nations without exception, or to act for them on agency.
To remove all doubts as to the extent of the proposed guarantee
fund to the nominal or real value of the capital, Mr. Dundas stated
t hat he never had any doubt upon the subject. He meant the real
value of the capital at the rate it should be taken at in the proposed
augmentation of it. If, therefore, the additional million of capital
were taken at the value of two millions, the guarantee on the capital
would extend to twelve millions.
The petition from the Company for a renewal of the charter being
considered in a Committee of the House on the 23d April, Mr. Dundas
stated :
" That the difficulties which he had experienced had arisen not only
" from the importance and magnitude of the subject, but from the system
" which he was to propose being in opposition to established theories in
" government and in commerce. These theories, he admitted, were just
" and applicable to other cases ; and yet he found it dangerous to listen to
" them when he was devising a plan of government and a system of trade
" for British India. No writer upon political economy (he said) has, as
" yet, supposed that an extensive empire can be administered by a commer-
" cial association ; and no writer on commercial economy has thought that
" trade
110
M trade ought to be shackled by an exclusive privilege. In deviating from
" these principles, which have been admitted and admired, I am sensible
" that my opinions have popular prejudices against them ; but I am sup-
" ported by successful experience j and when the House adverts to the pe-
" culiarities of the subject before them, they will at once see that I am not
" attempting to overturn theories, though I am unwilling to recede from
" old and established practice. I wish, in the outset, to arrest the atten-
" tion of the House, and to fix it on the advantages which Great Britain
" actually possesses, and then to ask, whether it would be wise or politic to
,4 forego them in search of greater advantages which may exist only in ima-
" gination ? It would be idle, it would perhaps be a proof of ignorance, to
" maintain that all the advantages which Great Britain possesses from its
" connection with India, arise out of the present exclusive privilege of the
•' Company j but it would be rash, and perhaps impossible, to say what
" might be the political or commercial effects of a variation from the present
" system. In an age of enterprize and improvement, men are unwilling to
' ' hear of restraints ; but the wisdom of the British Parliament will not rashly
" relinquish a positive good in possession, for a probable one in anticipation.
" — Should it here be said, that the Company is an improper instrument
" for the management of an empire, I would (if they were not under the
" control of the executive power and the superintendance of Parliament)
" readily admit the force of the argument ; but if I find them to be an organ
" of government and of trade, which has experimentally proved itself to be
" suited to the administration of distant provinces, the revenues of which
" are to be realized through a regulated commerce, I am afraid to lay aside
" a means which has hitherto answered all the political and commerial pur-
" poses for which they had been employed."
On the third reading of the Bill, on the 24th May, Mr. Fox, ^vho
till then had abstained from any decided opposition, spoke strongly
against
Ill
against it, and complained of precipitation and want of information.
Mr. Pitt remarked, in reply :
" That it must have appeared an extraordinary circumstance to the
" House, that a bill of such importance should have passed to a third
" reading, with a quietness unexampled in the annals of Parliament, and
" that now it should be censured with ungoverned and angry words.
" The right honourable gentleman who had delivered them had perhaps
" withheld his opposition during the earlier progress of the business, that
" he might in the last stage of it, with collected hostility, bear it down fully
" and finally. Had not his right honourable friend, in February last,
" called the attention of the House to the subject of Indian affairs ? Had
" he not invited the manufacturing interests to bring forward their claims,
" and the Company to devise means by which those claims could be
" satisfied ? Had not the subject for the last nine years occupied the
" attention of Parliament at various periods ? Had not his right honour-
" able friend in successive years laid the state of the Company's affairs
" abroad before the House ? Had not, in each of these years, resolutions
" been adopted, which marked the progressive stages of their improve-
" ment? Had the right honourable gentleman forgotten, that the
" principles of a free trade to India were discussed, when his own memo-
" rable bill was proposed and the present system adopted ? Could, then,
" the right honourable gentleman complain that any thing like surprise
" had been attempted ? The answer was obvious. The right honourable
" gentleman had avoided opposition in the detail, because he knew he
" would be unsuccessful in every point."
Mr. Pitt said,
" He felt the most entire satisfaction, when he contemplated the whole
«< progress of the present measure, more particularly when he considered
" the
112
u the efforts which the right honourable gentleman was disposed to make
" to counteract it, had he thought it prudent to oppose his own prejudices
" to the opinions of the Public. He also asked, whether the claims of the
" manufacturers had not been listened to and provided for, and whether the
" exclusive privilege of the Company had not been rendered subservient to
** the resources of the empire ?"
The Act of the 33d George III. cap. 52, founded on the Bill
brought forward by Mr. Dundas, was passed. The following sum-
mary of the existing laws comprises most of the existing provisions.
The Government-general of Bengal continues supreme : the presiden-
cies of Fort St. George and Bombay are subordinate to it. The Go-
vernment of Bengal consists of a Governor-general and three Members of
Council : the subordinate Presidencies, in the particular cases of con-
cluding treaties with the native powers in India, levying war, making
peace, collecting and applying revenues, levying and employing forces,
and, in general, in all matters of civil and military administration, are
placed under the superintendence of the Government-general of Bengal ;
and, in all cases, are to obey its orders, unless the Directors should have
sent instructions to the contrary, not known to the Government-general ;
but, in such case, the subordinate Presidencies are to give the Govern-
ment-general immediate notice of the same.
The civil Members of Council are to be appointed from the list of civil
servants who have resided ten years in the civil service in India.
When a vacancy of Governor-General or Governor may happen, and no
provisional successor appointed, it is to be filled up by the senior of the
civil Counsellors till a successor shall arrive ; the vacant seat in council,
occasioned by this contingency, is during the time to be supplied from
the senior merchants, at the nomination of the acting Governor General :
if
113
if only one Counsellor shall then remain, the Governor General has
power in case of vacancies in council, to supply them from the senior
merchants, until successors duly appointed shall take their seats. In all
these cases, the salaries or allowances are to attach to the acting members
while in office.
In case any Member of Council shall be disabled from attending
by casual illness or infirmity, provision is made to supply his place.
Upon the departure of any Governor or member of Government
from India for Europe, or of any written intimation delivered in by
them to such effect, such departure or writing is to be held as an
avoidance of office.
The mode of conducting business in the Council Board is as
follows :
The subjects proposed by the President are first to be discussed,
and he is to have the power of adjourning any questions which
may be proposed by the Members of the Council, but not more
than twice, and not longer than forty-eight hours each time.
All orders are to be expressed as made by the Governor General
in Council. Powers are given to the Governor General to act
contrary to the opinions of the Members of Council ; but, in such
cases the Governor General is alone to be responsible. On such
occasions the Governor General and Counsellors are to communicate
to each other their opinions and reasons, by minutes in writing,
and to meet a second time ; and if both retain their first opinions,
the minutes are to be entered on the consultations, and the orders
of the Governor General are to be deemed valid and put in
execution.
In the event of the Governor General visiting any subordinate
Q Presidency,
114
Presidency, he is vested with the power to appoint a Vice Presi-
dent to act in Bengal during his absence, who, with the Council,
are to administer the government in that Presidency only. The
authority of the Governor General, and that of his Council, are
transferred to the Council Board of the Presidency where he may
be present, except in judicial cases.
When the Governor General is at a subordinate Presidency, the
Governor of that Presidency is only to have one voice in Council,
his other authorities, except in judicial cases, becoming suspended :
and if the Governor General should be in the field, all the govern-
ments and officers are to obey his orders, he alone being responsi-
ble. These extraordinary powers, however, are not to extend to
the imposing of taxes, nor to any act which might not be done by
the whole Council, nor to any judicial case, nor to the suspension
of any standing order of Government ; and these powers of the
Governor General are not to be exercised by persons casually suc-
ceeding to the temporary government.
The Government is laid under restrictions to prevent war, or ex-
tension of territory, in India, unless hostilities against the Company
or their allies should render war and its consequences unavoidable.
The members of the subordinate Governments who might act
contrary to this decree or to the orders of the Governor General,
are to be suspended from their offices or dismissed the service, be-
sides being liable to farther punishment. The subordinate Presi-
dencies, for the purposes of preserving uniformity in the system
of government, are required with every possible despatch to com-
municate all matters of importance to the Supreme Government.
The Governor General is vested with the power of apprehending
all persons suspected of illicit correspondence, of examining and cross-
examining
115
examining witnesses, and the evidence given by them is to be recorded.
Such persons may be tried either in India, or may be sent home for trial ;
the depositions of the witnesses, in the latter case, are to be sent home, and
to be received in evidence, but subject to impeachment in respect to the
competency of the witnesses.
In all cases where there may be an equality of voices, the acting
President of the Council is vested with the power of giving the casting
vote.
The Board of Commissioners was continued with the following addi-
tional provisions : The person first named in the King's commission was
declared to be president ; three members were to form a Board ; officers
might be appointed by the Board ; the salaries to the Commissioners and
officers were first authorized ; those to the Commissioners were not to
exceed in the whole £5,000 a-year, and to the officers of the Board
£11,000, making a total of £16,000. The Board was to approve all
grants of salaries beyond £200 a-year. The Secret Committee was
also instituted. In 1811 the sum for the salaries and expenses of the
Board was fixed at £22,000, and in 1813 at £26,000. In the latter year,
also, the Board was invested with control over territorial appropria-
tion, and the Board's confirmation is necessary to gratuities above £600,
and also to the restoration of servants.
It will have been perceived, that one of the professed objects of
the Act of 1793 was to remedy the abuses of the clandestine trade :
and it proposed to do this by abrogating the former prohibitory
law, and permitting British residents in India not only to act for
foreigners, but to export from thence, annually, a certain quantity
of goods in the Company's ships. It was intended by this last
Q 2 new
116
new privilege, to furnish a legal and patriotic channel for the
trade which the fortunes of British residents carried on from
India to Foreign Europe, by admitting that trade directly into
the Thames. It is true that, at the period here spoken of, large
channels of remittance by bills on the Company were open ; and
it was sufficiently obvious, that British residents, who had been
carrying on a traffic in violation of the laws and their engagement
with the Company, had not thereby merited new privileges : but
this consideration was absorbed in the national object of bringing
a trade which it was found difficult to suppress, immediately to
our ports. Yet even in the way of establishing this privilege, the
free merchants of India were regarded rather as secondary than as
principal objects; for it was primarily conceded to the manufacturers
of Britain, who were allowed to send their productions in the
Company's ships to India for sale, and to bring back the pro-
ceeds in Indian goods : and the permission to lade home such
goods was then also extended to British subjects residing in India.
But the manufacturers made so little use of it, the privilege rested
almost wholly with the residents abroad. The extent was three
thousand tons annually, with a proviso for the augmentation of
that quantity if necessary. Thus, for the first time, individuals
were admitted by law into a participation of the trading privileges
of the Company, by being allowed to send goods for sale in the
Company's ships.
In the month of May 1795, representations reached the Court
of Directors through the Bengal Government, of the insufficiency
of the provisions of the Act of the 33d George III. in regard to the
allotment
117
allotment of 3,000 tons of shipping for the private trade. The
quantity was represented as inadequate, and the' rates of freight
too high. The impossibility of the merchants at Calcutta knowing
what portion of the tonnage might have been previously engaged
in England, or could be appropriated for parties in India, presented
an insurmountable obstacle to an increased exportation from India.
The remedy proposed was the employment of shipping belonging
to British subjects in that country, of which there were then 30,000
tons at Calcutta, 16,000 of which had been built in India ; the rate
of tonnage, sB\2 in peace, ^16 in war. The goods to be sent to
London, and lodged in the Company's warehouses, and to be sold
as other private trade goods, subject to the Company's duty of ^83
per cent.
In June 1794, the principal merchants of Calcutta, in a body,
addressed Lord Mornington, congratulating him upon his arrival
in India, expressing the satisfaction with which they reflected on
the fact of his Lordship having been a member of the Board of
Control, whereby he must have acquired a full knowledge of every
point beneficial to the territories over which he was placed, as well
as to the commerce of the mother -country ; and urged on the con-
sideration of his Lordship all the arguments which had been ad-
vanced in favour of a general permission for India-built ships to
carry cargoes thence to London, under certain regulations, so as
to secure a permanent benefit to the East-India Company, the
British nation, and the nations and countries in Asia under the
sovereignty of Great Britain. Such a measure, it was stated, would
annihilate the illicit trade of Europe, and secure to London those
certain
118
certain advantages only to be derived from being the grand depot
of Asiatic commerce.
In March 1 799, Mr. Dundas, in bringing forward the India Bud-
get, took occasion to advert to the increase of the exports from
India, and to the necessity which would arise for an extension of
the means of bringing the same to British ports in British vessels.
In April 1800, he brought the question of private trade and
India-built shipping distinctly before the Court, in a letter to the
Chairman, dated the 2d of that month. He felt the more anxious
to come forward on that subject, because it was impossible for him
not to observe a shyness on all hands to come to the discussion :
and he was not surprised at it, because there never was any ques-
tion where those who differed went to such opposite extremes
as those had done who had taken an active part in the agitation
of it.
In order to avoid being misunderstood upon the general question
involving the policy of continuing the union of the government
and the trade in the hands of the East-India Company, Mr. Dun-
das expressed himself as follows, viz.
" In the first place, I set out with disclaiming being a party to those
" opinions which rest upon any general attack of the monopoly of the East-
" India Company, either as to the government or commerce of India. My
" sentiments, in that respect, remain exactly the same as they were when
" I moved the renewal of the Company's charter in 1793 ; and if any
" thing, I am still more confirmed in the principles I brought forward at
" that time. That a direct interference by Government in the affairs of
" India is necessary for their stability and uniformity, I am more and more
" convinced ;
119
ft convinced ; but that the ostensible form of government, with all its
M consequent extent and detail of patronage, must remain as it now is, I am
" persuaded will never be called in question by any but those who may be
" disposed to sacrifice the freedom and security of our constitution to their
" own personal aggrandizement and ill-directed ambition. I remain equally
" satisfied, as to the propriety of continuing a monopoly of the trade in
" the hands of the East-India Company. Those who maintain the reverse,
" appear to me to be misled by general theories, without attending to the
'*. peculiar circumstances of the trade they are treating of. Viewing it even
" as a mere commercial question, I believe the proposition to be a sound
" one ; and if the trade were laid open, the supposed advantages thence
" arising are at best very problematical, and would be certainly very
" precarious and short-lived. It is, however, totally to forget the question,
" to treat it as a mere commercial one. The same principles which prove
" the necessity of the present form and mode of Indian government, evince
" the necessity of the monopoly of trade. The government and the trade
" are interwoven together, and we have only to recur to a very recent
" experience, to learn the immense advantages which have flowed from
" that connexion of government and trade. By the commercial capital of
" the Company at home acting in connexion with the public revenues
" under their administration abroad, they have materially aided and
" administered to the wants of each other ; and the result has been, the
" fortunate achievement of those brilliant events, upon the success of which
f* depended the existence of the government, the territorial wealth, and
" the trade of India."
And with regard to the scale of ships employed by the Com-
pany, Mr. Dundas remarked:
"Upon that subject there seems to be a greater abuse of terms, and a
" more
120
" more palpable confusion of ideas, than upon almost any other part of this
" complicated question, in so far as any person is loud in disclaiming against
" the abuse of that great interest being confined exclusively to few hands
" who, by such a monopoly, might have it in their power to dictate such
" terms as they pleased to the East-India Company. On the subject of
" freights, I am as prepared as any man to join in crying down that abuse ;
" but I am equally adverse to the sentiments of those, who contend that the
" great interest of the Company's trade is to be left to the chance of the
" market at large, and that the extent of the freight is either wholly or
" primarily to be the exclusive object of the Company's attention. I am
" decisively of opinion, that both on views of public policy and commercial
" security, the same description of ships should be continued in the Com-
" pany's service, built under the same inspection and regulation, fitted and
" formed in every circumstance in the same respectable way they have
" hitherto been ; and though every partiality and lavish extravagance is
" to be avoided, a freight fully adequate to secure those advantages ought
" not to be churlishly withheld.
" Having, 1 trust, made myself distinctly understood on those leading
" points, I proceed next to say what I hold to be equally uncontrovertible,
" that although the Legislature has, for the wisest purposes, given a
" monopoly of trade to the East-India Company, it is a monopoly at-
" tended with these two material circumstances, 1st, That the exportable
" produce of India exceeds what at present the capital of the East-India
" Company is capable of embracing ; 2d, That the monopoly of the
" East-India Company does not rest on principles of colonial exclusion ;
" for the trade to and from India is open to the subjects of other countries
" in amity with Great Britain. We must, therefore, accurately attend to
" the considerations which naturally result from these last-mentioned
" circumstances."
On
121
On the point of agency :
" If the question, by what agency is the trade of individuals to b e
" carried on, was to be decided on the principles of an open and free
" trade, the answer would be, that every individual should send out or
*' employ any agent he thought best to manage his own business ; but that
" no agent should be employed in India or permitted to reside there,
'« except with the license of the East-India Company, and subject to the
" control of such regulations as the habits, prejudices, and trade of the
" Company might render expedient. In addition to every other consider-
" ation arising out of the peculiar nature of the trade and manners of
" the country, there is one decisive circumstance against the tolerance of
" every unlicensed adventurer in India. It would rapidly, though insensi-
" bly, lead to the settlement and colonization of the worst kind of adven-
" turers taking root in that country, than which there could not be a more
" fatal blow to the permanence of the British power and pre-eminence in
" India. No principle ought ever to be tolerated or acted upon, that does not
" proceed on the basis of India being considered as the temporary residence
" of a great British establishment, for the good government of the country
" upon steady and uniform principles ; and of a large British factory, for
M the beneficial management of its trade, upon rules applicable to the
" state and manners of the country. With regard to the agents, provided
" they were licensed by the Company, and subject to the control of the
" regulations which the Company might see cause to establish for the con-
" duct of agents in India, he (Mr. Dundas) could see no reason why those
" agents might not be permitted to exercise their agency for behoof of their
" constituents in any of the territories of India. He stated this even with
" regard to agency exercised for behoof of foreigners trading to India. It
" was clearly beneficial for the interests of India, in every point of view,
" that foreigners should rather employ British agents residing under the pro-
" tection of the Company in India, than that those foreign nations should
R " establish
122
" establish agents of their own in any part of India. In the former case,
" they were under the control of the Company, and bound to adhere to
" such rules as the Company might think proper to lay down for the con-
" duct of agency ; but there could exist no such control or restraint over
" the agents of the other description.'*
From the foregoing premises the conclusions drawn by Mr.
Dundas were :
" That the surplus produce of India beyond what the appropriated
" capital of the East- India Company could bring home, should be con-
" sidered the means of transferring the fortunes of the servants in India
" to Great Britain ; and that the commerce should be managed there either
" by the parties themselves interested in it, or by their agents acting under
" the license, and subject to the control and regulations of the East-India
" Company.
" The question which naturally followed was, — by what mode of con-
" veyance is that trade to be brought home ? To this he (Mr. Dundas)
" replied, — by the India^built shipping.
" In supporting the propositions for the employment of India shipping,
" it was enquired by the merchants and ship-owners resident in Britain,
" why they should not have the same indulgences which are contended for
" by His Majesty's subjects resident in India ? The answer was plain and
" conclusive : that in contending for that indulgence to the British subjects
" resident in India, he (Mr. Dundas) was contending for a material
" national interest, which was no other than this, that their fortunes,
" capitals created in India, should be transferred from that country to
" this, in a manner most beneficial for themselves and for the kingdom at
" large, in place of being transferred through the medium of commerce by
" foreigners, and thereby adding to the wealth, capital, and navigation of
" foreign countries.
" Here was not a single circumstance in which that applied to the case
" of
123
" of the merchants of this country. It might be proved, if necessary, that
" the only effect of giving such an indulgence to the merchants residing in
" this country would be a temptation to withdraw a part of the capital of
•* the country from a more profitable trade, and more beneficial application
" of it, in order to divert it to other trade less profitable to themselves, and
" less beneficial to the public. Without, therefore, one single reason,
" either of private justice or public policy, it would be introducing a rival
" capital in India against the remittance trade of the East-India Com-
" pany, and in competition likewise with those individuals, whose capi-
" tals, by the proposed indulgence, it was wished to transfer to Great
" Britain.
" It was argued, that the extension of that indulgence of the British
" merchants would be an additional encouragement to the export of British
" manufactures. The argument proceeded on an erroneous view of the
" subject. The export trade to India could never be extended in any
" degree proportionate to the wealth and population of the Indian empire,
" neither could the returns upon it be very profitable to individuals. Those
" who attended to the manners, manufactures, food, raiment, and the
" moral and religious prejudices of the country, could be at no loss to trace
" the causes why that proposition must be true. The importance of that
" immense empire to this country is rather to be estimated by the great
" annual addition it makes to the wealth and capital of the kingdom, than
" by any eminent advantages the manufacturers of the country can derive
" from the consumption of the natives of India. He (Mr. Dundas) did
" not mean to say that the exports from this country to India had not been
" very considerably increased of late years, and he made no doubt that,
" from recent circumstances, they might be still considerably increased ;
" but, from the causes already alluded to, the prospect must be always a
" limited one ; and he was positive that the shipping and exertions of the
." East-India Company, joined to the return cargoes of the ships which
"* brought home the private trade of India, was more than adequate to any
R 2 " present
124
" present or future increase of export trade that this country could look
-' to upon any rational ground of hope."
The foregoing extracts, though long, are too interesting to be
omitted. They contain on points of much importance, the matured
opinions of a nobleman, who was unquestionably more con-
versant with Indian subjects, and the principles upon which the
affairs of that vast and increasing empire had been and should
continue to be governed and conducted, than any other individual
of modern times. The very effects predicted by his Lordship as
to remittance and the increased trade, are now most severely felt
by the Company, their servants, and the private -traders themselves.
The letter was referred to a Special Committee, who made an
elaborate report to the Court on the 27th January 1801 : and on
the 1st February the Court passed fifteen unanimous resolutions
comprehending the principal matters of the report. To these
Mr. Dundas replied on the 21st March, and stated :
" That it was upon the principle and basis of the measure where he still
** had the mortification to find himself in a difference of opinion from those
" whose integrity and talents he was equally bound to acknowledge; and
" that radical difference was the more to be regretted, because the great
" object of solicitude which both parties entertained was precisely the
" same. They were both strenuously maintaining, that the preservation
" of the monopoly of the East- India Company was essentially requisite for
" the security of every important interest connected with our Indian
" empire; and so deeply was he impressed with the truth of that propo-
" sition, that although the first formation of an East-India Company
" proceeded upon purely commercial consideration, the magnitude and
" importance to which that Company had progressively advanced was so
" interwoven with the political interests of the empire, as to create upon
" his mind a firm conviction, that the maintenance of the monopoly of the
" East-
125
" East-India Company was even more important to the political interests
" of the state than it was to the commercial interests of the Company.
" That with this strong conviction he had reviewed his opinions with
" the most jealous attention; and he had weighed with the most anxious
" care the arguments of those, who supposed that the system he had re-
" commended was likely to produce any inconvenience or danger to the
" rights, privileges, and exclusive interests of the East-India Company.
" But it was his misfortune to view the subject in an opposite light. If any
" thing could endanger that monopoly, it was an unnecessary adherence
" to points not essential for its existence : and, on the other hand, if it
" were seen and felt by sober, thinking, and wise men, that every facility
" was given spontaneously by the Company, which could be given con-
" sistently with their commercial interests and the political welfare of the
" state, that consideration would present an impregnable rampart against
" any attack which, at any time, either the secret or the avowed enemies
" of the Company might be disposed to make against the system of Indian
" government established in connection with the exclusive charter of the
" East-India Company."
During this correspondence between Mr. Dundas and the Court
of Directors, a letter was received on the 2d March 1801 overland
from Calcutta, dated the 30th September 1800, from the Marquis
Wellesley, submitting a view of the urgent considerations which
had determined him to adopt the temporary arrangements for the
current year which he had introduced in October 1798, and ex-
pressing a hope that the Court would speedily confirm his pro-
ceedings, by a permanent system of regulation founded upon
similar principles. His Lordship stated :
" Your Honourable Court will observe, that the expected amount of
" the tonnage of 1800-1 is inadequate to the demand in India, and that
" a large
126
" a large proportion of the gruff goods belonging to the Company at this
" Presidency, and nearly the whole of the private goods for which the
" Company is bound by law to furnish tonnage, cannot be shipped during
" the season 1800-1 for England, unless ships built in India shall be em-
" ployed between this port and that of London.
" The employment of ships built in India between this port and that of
" London is, therefore, no longer merely a question of expediency or of
" liberal commercial policy. The deficiency of the tonnage expected from
" Europe, reduces me to the extreme necessity of providing a large pro-
" portion of Indian tonnage for the service of the present season, in order
" to secure the conveyance of the heavy articles of your investment and
" to fulfil your legal obligations. The only question on which I retain the
" power of exercising a free judgment with relation to this subject, is
" confined to the mode of obtaining the necessary tonnage for these indis-
" pensable purposes."
The dissensions on the subject continued between the Board
and the Court. Paragraphs proposed by the latter were rejected
by the Board, as being opposed to the views which had already
been submitted by the President. The papers were printed and
laid before the Proprietors.
On the 12th of June the House of Commons called for a copy
of all the papers connected with the subject of private trade. It
was on that day that Mr. Dundas, as the last act of his Indian
administration, laid before the House a statement of the Com-
pany's finances.
The Court, on the 15th July, sent up to the Board of Commis-
sioners paragraphs for Bengal, intimating that it was their inten-
tion to have detailed the grounds upon which they disapproved
the plan suggested by the Governor General, but in consequence
of
127
of a motion in Parliament on the subject, they confined their
directions to the trade and intercourse of individuals in India with
this country being governed by the Act of 1793. The Board
altered the paragraphs, leaving out that part which had reference
to the conduct of the Governor General, conceiving
" That it would be unnecessary to send out paragraphs, the tendency of
" which might be to occasion uneasiness in the mind of the Governor
" General, who had, no doubt, acted upon the occasion in the manner
" which he conceived would be most for the advantage of his employers."
The Court on the 23d July sent up an amended draft, still dis-
approving the conduct of the Governor General.
On the 31st July Mr. Addington, then Chancellor of the Exche-
quer, addressed a letter to the Court, referring to an advertise-
ment for building ships for the Company's service, and stating
that he was induced by a strong sense of public duty to represent
to the Court the inexpediency of entering into such contracts, until
the very important subject which had recently occasioned a cor-
respondence between the Commissioners for the Affairs of India
and the Court, had undergone the investigation and discussion,
which it might be presumed would take place in the ensuing
session of Parliament.
The Board on the 4th August returned the paragraphs sent on
the 23d July, disapproved ; and substituted other paragraphs,
accompanied by observations.
The lengthened discussion terminated in a despatch in the
Commercial department to Bengal, under date the 16th June
1802, which conveyed instructions for providing ample means for
the shipment of the private trade from India.
In
128
In 1802, Lord Cornwallis was nominated to represent the British
nation at the negociation to be carried on at Amiens for a definitive
treaty of peace between the two nations. Considerable anxiety was
manifested for the conclusion of the treaty, and various questions
were put to the Minister in Parliament. One of the propositions
brought forward by M. Joseph Buonaparte related to the augmen-
tation of the French commerce and territory in India. Various papers
were moved for in both Houses previous to the discussion on
the treaty, which was fixed for the 13th May 1802. In the
House of Commons on the 12th May, Dr. Laurence moved for
certain papers relative to India, including an account of the acquisi-
tions made, or pretended to be made, by his most Christian Majesty
on the coast of Coromandel and Orixa, between the years 1748 and
1^63. Mr. Dundas opposed the motion. He remarked, that
" With regard to European powers, we could say freely and dis-
" tinctly, we had gained our possessions in India by our arms, and by
«* our arms we would keep them. When he observed that we should not
" prevent the French trading, he meant that he was not afraid of them as
" merchants ; he was not unwilling to give them a boon as such, but he did
" not think he was going too far in desiring to guard against that which he
" knew the French had endeavoured to make, and will endeavour to make,
" if they see any probability of success — he meant an encroachment on our
" sovereignty in India. This they have done ; and if an opportunity offers
" they will do, under the pretence of pursuing trade. They will ask to be
" allowed to do a number of things for the purpose of carrying on trade, when
" their object will be to encroach upon our sovereignty. It was in this way
" they endeavoured to encroach upon us in 1787, when they told us they could
" not recover their debts without a certain enlargement of power; we resisted
41 that
129
" that distinctly, and he hoped such would be the conduct of this country in
" future."
The very first article insisted upon by Lord Auckland in 1787,
was,
•" That nothing in the most distant degree touching our sovereignty in
" India, would, on any terms or conditions whatever, be assented to on the
" part of this country ; and he hoped it was not presumptuous in him to say,
" that he trusted His Majesty's Government would adopt the same principle,
" and stand upon the same ground as we did then : if we did so, he would
" venture to say there would be no danger ; depart from that principle,
" and our sovereignty in India would be first undermined, then attacked,
" and perhaps overthrown."
On the 8th May 1805, a Committee of the House of Commons was
appointed to take into consideration the account between the Public
and the East-India Company, arising out of the expedition to the
French Islands, the Cape of Good Hope, the intended expedition
against Manilla, the expenses incurred on account of the purchase of
vessels for His Majesty's navy, the capture of the Danish settlements
in India in 1801, the extraordinary expense by the expedition to
Egypt, and the balance of property in Ceylon.
The Committee reported on the 26th June following : their report
was ordered to be printed. The investigation embraced a period of ten
years, from 1794 to 1803 j during which commissions had been appointed
at three different times on the part of the Treasury and the East-India
Company, for the purpose of considering the most equitable mode of
adjusting the account. The minutes of those meetings formed part of
the appendix attached to the report. The first, dated 1st January 1803,
S when
130
when the Right Honourables Charles Bragge and Nicholas Vansittart,
Esq., were appointed by the Chancellor of the Exchequer and the Lords
of the Treasury, on the part of Government ; and Jacob Bosanquet, Esq.,
Deputy Chairman, and Sir Hugh Inglis, Bart, on the part of the East-
India Company : in December 1804, and January 1805, the meeting was
held between the Right Honourables Charles Long and William Dundas,
and the Deputy Chairman (Charles Grant, Esq.) and Sir Hugh Inglis,
Bart. The Committee reported that a balance of about £2,200,000 was
owing by the Public to the Company ; but as the detail would require
revision, they recommended that £1,000,000 should be provided in the
supplies of the year, to be voted to the Company ; which sum was accord-
ingly voted on the 29th June. Another million was voted in the follow-
ing year, on the report of the accountant named by the Lords of the
Treasury on the part of the Public.
FIFTH PERIOD,
From 1808 to 1830. Comprising the Jive reports of the Select Committees of
the House of Commons on India affairs : — the opening of the negotiation in
1808 for a renewal of the Company's exclusive privileges ; — the capture of the
Moluccas, the French Islands, and the island of Java ; — the evidence before
the House of Commons and the Committees of the Lords and Commons, which
ended in the Act of 1813, continuing to the Company the territorial revenues
and government with the China trade to 1834, including three years' notice, but
opening the trade with India, and empowering the Board, in the event of the
Court's refusal, to license persons and ships to proceed to India ; — the separa-
tion of commercial and territorial accounts ; — the allotting from the Indian
revenues to a Europe investment a sum equal to that paid in England on
qccount of political disbursements for India, instead of a fixed sum of one
million
131
million sterling as before ; — the appointment of a Bishop and Archdeacons for
India ; — the review of the civil and military establishments ; — the embassy to
China ; — the correspondence with the Board as to permitting an entrepot in
the Eastern Archipelago for Tea ; — the Committee of the Lords on the foreign
trade of the country, and their reports on the British trade with Asia ; — the
subsequent Acts as to the trade, passed under the power reserved in the Act
of the 53d George III., 'permitting a circuitous trade ; — a direct trade to
Gibraltar and Malta ; — an enlargement of the Circuitous Trade Act ; — a
repeal of the size of the ships, which had been fixed at 350 tons ; — the aboli-
tion of licenses for ships ; — the consolidation of the Trade Acts ; the final
settlement of accounts between thePublic and the Company; — the agreement of
the Company to pay £60,000 per annum for retiring pay and pensions; —
the erection of a Supreme Court at Bombay ; — the revision of the pensions to
the Bishops, Judges, and Archdeacons ; — the Act as to criminal justice in
India, also as to insolvent debtors and juries ;*—the Nepaul, Pindarrie, and
Mahratta wars ; — the Burmese war, and the siege and fall of Bhurtpore.
On the 18th April 1808, a petition was presented by the Company
to Parliament, setting forth the various expenses which had been
incurred by them, for expeditions from the continent of India to the
French, Dutch, and Spanish islands in the Indian seas, under instruc-
tions from his Majesty's Government, and to Egypt, and the claims
which the Company had on that account. They stated the actual
amount of their property in England, and that they did not request
the interposition of the House to aid them, without shewing their
unquestionable ability to discharge all their present debts in England,
the property of unsold goods in their warehouses being d£J fi> 15,000.
The Chancellor of the Exchequer having stated that his Majesty
recommended the petition to the consideration of the House, it was
S 2 referred
132
referred to the Select Committee appointed on the 7th March, to
examine and report.
On the 15th May, Sir John Anstruther, as chairman of the Select
Committee, delivered in their Report, which was ordered to be
printed.
That report forms the first of a series of five reports laid before the
House of Commons, on the affairs of the East-India Company, from
the year 1808 to 1812 inclusive.
The Committee offered it as their opinion, that the state of the Com-
pany's affairs, as exhibited in the accounts, was to be traced to a combi-
nation of various circumstances connected with the wars in which they
had been engaged in India, as well as with the general state of warfare in
which a large portion of Europe had for a long period been involved. In
adverting to that part of the petition wherein the Company represented
their ability to discharge all their debts in England, and to repay whatever
the House might think fit to assist them with, the Committee stated, that
they felt it to be their duty carefully to investigate that part of the subject,
and that they had no difficulty in giving their opinion, that there would
remain in this country assets to an amount considerably beyond what the
then exigency of the Company's affairs appeared to demand, as secu-
rity for any advance to the extent which Parliament might think fit to
grant.
The report was referred to tlie Committee of Supply on the 13th
June. On the 14th, .sgl, 500,000 was granted to enable his Majesty
to pay the same to the East-India Company, on account of the
expense incurred by them in the public service.
On the 30th September 1808, Mr. Dundas addressed a letter to the
Chairs from Melville Castle, adverting to the subjecrof a renewal of the
Company's
133
Company's exclusive privileges, and to a continuance of the system
of government of the British territories, which had been the subject
of frequent consideration and discussion, and expressing his opinion,
that it would be advisable to ascertain whether the Court of Direc-
tors were desirous of agitating the question at that time, and of sub-
mitting it in all its details to Parliament.
The letter was read in a Secret Committee of Correspondence on
the 5th October, and again on the 12th, when a letter from the Chairs
to Mr. Dundas was agreed to, stating it as the opinion of the Com-
mittee, as well as their own, that the interests of the Public as well
as of the Company would be best consulted by continuing the present
system, trusting that there would be no disposition to introduce any
change that would alter or weaken the main principle and substance
of a system, essential to the due management and preservation of
India.
On the 7th December the above-mentioned letters and the proceed-
ings of the Committee of Correspondence were laid before the Court,
and approved unanimously.
On the 16th December a letter from the Chairs to Mr. Dundas was
approved in the Court of Directors, intimating the concurrence of
the Court in the letter from the Chairs of the 12th October, and
suggesting that, under the present system of government, with a
regulated monopoly trade, the territories had been improved, and
the security and happiness of the vast population signally increased.
It had established salutary checks for the exercise of authority lodged
in this country over the Indian administration, and for all its details,
political, judicial, commercial, and financial, had produced servants,
both civil and military, of distinguished skill and conduct The
Court
134
Court therefore trusted, that no material change would be made :
in which case it would be unnecessary to enter into any discussion of
the right of the Company to the territorial acquisitions ; a right
which they hold to be clear and must maintain.
A comparison was made of the Company's situation then and in
1793. European wars had continued with hardly any intermission ;
wars in India had been carried on not directed by the executive body.
The Indian debt had been increased from eight millions in 1793 to
thirty-two millions ; hence the benefits to the Proprietors expected
in 1793 had not been realized : and the Court trusted that, in the
formation of a new charter, especial care would be taken, that no
measures would be adopted which could have the effect of reducing
the value of the capital stock. The dividend on that stock, which
was only equal to the legal interest of money, was all that the Pro-
prietors had ever received from the united sources of Indian revenue
and Indian commerce, whilst the country had been enriched by the
long-continued influx of private wealth, and raised in the scale of
nations by the political importance of the Indian empire.
The liquidation of the Indian debt was considered a matter of
indispensable necessity. The aid of the public was adverted to for
that purpose : the security to be found in the Indian territory and
revenues.
The apportionment of the military expenses of the Indian empire
between the Public and the Company was viewed as unavoidable-
The heavy expense of the military establishment, particularly that of
the King's troops, was insisted upon. The contemplation of India
being invaded by France would make it a European war for Euro-
pean objects ; a struggle between England and France upon the soil
of
135
of India : hence the national funds ought to provide for that con-
tingency. It was considered that an early renewal of the charter
would conduce to the best interests of the Company.
The foregoing observations with regard to the possibility of a war,
which should bear the character of a European war for European
objects, may at first sight appear to have been uncalled-for ; but
when it is recollected that the expedition to Manilla in 1J62 was
undertaken at the instance of Ministers, for the avowed purpose of
despoiling Spain, then our enemy; when it is likewise remembered
that the expedition to Egypt, the reduction of the French islands,
and subsequently of the Moluccas and Java, were all undertaken at
the instance of Ministers, in support of the views of the cabinet of
Great Britain with reference to European policy, and that the Com-
pany, in consequence of those operations, became involved in an
enormous outlay, which they were only partially repaid after a great
lapse of time, as will be seen by the proceedings of the Parliamentary
Committees of the day, the foresight and soundness of the sugges-
tion will be admitted.
Mr. Dundas replied to the foregoing letter on the 28th December.
His remarks were to be deemed preliminary, and not as the result of
any plan in concert with His Majesty's confidential servants. He
observed ;
" That he had not yet heard or read any arguments against the continu-
" ance of the system under which the British possessions in India were
" governed, of sufficient weight to counterbalance the practical benefits
" which had been derived from it in their increased and increasing pros-
" perity, and the general security and happiness of their inhabitants. It
" was possible that the same effects might have been produced under a
" government
136
° government immediately dependent upon the Crown ; but for the attain-
" ment of those objects the experiment was at least unnecessary, and it
" might be attended with dangers to the constitution of this country,
" which if they could be avoided it would be unwise to encounter. Any
" alteration, therefore, which might be suggested in that part of the
" system, would probably be only in its details.
It was deemed unnecessary to discuss the question of the Company's
righf to the permanent possession of the British territories in India.
The right could not be relinquished on the part of the Public. It
was admitted to be very desirable that no measure should be adopted
which should have the effect of reducing the value of the Company's
capital stock ; but the Company's claim to remuneration from the
Public, on account of war or other events, was not recognized.
Upon the liquidation of the Indian debt Mr. Dundas observed :
" If we were now called upon to discuss the right of the Public to the
" territorial revenues which have been obtained in India, either by cession
" or conquest, it would be impossible to relieve the question from the fair
" claims of the Company, and their creditors, to a reimbursement Jof their
" expenses, and the discharge of the debts which have been contracted in
" the acquisition and maintenance of those possessions. Entertaining that
" opinion, and convinced that the liquidation of the Indian debt, in the
" most speedy and effectual mode, would be a measure of mutual interest
" and advantage, I do not suppose that your suggestion in the fourth
" article would be objected to by Government, provided the necessity, or
" at least the expediency, of such an interference on the part of the Public
" is made obvious and apparent; and provided also, that sufficient security
" is afforded for the punctual payment of the interest, and of an adequate
" sinking fund for the liquidation of the principal of any sums advanced
" for that purpose. I need not remind you, however, that any such aid
" from
137
" from the Public will be unavailing, and the relief afforded by it will be
" temporary and delusive, unless by the zealous exertions of your Govern-
" ment abroad, and the minute and detailed investigation and unremitting
" attention of the Court of Directors, the ordinary expenditure in India,
" including the interest of debt, shall be brought within the limit of your
" annual income.
" If the principal theatre of the war between European nations be
" transferred to Hindostan, it must be supported, to a considerable extent,
by European resources ; and if our empire in India is an object worth
" preserving, the country must contribute to its defence against any attack
" of the description which we have been taught to expect."
No reason was seen for extending the term beyond twenty years.
In alluding to the trade Mr. Dundas stated, that it was fit that the
Court should understand distinctly, that he could not hold out to
them any expectation that His Majesty's Ministers would concur in
an application to Parliament for a renewal of any privileges to the
East-India Company, which would prevent British subjects, mer-
chants and manufacturers, from trading to and from India and the
other countries at that time within the limits of the Company's ex-
clusive trade {the dominion of the Emperor of China excepted), in
ships or vessels hired or freighted by themselves, instead of being
confined, as then, to ships in the service of the Company or licensed
by the Directors.
He concluded by adverting to the military system in India, which
he considered
" Would require alteration, for the removal of those jealousies and
" divisions which had unfortunately been too prevalent between the
" different branches of the military service in that quarter, and which must
T " at
138
at all times be particularly prejudicial to the public interest, and for
the correction of the anomalous system of divided responsibility
which prevailed in that country, in every thing that related to the
military defence of India. The only effectual remedy for those evils
would be found in arrangements for consolidating the Indian army with
the King's troops, founded upon the plan so strongly recommended by
Lord Cornwallis, with such modifications as the actual constitution of
the Company's service might render expedient or necessary. Those
arrangements needed not to be attended with any alteration of the
system of promotion among the officers of the native branch of the
service, with any diminution (they might more probably produce an
increase) of any of her professional advantages which those officers then
enjoyed. Neither would they in any degree interfere with the general
authority possessed by the Court of Directors and the Governments in
India over all His Majesty's forces serving in those parts, or with their
control over all disbursements of a military nature. He was moreover
not aware of any reason against continuing in the Court of Directors
the nomination of all cadets destined to hold commissions in the Indian
army.
" He assured the Court that it would be the earnest desire of His
Majesty's Government, to suggest to Parliament such a system only as
should be conformable to the principles on which the regulations of
1784 and 1793 were founded, as would secure to this kingdom all the
benefit that could practicably be derived from its trade w r ith our
possessions in India, and to the natives of those countries a government
and an administration of law, suited to their customs, habits, and
prejudices, and consistent with the British character, and which should
also be strong and efficient, without adding unnecessarily to the authority
of the executive government at home, or increasing to any dangerous
extent the influence of the Crown."
A reply
139
A reply to Mr Dundas' letter was approved by the Court on the
17th January. It was confined to the two points, the Trade and the
Army, and intimated that, had not the letter from Mr. Dundas con-
cluded with the declaration it did, it would have filled the Court
with the deepest concern.
The Court observed, that if either of those two propositions were
to be acted upon in the sense which the terms of it seemed obviously
to convey, they had no hesitation in declaring their decided con-
viction, that it would effectually supersede and destroy not merely the
rights of the East-India Company, but the system of Indian admi-
nistration established by the Acts of 1784 and 1793 ; and with respect
to the latter proposition for the transfer of the native army, it
appeared to be incapable of any modification, which would not still
make the overthrow of the system the certain consequence of it.
With respect to the private trade, the Court said, that the Com-
pany were not governed by narrow considerations of commercial
profit or commercial jealousy, and, in fact, that the Indian trade, as
an object of gain, had gradually ceased to be of importance either to
the Company or to individuals. The admission into it already ac-
corded to British resident's in India, with the prodigious increase of
the cotton manufactures in Europe, the changed circumstances of
the European continent, and the almost incessant wars which had
prevailed for the last sixteen years, had reduced the value of that
trade to a very low point.
In any scheme of intercourse, purely commercial, between this
country and India, the leading objects must be to export as many as
possible of our home manufactures, and to import those commodities
which would either beneficially supply our own consumption or the
T 2 demand
140
demand of other countries, European or transatlantic, and it was no
doubt imagined by many persons, that if the trade to India were
perfectly free, those objects could be attained in a degree extending
far beyond the then existing scale.
The times, it would also be said, peculiarly demanded new
attempts and discoveries in commerce, and His Majesty's Govern-
ment might very naturally wish, at such a crisis, to procure for the
country every possible facility for the exertion of its commercial
capital. But before a change in its principle, altogether novel and
obviously connected with national objects of the highest importance
was adopted, the Court observed, it ought to be seen not only on what
national grounds the expectation of advantages entertained from it
rested, but to what consequences so material a change might expose
the country and its Indian dependencies. They contended at great
length, that the entire opening of the Indian trade to the merchants
of this country would not, in reality, extend in any considerable de-
gree, if at all, the consumption of British manufactures; and that as
to the productions of India valuable for foreign commerce, the trade
of Europeans of different nations to all parts of it in the course of the
last three centuries, might well be presumed to have left little for dis-
covery in that way.
The reasons assigned for the period of transfer of the Indian army
to the King were, that an end might be put to the jealousies and divi-
sions which had too much prevailed between the officers of His Ma-
jesty's army and those employed by the Company, and that the res-
ponsibility in the country of providing for the military defence of
India be ascertained and strengthened.
Upon this the Court stated :
" The
141
" The Indian army is the main instrument by which the Company
« have acquired and retained the possessions they have added to the
" British empire. The constitution and character which this Indian
" army have acquired have been the subject of just admiration. These
" have been owing essentially to the happy mixture of bravery and
" generosity, of firmness and kindness, exercised towards the Sepoys by
" their European officers. The superior lights and energy of the
" European character have directed the powers, and conciliated the
" prejudices of the native troops : but it was because the officers knew the
" people and their prejudices well. These officers had been trained up
" among them from an early age : the nature, the usages, and the languages
" of the natives were become familiar to them ; and the natives,
" remarkably the creatures of habit, in return, from- being accustomed
" became attached to them. Without such knowledge, however, on the
" part of the officers, they might every day have revolted the minds
" of so peculiar a race, and have alienated them from our service and
" government.
" An Indian military education from an early age is essential to the
" formation of a good sepoy officer, and gradual rise in the service by
" seniority is no less indispensable. In this way the Indian army has been
" constituted and rendered eminently efficient, and all measures tending
" to change or weaken the constituent part of this fabric are to be
" deprecated.
" The introduction of European troops from His Majesty's army into
" India altered this state of things. Young officers of no Indian experience,
«' who had obtained their commission by purchase, took rank of men of
" long and tried service : the King's officers were thought to come
" in, also, for too large a share of employments and advantages. To
"redress the complaints which the Company's officers made of super-
" cessions and partialities, and to give them a better share of the benefits
" of
142
" of the service, was the leading object of Lord Cornwallis' plan of 1794,
" and with him a principal motive for proposing to transfer the Indian
" army to the King, no other practicable means having occurred to him.
" But the object was in substance attained by the military regulations of
" 1796, passed in concert with His Majesty's Government, without that
" transfer, of which his Lordship did not revive the idea on his last
" return to India, those regulations having given increased rank and
" retiring pay to the officers of the Company's army. The causes of
" complaint, however, did not entirely cease. To avoid the collision of
11 authorities, the Company had adopted the usage of appointing the
" Commander-in-chief of the King's troops also their Commander-in-chief;
" and one consequence of this has been, that the Company's officers,
" resident from early youth in India, possessing little influence in England,
u unknown to officers of high rank in His Majesty's service, have
" thought themselves treated with less favour and distinction, than younger
" officers of that service, recently arrived but better patronized. You
" know, Sir, (said the Court) that there have been instances of this sort,
" which the Court, with the sanction of your Board, have interposed to
" repress ; but as long as the British force in India is made up of two
" armies so differently constituted, with so large a portion of King's
" officers, the whole commanded by generals of His Majesty's service,
" there will probably be real or apprehended ground for the like com-
" plaints. They do notarise because one army has the honour to belong
" to the King and the other serves the Company, but because the
" constitution of the two armies is radically different, and must continue
" so, whether the armies are under one head or two. The Indian army
" cannot be maintained without officers attached to it from an early age,
" and rising by seniority. Frequent changes in King's regiments serving
" in India, and the consequent frequent arrival of young men promoted
" in them by purchase, cannot be avoided. The former class will be
" com pa-
143
*' comparatively unknown to the King's commanders : the latter will have
" among them the connexions of those commanders or of men of influence
" in England. It is not difficult to see, therefore, to which side the
" exercise of military patronage will lean : and to prevent causes of
'* complaint, and to keep the balance even, must be an important object
" in the government of India. It does not seem the way to effect this
" to put the Indian army wholly in the power of the Commander-in-chief.
V It is of the partiality of that station of which the Company's officers
" have sometimes complained; and the Court see no reason whatever to
" suppose that their jealousy and dissatisfaction would be removed by
" putting them entirely under its control; and indeed, by placing two
" armies of such different races, and so differently constituted, under the
" same master, it would seem difficult to avoid attaching the idea of
" permanent inferiority to that which was Indian.
" They must, at the same time, humbly express their opinion, that the
" law as it now stands is wisely conceived, since it does not halve the
" responsibility but double it, making both His Majesty's Government and
'* the Court of Directors fully answerable for the appointment of the
'* Company's Commanders-in-chief; and if it should still be said that, in
" point of fact, the selection of a Commander-in-chief for His Majesty's
" forces may be rendered difficult, by reluctance on the part of the Court
" to accept of the same officer for the command of the Company's army,
" it may be justly replied, that they make a sacrifice to the public interest,
" in agreeing that the Commander-in-chief of His Majesty shall also be
" the Company's : and when he is not only to command their army, but
" expects to be made a member of their civil and political government, it
** cannot be deemed unreasonable that they should possess the right of
',' satisfying themselves as to his competency for filling those high offices ;
" neither is it, as they think, to be shewn from theoretical reasoning or by
" an
144
" an appeal to facts, that the service will suffer or has suffered by their
" assertion of this right.
" But the strongest objections of the Court to the proposed transfer
" arise from political considerations. They conceive the continuance of
" the Indian army in the hands of the Company to be essential to the
<( administration of the civil, financial, and political affairs of British India
" according to the present system. The Company's Government has
" hitherto been respected by its own subjects and foreign powers, because
11 it possessed a great military force. Organizing this force, enlarging
" or reducing it at pleasure, appointing its officers, rewarding merit,
(i punishing the unworthy, providing for the comfortable retirement of
" the veteran soldier and officer, and in short, exercising all the functions
" of a governing power over a very numerous body of men of high
" military spirit, it has possessed all the respectability and the benefit of
u their attachment and fidelity.
" If the Company were to be divested of the whole of their military
" force and power, if they were to be no longer masters of a single
u regiment, no longer capable of entertaining any soldiers nor of giving
" one subaltern's commission, if the immense body of men who have so
" long looked up to them were to be transferred from them, the people
" must consider their power as fallen and drawing rapidly to a close.
" But this is not the only way in which the measure in question appears
" to the Court to be pregnant with danger. It proposes to place in the entire
" disposal of the Crown a regular army, amounting to one hundred and forty
" thousand men, commanded by above three thousand European officers,
" having a great variety of places of honour and emolument, and all the vast
" patronage attaching to such an army (saving the nomination of cadets)
" would, mediately or immediately, be under the influence or control of
" some of the members of His Majesty's Government. This would
" be a signal departure from the spirit and letter of the Acts of 1784
" and
145
" and 1793 ; a professed principle of which was, that the Indian patronage,
" civil and military, should be kept entirely out of the hands of the
" servants of the Crown. It is not for the Court to enlarge upon a pro-
" position so momentous; but they beg leave with the utmost deference
" to state, that they would deem it a dereliction of duty, to which no
" consideration could induce them to submit, to recommend any measure
" of this description to the adoption of their constituents."
On the 28th February 1809, the Chairs reported to a Secret Com-
mittee of Correspondence, that they had had an interview with Mr.
Dundas on the preceding day, when he observed, if the Company
were not under the necessity of coming to Parliament on the score of
their finances, he thought it expedient to delay the agitation of the
subject of the charter in Parliament till next session, because the
Committee of the House of Commons, which had been reappointed
on the 20th February to enquire into the state of the Company's af-
fairs, were about to examine into all the great branches of those
affairs which would engage public attention on the renewal of the
charter.
Nothing more is recorded of what passed until the 5th December
1809, when the Chairs, with the concurrence of a Secret Committee
of Correspondence, addressed a letter, marked " private," to Mr.
Dundas ; stating that, from the conference the Chairs had had the
honour to hold with him on the 13th February respecting the renewal
of the Company's charter, they were given to understand that al-
though His Majesty's Ministers did not deem it expedient to bring that
subject under the consideration of Parliament in the session then pre-
ceding, it might in their opinion be proper to prepare for the agita-
tion of it in the next following one : they therefore begged to state
U that,
146
that, in their opinion, it was desirahle that the discussion concerning
the renewal of the charter should be brought forward in the ensuing
session, both on account of the general situation of the Company's
affairs, and also on account of the particular pressure on their finan-
ces (arising chiefly from the transfer of certain sums of the Indian
debt to England) ; and therefore proposing, that the discussions be-
tween him (Mr. Dundas) and the Court on the subject of the charter
should be resumed, from the point at which they were left by the let-
ter addressed to him by the Chairs under date the 13th January 1809.
On the 13th April 1810, a petition was presented to the House
from the East-India Company, setting forth
The excessive and unexampled drafts made on them from India in the
two last years, amounting to £4,707,946, part of the Indian debt incurred
on account of wars and expeditions, pointing out the calamities which
had befallen the Company's shipping, to the extent in value of £1,048,077;
a loss in no way imputable to any want of care in the Company. That
as the unavoidable disbursement of the Company, from the 1st March
1810 to the 1st March 1811, would exceed the probable amount of their
receipts by £2,038,948, which sum it would be disadvantageous for them
to raise by the increase of their capital, they prayed the House would
grant such a vote for their relief as they might see fit ; the Company's
property and effects in England exceeding the amount of their debts,
including the heavy and unusual drafts from India before-mentioned, by
the sum of £4,842,145.
The Chancellor of the Exchequer, by His Majesty's command,
having acquainted the House that his Majesty had been informed
of the contents of the petition and recommended it to the House,
it was referred to the Select Committee appointed on the 20th
February.
On
147
On the 11th May, Sir John Anstruther laid before the House a
report from the said Select Committee, which was ordered to be
printed. On the 14th of that month another petition was presented
from the Company, praying leave that, as the time was past for
presenting petitions for private bills, the House would permit a
petition to be presented, praying the House to take the pecu-
niary claims of the Company into consideration. Leave was
accordingly given.
On the 23d May, the report from the Select Committee laid
before the House on the 11th, was referred to a Committee of the
whole House.
On the 3st May, Mr. Robert Dundas brought the subject be-
fore the House.
Having represented the difficulties in which the Company were
involved by the heavy drafts on account of the Indian debt, and
stated, in reply to an observation as to the Company being bankrupts,
that the affairs of the Company could not be considered as a mere
mercantile concern ; that they were not to be considered as bankrupt,
because their commercial profits in this country could not answer all
the demands for India bills ; that it might as well be said that the
country was bankrupt because it could not at once discharge a debt of six
hundred millions of pounds; he moved that the sum of £1,500,000 be
granted to the Company by the Public, to be repaid on or before 1st
January 1812 : which was agreed to by a majority of seventy three to ten.
The Act 50th Geo. III. cap. 114, brought in in consequence,
received the royal assent 20th June 1810.
On the 4th April 1811, the House of Commons ordered that the
Speaker should, on the 10th of that month, signify by writing to
U 2 the
148
the East-India Company, the resolution of the House as to the
three years' notice and the redemption of the arrears of annuity
due from the Public to the Company of ^1,207,559. 15s. The
notice was accordingly given by the Speaker, through his secre-
tary, to the Court of Directors, on the 10th April, in the form
following :
The Court being informed that the Secretary to the Speaker of the House
of Commons was in waiting, he was introduced to the Court, and delivered
to the Chairman the following resolution and order of the Honourable House
of Commons, viz.
" Whereas upon Thursday the fourth day of this instant April, the House
" of Commons came to a certain Resolution, which is as followeth :
'* * Resolved, That notice be given that the sum of one million two hun-
" ' dred and seven thousand five hundred and fifty-nine pounds fifteen
" 'shillings, and all arrears of annuity payable in respect thereof, being
" ' the remainder of the capital stock, debt, or sum due from the public
" 'to the United Company of Merchants of England trading to the East-
" ' Indies, will be redeemed and paid off on the 10th day of April 1814»,
" ' agreeable to the power of redemption contained in an act made in the
" ' thirty-third year of the reign of his present Majesty King George III.
" ' intitled, "an Act for continuing in the East-India Company for a further
" ' term the possession of the British Territories in India, together with their
" ' exclusive Trade under certain limitations; for establishing further Regu-
" ' lations for the Government of the said Territories, and the better Ad-
" 'ministration of Justice within the same; for appropriating to certain
" ' Uses the Revenues and Profits of the said Company, and for making
" ' Provision for the good order and government of the Towns of Calcutta,
" ' Madras, and Bombay. "
'« And
149
*' And whereas the House of Commons thereupon ordered, that the
" Speaker do, on the tenth day of April 1811, signify by writing to the
" United Company of Merchants of England trading to the East-Indies the
" said Resolution of the House :
*' I do hereby signify the said Resolution accordingly.
" Given under my hand, the tenth day of April 1811.
" CHAS. ABBOTT, Speaker."
" To the United Company of Merchants of England
" trading to the East-Indies."
The Chairman then requested Mr. Rickman, the Speaker's Secretary, to
present the compliments of the Court to Mr. Speaker, and to acquaint him
his notice had been duly received.
The Third Report from the Select Committee appointed to in-
quire into the affairs of the Company was laid before the House by
Mr. Wallace, and ordered to be printed on the 21st June 1811.
In this report the Committee entered into a further examination of
the receipts and expenditure of the Company, more especially of
the receipts and disbursements which might be termed Extraor-
dinary.
In adverting to the application of the funds the Committee observed,
that the accounts would doubtless be considered by the House as a
display of order, regularity, and precision, as satisfactory as could be
expected in the management of the extensive and complicated finances
of that great empire.
In adverting to the Indian Debt, the Committee considered it as due
to those entrusted with the government of India to state, that the growing
amount of that debt had from a very early period been the subject of
their most anxious attention.
The first recorded proceeding after the 5th December 1809, was a
letter
150
letter from Lord Melville of the 17th December 1811, in which his
Lordship referred to an understood wish of the Court, that a propo-
sition should be submitted to Parliament in the course of the ensuing
session for a renewal of the Company's exclusive privileges, and
adverted to the Court's reply of the 13th January 1809, to his letter
of the 28th December 1808, in which they declined to advise their con-
stituents to seek a renewal of their charter, on conditions which
would despoil it of all its solid advantages, deprive the Company of
their most valuable privileges, and incapacitate them from performing
for themselves and the nation the part hitherto assigned to them in
the Indian system.
" His Lordship did not feel it requisite, in that stage of the business, to
" enter upon a minute examination of the arguments from which that conclu-
" sion was drawn.
There were two points, however, of considerable importance.
The first related to the transfer of the Company's army to the
Crown : a measure which had been frequently suggested by persons
intimately acquainted with the military concerns of the Company,
and whose opinions were entitled to great consideration.
" It was impossible, however, not to admit that several weighty objections
" to such a change were stated in the letter of the 13th January 1809.
" Events which had since occurred must also have an influence in
" deciding that question, and might possibly suggest the expediency
" of adopting other measures for promoting the discipline and efficiency
" of the army in India."
The other point, was the proposition for enabling the Company to
meet the heavy demands which were then expected, and which, to a
certain extent, had since come upon them, by the transfer of their
Indian debt to this country.
In
151
In the King's speech at the opening of the session on the 7th Ja-
nuary 1812, the attention of Parliament was directed to the propriety
of providing such measures for the future government of the British
possessions in India, as should appear from experience and mature
deliberation " to be calculated to secure their internal prosperity, and
" to derive from those flourishing dominions the utmost degree of
" advantage to the commerce and revenue of the United Kingdom."
An answer was unanimously approved, dated the 4th March,
to Lord Melville's letter of the 17th December.
The Court stated,
" That as they understood His Majesty's Ministers had made up their
" mind not to hold out to the East-India Company a continuance of the
" existing system of trade with India, they would reluctantly offer this
" measure to the consideration of the Proprietors, with whom alone the
" power vested of consenting to such a fundamental change in the consti-
" tution of the Company. In communicating, however, their sentiment
" of reluctance by which the determination of the Court to submit the
" propositions in question to the Proprietors of East-India Stock was
" accompanied, the Court hoped it would be clearly understood, that that
" determination arose from a presumption that such military powers as
" were vested in the Company would be left unimpaired, which could alone
" induce them to entertain an expectation of their being able, in a manner
" satisfactory either for the Company or the Public, to perform the part
" which had been assigned to the Company in the government of a distant
" empire; also that such regulations would be adopted, as would prevent
" the highly dangerous intercourse with Europeans in the East ; and that
" such an arrangement would be made in respect to pecuniary matters,, as
" would enable the Company to meet with confidence the present state of
" their affairs. The Court also hoped that, in the extension of the trade
" which the Company enjoyed, His Majesty's Ministers had not had in
" view
152
" view the hazardous experiment of dispensing over all the ports of England
" and Ireland, a trade then brought, with so much andvantage to the
" Company and the Public, to the single port of London."
The Court then entered into a refutation of the charges brought
against them on account of the repeated calls which they were ac*
cused of having made upon the Public. They stated:
" That large and necessary outlays, in fact, constituted the source of the
* Company's embarrassment. A considerable part of the money raised in
" India upon periodical loans to meet that outlay, had by the terms of those
" loans been made payable, if required, in England, and in consequence of a
" general reduction of interest from eight to six per cent, being at once
" thrown upon the Company for immediate payment in Europe, a sum which
1 ' without the aid of Parliament it was impossible to discharge. Of that large
" expenditure, sanctioned, and in many cases specifically directed by the
" Minister of the Crown, it might with justice be asked, what part had been
" incurred for the partial or exclusive advantage of the Company? It was
" evident that the whole concern had been begun and continued by private
" exertions alone ; nor had the Proprietors received by any means an ade-
" quate recompense for those exertions : they had scarcely derived more
" benefit than the mere interest-money."
In the second place, it had been often urged
" That the Company had been favoured during their exertions with an
" exclusive trade, and that the nation had thereby lost an opportunity of
" extending their commercial enterprizes over a large quarter of the globe.
11 During part of the period, from 1768 to 1812, the Public had received
" in direct contributions from the Company a sum not falling short of
« £5,185,319."
With respect to the immediate produce of the trade to the Public,
" The Court believed it would bear comparison with that arising from any
" other
153
" other distant possession. It produced in the preceding year to the Public
" the large sum of £4,213,425; viz* in customs, £759,595, and in excise,
" £3,453,830; and although that return to the Public was larger, as the Court
'* had reason to think, than the return from any other trade, it had at the same
" time been collected with a facility unknown to other concerns: an ad-
" vantage which had been obtained partly by the progressive enactments of
" regulations the fruit of many years* experience, and partly by the concen-
" tration of the trade in a single port, and the prevention of smuggling which
" had been the consequence of it.
' ' But what had never yet been fully estimated in the existence of the East-
" India Company was, that the whole of those returns had been brought into
* ' the Exchequer of the Public, without the Public having been called upon for
" any direct contribution for the preservation of the source whence they have
" had their rise ; whilst the possessions of the Crown in every quarter of the
" globe had drawn from them a considerable sum for their support in troops."
A Deputation which had been appointed by the Court on the 2d
March, waited upon Lord Melville on the 4th of that month, with
hints and observations which had been approved by the Committee of
Correspondence.
« HINTS " OBSERVATIONS
" Approved by the Committee of Correspon- " Of the Right Honourable Lord Melville on
" dence, and submitted to the Consideration " the Hints submitted to His Lordship's
" of the Right Honourable Lord Melville. " Consideration by the Deputation of the
Court of Directors, Sd March 1812.
" That the renewal of the Charter
" shall proceed upon the basis of the
" Act of 1793, and that no greater ex-
*' tension of the trade shall be granted
" than what was allowed by that Act;
** but the Deputation are ready to re-
" commend
154
" Hints. " Observations.
" commend to the Court of Directors,
" and ultimately to the Court of Pro-
" prietors, to admit such modifications
" as may be deemed necessary to give
" greater facilities to the private trader.
" 1. No British or Indian ship to " 1, % and 3. It is deemed advi-
« sail, directly or circuitously, from a " sable, with a view to the security of
" British port in Europe to China. " the revenue and to other objects con-
" 2. No British subject to be per- " nected with the trade to China, to
" mitted to reside in China, without " leave it on its present footing, and
" the Company's license. " to guard, by proper regulations,
" 3. No goods, the growth or pro- " against any encroachment on that
" duce of China, to be imported into " branch of the Company's exclusive
" any of the ports of the United King- " privilege.
" dom, except by the East-India Com-
" pany.
" 4>. The power of levying duties in "4. This proposition ought to be
" India upon British subjects, and the " acceded to ; with the reservation,
" subjects of foreign nations, to be " however, that the Governments in
" continued to the Company, upon the " India ought to be restricted from im-
" footing on which it at present exists; " posing new duties, without the pre-
" and the same power, with respect to " vious sanction of the authorities in
" British subjects, to be extended to " England.
" the districts within the jurisdiction
" of the courts of Calcutta, Madras,
" Bombay, and Prince of Wales Island.
" 5. Saltpetre to be considered as a u 5. The Company are understood
" political article, and to be confined " to have, in some degree, the power
•' exclusively to the Company. " of regulating the internal trade of
'* saltpetre
155
" Hints.
" 6. The whole of the Indian trade
" to be brought to the port of London,
" and the goods sold at the Company's
" sales, and to be, as at present, under
" the Company's management.
" 7* The three per cent, now paid
" to the Company by the private tra-
" ders, from the warehousing and ma-
" nagement of the private trade, to be
" increased to five per cent.
" 8. No private ship to be permitted
" to sail for India, except from the
" port of London.
" 9» No ship to be permitted to sail,
" except under a license from the East-
" India
" Observations."
saltpetre in India ; it appears, there-
fore, to be scarcely necessary to im-
pose any other restrictions on the
exportation of saltpetre from India,
than such as may be deemed expe-
dient for political objects, especially
in time of war.
" 6. The adoption of the regulation
suggested in this proposition, will
probably tend to the security and
advantage of the public revenue, in
collecting the duties on all articles
imported from the East-Indies and
China, as well as other countries to
the eastward of the Cape of Good
Hope.
" 7. The Company ought at least to
be indemnified from the charges in-
curred by this management.
" 8. There does not appear to exist
" any sufficient reason for preventing
" ships from clearing out for the East-
" Indies from other ports in the United
" Kingdom besides the port of Lon-
" don.
"9. It will be necessary, either by
" the regulations suggested in this pro-
X 2 "position,
156
" Hints. " Observations.
" India Company. Ships obtaining this "position, or by others of a similar
"license, to deliver one copy of their "description, to guard against the
"journals at the East-India House; " evil therein described.
" and the license to contain such
." clauses, as may be likely to prevent
" an unlimited or improper intercourse
" of individuals with India.
" 10. Fire-arms, military and naval " 10. It will probably be necessary
" stores, to be prohibited articles. " to regulate the exportation of mili-
" tary stores to the East-Indies, and
" also of naval stores in time of war.
" 11. Existing restrictions, with re- "11. It is understood that the ob-
" spect to the article of piece goods, " ject of this proposition is to secure to
" to be continued. " the manufacturers of piece goods in
" India the continuance of regular and
" constant employment, under the
" same system of local management,
" for their benefit, which prevails at
" present. If that object is likely to be
" attained, without continuing the re-
" strictions mentioned in this proposi-
" tion, it certainly would be desirable
V that they should cease, except in so
" far as it may be necessary to regulate
" the importation of Indian piece
" goods, with a view to the protection
" of British manufactures.
" 12. It being desirable, as well for " 12. As no such restriction exists
" the Public as for the Company, that " at present in the importation of silk
f the " by
157
" HfNTS.
**■ the quality of the silk grown in India
" should not be deteriorated, it is sub-
" mitted that this article be confined
" to the Company.
" 13. The ships of private persons
" to be subject to the same regulations,
" in respect to convoys, &c. as those
" belonging to the Company.
" 14. No private ship to be permit-
" ted to sail, either from Great Britain
" to India, or from India to Great
" Britain, of a less burthen than four
" hundred tons.
" Observations.
" by private merchants, and as the
?• reasons which have hitherto been
" adduced, on the part of the Court of
" Directors, for establishing such a
" regulation, though entitled to much
" consideration, do not appear to be
" conclusive, it will scarcely be deem-
" ed expedient to agree to this pro-
" posal.
" 13. This suggestion appears to be
" perfectly reasonable.
" 14. It is understood, that this
" proposition is founded on a principle
" of guarding against the dangers to
" which vessels of less burthen than
" four hundred tons would be exposed
"ona voyage to the East-Indies, and
" also of providing for the security of
" the revenue, which might be affect-
" ed by permitting importations in
11 smaller vessels. These reasons,
" though entitled to due considera-
" tion, do not appear to be sufficiently
" strong to justify the proposed re-
" striction, or the making a distinction,
" in that respect, between ships trad-
'.• ins to the East-Indies and to other
countries.
15.
158
" Hints. " Observations.
" 15. The Company to be subject " 15. This seems to be reasonable.
" to no obligation with respect to ex-
" ports to India, except in common
" with the private traders.
" 16. The Lascars and Chinese sai- " 16. It will be necessary to pro-
" lors brought home in private ships, " vide, by proper regulations, for the
14 to be placed under proper regula- " care and maintenance of these per-
" tions. Not, upon any account, to " sons, and for their return to the
" be suffered to wander about the " East-Indies.
" streets of London. Good treatment
t€ to be secured to them, and the
" Company to be enabled, by some
" summary process, to recover the ex-
" penses to which they shall be subject-
" ed, in the event of neglect on the
11 part of the owners of such ships in
" these respects.
" 17. The Company to be indemni- " 17. This proposal would be wholly
" fied for their unexpired engagements " inadmissible, unless it were limited to
" for extra shipping, provided for the " such unexpired engagements as do
" accommodation of theprivate traders. " not extend beyond March 1814, when
" the Company's present term of ex-
" elusive privileges will expire; but the
" Public may fairly look to the Com-
M pany to bear this burthen, as a com-
" pensation, to a certain extent, for
" the continuance of the exclusive
" trade to China.
" 18. An unrestrained intercourse " 18. It will be indispensably ne-
" with « cessary,
159
" Hints. " Observations.
" with India to be prevented, and the " cessary, for the purpose of guarding
" existing restrictions, with respect to " against the inconvenience herein al-
" residence in India, to be continued. " luded to, that the existing restric-
" tions shall be continued, with such
" alterations as may be requisite, in the
14 new system of trade.
" 19. The number of His Majesty's " 19. The number of His Majesty's
" forces in India to be in future main- " forces to be maintained by the East-
" tained by the East-India Company " India Company may, without incon-
" to be now fixed, and any troops sent " venience, be limited, as herein sug-
" beyond that number (except at the " gested. It will be necessary, how-
" express requisition of the East-India " ever, in consequence of the increased
" Company) to be at the charge of the " extent of the British territories in
" Public. " India, since the passing of the Act
" by which the number is at present
" regulated, that a considerable addi-
" tion should be made to it.
" 20. The Company to be released " 20. It will be necessary that the
"from any future account with the " present system of accounting between
" Pay-Office, and to be henceforward " the East-India Company and the Pay-
" charged, either so much per regiment " master General should be abolished,
" of a given force, or so much per man. " and new regulations enacted.
" 21. The present heavy current " 21. These demands must neces-
" and postponed demands of the Pay- " sarily be arranged on the principles
" Office against the Company to be " suggested by the Committees of the
" arranged upon some footing of gene- " House of Commons, who have re-
'• ral equity, and some advertance in " ported upon the subject of the ac-
" settling this account made to the " counts herein referred to. If it were
" share which the Company have been " necessary or proper, in discussing the
" obliged , " future
160
" Hints. " Observations.
" obliged to bear in foreign captures " future regulations which it may be
" not retained by them, and to their « deemed advisable to establish, re-
H having been constrained to maintain " specting the affairs of the East-India
" an European and native force, larger " Company, there would be no diffi-
• than what was required for the de- " culty in demonstrating that the
" fence of the Peninsula, and other " amount of force maintained in India
" heavy expenses. " has not gone beyond what was requi-
" site for the defence and security of
" the Company's possessions, and for
" other operations, intimately and in-
" separably connected with those ob-
" jects.
"22. The Proprietors to be secured, "22. The Proprietors ought to be
" as at present, in the receipt of their " secured, as at present, in their divi-
" dividend of ten and a half per cent., " dend of ten and a half per cent.
" upon the faith of which dividend the
" capital in 1793 was raised.
" 23. The whole of the surplus of " 23. The whole of the surplus funds
" the East-India Company to be appro- " of the East-India Company, at home
" priated to a diminution of their debts, " and abroad, ought to be applied, in
" until the debts be reduced to the sum " the first instance, to the reduction of
" of ten millions sterling. " debt, till it is reduced in India to the
" sum of ten millions, and the bond
" debt at home to the sum of three
" millions, after providing for a pro-
" portionate increase of the capital
" stock of the Company, if they shall
" think fit to avail themselves of the
" power
161
" Hints. " Observations.
" power now vested in them by law to
" that effect.
" 24. The sums required by the « 24. It is intended to submit to
u East-India Company to liquidate the " Parliament a proposition to that ef-
" debt transferred from India to Eu- « feet, or similar in substance.
" rope, and becoming payable in 1812
" and 1813, to be funded by the Mi-
" nister, the interest of which shall be
" regularly paid into His Majesty's
" Exchequer by the Company, together
" with any such per-centage, for the
" gradual liquidation of the capital or
" redemption of the fund, as shall be
" deemed proper by His Majesty's
" Ministers.
" The twenty-fifth article did not
" form a part of the propositions sub-
" mitted to Lord Melville, but is now
" introduced by the Committee of Cor-
" respondence, and is as follows, viz.
" 25. That, in order to give the ut- « 25. If the object adverted to in
" most possible extension to the com- " this proposition can be obtained by
" merce of private merchants, and at " exclusion from the dominions of the
" the same time to secure the Compa- " Emperor of China, and a prohibition
" ny's exclusive trade to and from " to import the produce of that coun-
" China, private ships be not permitted " try without license from the Com-
" to go farther eastward than Point tl pany, it will be preferable to the
" Romania, at the entrance of the « mode herein suggested. There seems
" China Y " to
162
" Hints. " Observations.
" China Seas, and to the northward, " to be no reason for excluding the
" not beyond the equinoctial line. « private trade from the Spice Islands.
" N.B. Should it be the intention
" of Government that private traders
" shall be excluded from the Spice Is-
" lands, the limits ought then to be for
" them not to go to the eastward of
" the Straits of Bally, nor to the north-
" ward of the Line."
Lord Melville, in returning the Observations with the remarks on
the 21st March, wrote :
" In adverting in your letter of the 4th instant to the statement contained
" in mine of the 17th December, on the proposed transfer of the Company's
" army to the Crown, you do not appear to have understood accurately the
" purport of my suggestion. I entertained no doubt as to the expediency
" of continuing to the Company's government in India the supremacy of
" their military as well as civil authority ; but though various regulations
" may possibly be necessary, with the view to promote the discipline and
" efficiency of the army in India, I am not aware that any legislative enact-
" ments are requisite, except as to the amount of force which His Majesty
" may be empowered to maintain in India at the expense of the Company :
" and perhaps, also, some provisions in regard to the relative powers of the
" Board of Commissioners and the Court of Directors."
On the 7th April 1812, a petition was presented from the
Company, praying that leave might be given to bring in a bill
or bills, for continuing the possession, government, and manage-
ment of the territorial acquisitions of the East-Indies in the
Company.
The
163
The petition was ordered to lie on the table.
Numerous petitions from various parts of the country were
presented to Parliament, praying for a free and open trade with
India.
The Fourth Report from the Select Committee was laid before
the House by Mr. Wallace, and printed. It entered into the home
concerns of the Company. In the early part of this Report the
Committee made the following remarks with reference to the
China trade :
" The trade with China has for a very long period formed a part of the
" exclusive privilege of the Company, and has been carried on upon prin-
" ciples conducive, in a very eminent degree, not only to the advantage of
" those embarked in it, but likewise to the interests of the British empire in
" its revenue, in the employment of its shipping, and in a steady and con-
il tinued demand for its manufactures."
On the 22d July the Fifth Report was laid before the House
of Commons and ordered to be printed. It treated of the political,
military, revenue, and judicial establishments in India.
" It can, in the opinion of your Committee, admit of no question, whether
" the dominion exercised by the East-India Company has on the whole been
" beneficial to the natives. If such a question were proposed, your Com-
" mittee must decidedly answer it in the affirmative. The strength of the
*■* government of British India, directed as it has been, has had the effect of
" securing its subjects as well from foreign depredation as from internal
" commotion. The nature and circumstances of our situation prescribe
" narrow limits to the prospects of the natives in the political and military
" branches of the public service : strictly speaking, however, they were
" foreigners who generally enjoyed the great offices in those departments,
" even under the Mogul government; but to agriculture and commerce
Y 2 " every
164
" every encouragement is afforded under a system of laws, the prominent
" object of which is to protect the weak from oppression, and to secure to
" every individual the fruits of his industry."
After the election on the 9th April 1812, a new Deputation of
Directors was appointed.
The Earl of Buckinghamshire succeeded Lord Melville as Pre-
sident of the Board on the 4th April 1812. The Court on the
15th approved a letter from the Chairs to his Lordship, in which
they proposed to continue the correspondence, and referred to
Lord Melville's letter of the 21st and 23d March, and to his obser-
vations on the Hints submitted by the Deputation. The opinions
of the Court against opening the trade were re-urged.
Various arguments were set forth in support of confining the
private trade to the port of London.
On Monday the 20th April the Chairman communicated to the
Court, that in a conversation with the President of the Board the
preceding evening, he had learned the intention of Ministers to
extend the Indian trade to the outports. The Court strongly
remonstrated against this unexpected change.
On the 9th June a petition was presented from the Company for
a loan of ^S, 500, 000, to enable them to meet the bills drawn on
account of the Indian debt. The same being recommended by his
Royal Highness the Prince Regent to the House of Commons, was
referred to a Committee on the 7th July. The bill for advancing
the s£2,500,000 on loan to the Company passed the Commons, and
received the royal assent the 13th July.
In the same session an Act was passed, authorizing the Company
to re-transfer to the East-Indies debts originally contracted there.
The
165
The negociation appears to have ceased until the 17th Novem-
ber following, when the Chairman reported to the Committee of
Correspondence, that he had learnt from the President of the
Board that it was the intention of His Majesty's Ministers not to
abandon the proposition they had made for allowing a direct trade
between the outports and India ; but that Lord Buckinghamshire,
before resuming the correspondence relating to it, was desirous that
the Committee of Correspondence should hold a conference with
Lord Liverpool and himself upon the subject.
A meeting accordingly took place on the 1st December, between
His Majesty's Ministers and the Committee of Correspondence,
when it was agreed that, in order that the most unreserved dis-
cussion should take place, no minutes should be taken.
On the 10th February 1813, a report from the Committee of
Correspondence was laid before the Court, containing observations
on the several petitions from the outports. The Committee en-
tered at great length into the reasoning of the petition, and
observed,
11 That the Petitioners treated the whole question of the monopoly as if it
" were purely a question of commerce ; as if it involved no high question of
" policy ; as if it stood unconnected with the acquisitions, the government
" and the preservation of a great Indian empire ; and as if, from its poli-
" tical relations, the question concerning it had no bearing on the British
" constitution. Thus, said some of the petitioners, * the reasoning in favour
" of the monopoly proceeds from narrow partial views, demonstrated to be
" fallacious, and which will apply equally to every other branch of British
" commerce;' whereas it was abundantly obvious, that the exclusive com-
" mercial privileges enjoyed by the Company in the Indian trade (how-
u ever well they were entitled to them on other accounts) were contended
" for
166
" for by them, and had been continued by the Legislature, mainly because
" deemed to be necessary for the political government of India, and not at
" all on account of any pecuniary participation, which one of the petitions
" erroneously assumed to be in question. The same cause was also under-
" stood to require the continuance of the China monopoly, though that
" privilege stood upon other irrefragable grounds, as the unlimited admis-
" sion of British ships into any quarter of the Eastern seas could not be
" thought compatible with the system adopted for the security of our
" Eastern territorial possessions. The commercial monopoly therefore was,
" in a word, an instrument in the hands of the Company for the political
" government of India. Such it had been maintained by them, and
" admitted by Ministers in the discussions respecting the charter to be ;
" but that great truth, either as a fact or as a principle, was unnoticed in
" the petitions. Some of the petitioners were, indeed, so just as to recoi-
" lect that the India Company had territorial rights, and to say that it was
" not their wish to trench on them j but they did not seem to be aware that
" those rights could be enjoyed only through the medium of commercial
" privileges, or that any provision could be made for securing them, com-
" patibly with their own claims for an universal opening of the Eastern
" trade."
Lord Buckinghamshire, to whom the same had been forwarded,
acknowledged its receipt, and stated that the report would receive
that serious and deliberate attention which had been given to every
part of the important subject to which it related.
On the 23d February 1813, a petition was agreed to by the Ge-
neral Court to Parliament, for a renewal of the Company's exclusive
privileges. After setting forth the origin and progress of the Com-
pany under the several charters granted to them, it concluded as
follows, viz.
" Your
167
" Your petitioners feel it to be their duty to express to this Honourable
House their sincere opinion, that the public interest cannot be better
consulted than by continuing your petitioners as the sole organs and
channel, both for the trade with and the government of India, upon the
principles established by the Act of the 33d year of His Majesty's
reign, with such variations as to the financial appropriations, and in
some other points of detail, as present circumstances require and expe-
rience has pointed out. Your petitioners ask not for an exclusive trade
upon the narrow principles of monopoly, for the mere purpose of com-
mercial gain : they have under their care interests of a much more ex-
tended and liberal nature, which it is their duty to attend to. Your
petitioners are ready to become parties to any arrangement which shall
be consistent with the rights of your petitioners and the security of
British India, and which will not deprive your petitioners of the means
of fulfilling their pecuniary engagements with the Public and individuals,
or the performance of the functions which may be continued or allotted
to them.
" As your petitioners do not venture to anticipate what may be the deter-
mination of this Honourable House upon the question hereby submitted
to its decision, your petitioners hope that they will be excused for humbly
stating what, in the event of the dissolution of the present system, they
conceive would be found to be the rights of your petitioners, as well as
their fair pretensions upon the justice and liberality of Parliament. The
absolute right of your petitioners, for their own use, to a considerable part
of the forts, towns, islands, territories, and rights which they have ac-
quired abroad never has been questioned, and your petitioners believe it
to be unquestionable ; and notwithstanding the claim made for the Public
to other parts of the territorial acquisitions and revenues of your peti-
tioners, they entertain a strong hope that the property, as well in those
parts which were acquired by conquest under the powers of peace and
" war
168
" war lawfully exercised by your petitioners, as in those parts which were
" otherwise acquired, would be found to belong to your petitioners, in the
" same way as any other property within His Majesty's dominions belongs
" to the owners thereof, subject to the sovereignty and allegiance due to
" His Majesty. But even supposing it should be determined, contrary to
" the sense and expectations of your petitioners touching their rights, that
" those places were not the property of your petitioners, your petitioners
" submit that, in that case, if the possession were to be assumed on the part
" of the Public, your petitioners would have a just right to reimbursement of
" the expenses which they have incurred in acquiring and maintaining
" them, and in making the fortifications, and civil and military buildings
" and works which your petitioners have erected and built upon, with a
•f compensation for the services and risk of your petitioners during the long
" time which they have had the possession and government of such terri-
" tories under the confirmation of Parliament, and all other charges in-
" curred by your petitioners relative to such territories. These expenses
" and charges amount to many millions of money. Your petitioners also
" submit, that they have a just claim to be reimbursed all the sums they
" have paid in discharge of debts contracted on account of the territories,
•■' and to be indemnified against all other debts in respect of them, and
«' which now remain undischarged.
" Your petitioners do not question, as an abstract principle, the right of
" any of His Majesty's subjects to trade with any part of His Majesty's
" dominions ; but your petitioners humbly submit, that it cannot be con-
" tended that any persons can have a right, except with the consent ot
" your petitioners, to use the settlements, factories, and seats of trade, or
" to avail themselves of the means and facilities, moral and physical, which
" your petitioners, at a great expense and risk, have created and acquired,
44 and now at great current charge maintain, for the purposes of commerce
" and civil intercourse."
On
169
On the 27th February 1813, Sir George Staunton was requested
by the Chairman to favour the Court of Directors with any com-
munication which he might be enabled to make on the subject of
the China trade. Sir George Staunton, in consequence of such
requisition, transmitted to the Chairman, on the 15th March, a
paper entitled " Considerations upon the China Trade," in which
he entered at great length into a statement of the circumstances
peculiar to that trade, which placed in a strong point of view the
extreme importance, if not absolute necessity, of continuing it
substantially on its present footing.
The object of the paper was to shew in what manner the prosperity,
and comparative security, of the China trade had arisen out of the
system under which it had been conducted : a system which, through
the medium of an exclusive Company, diffused the profits and advantages
of a great and well-regulated commerce, in equitable proportions, directly
or indirectly, over the whole of the British community; first, by its
regular and secure contributions to the revenue (by which so much
equivalent taxation of a different description is avoided) ; secondly, by
its satisfactory and amply abundant supply of an universally desired
article of daily consumption ; thirdly, by its distinguished success in
extending the sales and maintaining the credit of British manufactures
and productions ; and lastly, by the support and employment it gave
to multitudes in the marine and other services of the Company, exclusive
of that large and important proportion of the British community pri-
marily interested in it, under the denomination of East- India Proprietors.
To point out in what manner the Chinese have recognized and become
accustomed to the existing system, and how, in fact, while it had had the
effect of reconciling them to our principles of government, it has enabled
Z us,
170
us, in a great degree, to counteract the worst features of their own;
and it was inferred that, by a dereliction of the system in question, the
trade could not be improved, though it might probably be ruined.
That though it might be thus put into other hands, there was no proba-
bility, in the nature of things, that into whatever hands it might fall,
it could benefit or advantageously employ a larger portion than it did of
the British public.
On the 22d March 1813, the House of Commons resolved itself
into a Committee to consider the petition of the East-India Com-
pany for a renewal of their charter. Lord Castlereagh, in intro-
ducing the subject, observed,
That if he and his colleagues had conceived that the arrangements
they should propose would shake a system which had unquestionably
answered all the great purposes of government, they would have hesi-
tated before they had suggested them ; but his proposition would not
only abstain from touching the principle of that system, but would
render it more applicable to the times. His Lordship submitted sundry
resolutions to the House, containing certain modifications of the system.
The propriety of hearing evidence at the bar of the House having been
acceded to, the examination commenced on the 30th March, before a
Committee of the whole House, with that of Warren Hastings, Esq.,
and was continued until the 13th April, when it was deemed expedient,
in order to save the time of the House, to appoint a Select Committee
for the further inquiry. A Committee for the same purpose was likewise
nominated in the House of Lords. The Minutes of Evidence form two
large quarto volumes, and contain much interesting information on the
affairs of India, and the commerce with that country and with China
generally.
On
171
On the 23d March a copy of the resolution submitted to the
House of Commons on the preceding day (Monday) given by
Lord Castlereagh to the Deputy Chairman, was laid before the
Court. Copies had been transmitted from the Board of Com-
missioners to the Court on the 22d March.
On the 24th March a General Court was held, at which a
unanimous resolution was passed, approving a petition to each
House of Parliament, praying to be heard by Counsel, and to exa-
mine evidence if necessary.
On the 31st May, Lord Castlereagh moved the order of the day
for the House resolving itself into a Committee, when the first
resolution for a continuance of the East-India Company with
certain exclusive privileges was submitted.
On the 10th June a Deputation from the Court of Directors,
accompanied by Sir Hugh Inglis, had an interview with the Earls
of Liverpool and Buckinghamshire and Lord Castlereagh, at Fife
House, the substance of which was stated in a memorandum
laid before the Court on the 15th June.
The memorandum stated, that there were some very material points on
which it was desirable that they should have a clear understanding with
His Majesty's Ministers j particularly the question respecting the realiza-
tion of funds in this country to meet the increased demands payable here
on account of the Indian territory, and the security of the dividend in
case the profits of the China trade should from the effects of smuggling be
greatly impaired.
With regard to the first head, Ministers dwelt upon the necessity of
allowing a fair experiment to be made by the private merchant, and not
using the power of the Company to cramp the efforts of individuals,
Z 2 ' and
172
and particularly not to carry on a losing trade for the purpose of re-
mittance.
To this it was answered, that the Company ought to be allowed to
use their own resources in their own way. That in doing this, they
could not be stated with any justice to cramp the trade of individuals,
a trade which they never had ; and that it would be hard to require
them to furnish any part of their funds in order to serve as a capital
for those individuals, which also was not requisite in order to a fair
experiment.
His Majesty's Ministers replied, that it was not intended to tie the
Company down to any particular mode of remittance to meet the territo-
rial demands here, but that it would be better for the country and them-
selves that they should limit their Indian trade.
To this the Deputation did not assent ; and a question arose about the
profits on the Company's Indian trade, and the funds by which it had
been carried on : on which subject the Deputation maintained, in oppo-
sition to Lord Castlereagh, the arguments already used by the Court.
But it was thought unnecessary to go at large into the question ; and, in
conclusion, Ministers declared, that if the Company, without any fault of
theirs, were brought into difficulty by the demands here on account of
the territory, the Government would certainly feel it proper, under such
circumstances, to recommend to Parliament to assist the Company to the
extent of their resources available in India.
With regard to the dividend, Ministers said that the surplus Indian
revenue was applicable to it as well as the commercial profits, and that
they did not apprehend much injury from smuggling; but, if any dif-
ficulty should occur in this respect, it would be time enough to interfere
when the difficulty occurred.
It was suggested to His Majesty's Ministers, that certain staple articles
of Indian produce should be left wholly to the Company, as piece goods,
raw
173
raw silk, and indigo ; and that all raw materials should be left to the
private merchants. But this was opposed, as not affording the fair expe-
riment intended ; and it was urged, that it would be for the interest of
the Company, in the eye of the Public and of Parliament, that they should
fairly lend themselves to this trial. It was asserted, on the other side,
that undoubtedly if the Company were to act under a new charter, they
would fairly come up to the intention of the Legislature ; but that, on the
other hand, they must not suffer from the suspicions or misrepresenta-
tions which might arise in any quarter. And His Majesty's Ministers
admitted, that the Company were to be at liberty to import any Indian
cemmodities, and to afford supplies to the China investment from India :
though Ministers also said, as matter of opinion, that it would be better
for the Company to abridge their Indian trade, or to confine themselves
wholly to that of China, which observation, advanced only incidentally,
was combated by the other side.
On the 26th June, the bill as brought into the House of Com-
mons was laid before the General Court, when the Directors were
requested to call a General Court, for the purpose of delivering
their respective opinions as to how far they might think it safe and
practicable for the Proprietors to act under the said bill with
security to their capital, certainty as to their dividend, and general
advantage to themselves and to the Public.
On the 15th July a Committee of the whole Court resumed the
consideration of the bill (which passed the House of Commons on
the 13th), and reported in detail their opinion thereon to the Court
of Proprietors.
After stating the prominent features of the bill, and of its probable
effect on the affairs of the Company, and pointing out the instances in
which they considered it favourable :
1st.
174
1st. As it regarded the security of the dividend, as the home net pro-
ceeds were not to be liable to territorial charges until after payment of
the dividend : and if in any year the fund for the dividend fell short,
the surplus of territorial income for the year preceding was liable to
make up the deficiency.
2dly. As regarded investment : the sum to be applied to it was not
to be less than the amount of the usual territorial charges at home of
£1,000,000 ; thus securing to the Company a commercial capital to that
amount, in addition to the amount of their exports of stores and goods
from England ; and also a provision for those territorial charges at home
which had hitherto been a burthen on the commercial funds, the whole of
those funds being liable for them.
They then adverted to the power of control given by the new charter,
and observed, that they might be distinguished into those which were
new, or those of which the principle, though not expanded, was to be
found in the former charter.
Of the first class were licensing ships and persons (saving as to agents
for private traders, which the Board were empowered to license by the
Act of 1793) to go to India, either by overruling the Directors or by
original jurisdiction.
The control over the College and Military Seminary in England.
Over the appointment to certain vacancies in Indian offices, which
were not to be supplied by the Directors without the approbation of the
Board.
Over the restoration of suspended or dismissed servants, civil or
military, which restoration was not to be valid without consent of the
Board.
Over the article of gratuities, of which none above £600 were to be
good without the consent of the Board.
It might be contended, however, that all these, except the first, fell
fairly
175
fairly within the scope of the general powers given to the Board by
the Acts of 1784 and 1793.
With regard to the power of control, of which the principle was to be
found in the former Acts, but the specification as to particular objects
was new, they related to the following particulars, viz.
Distinct accounts to be kept of the territorial, political, and commer-
cial concerns, as already explained.
A general control over the appropriation of the territorial revenues
(excepting the amount to be issued in India for territorial payments in
England).
The Board might require of the Directors abstracts, accounts, and
statements, relating to the affairs of the Company.
Vacancies of Governors and Commanders-in-chief were to be filled by
Directors with the approbation of His Majesty. This was new in point
of law, but only partly so as to practice.
Again, in alluding to the powers given to the Board, the Com-
mittee remarked :
" That the principle and substance of several of these powers were con-
" tained in former Acts ; but certainly, as they were now specified and
" extended, they altogether constituted a more strict and comprehensive
" control. Of this the Executive Body, as it affected themselves, and as
" it affected the general credit and interest of the Company, could not
" but be deeply sensible. They would not, however, allow their feelings
" on that score to carry them to an estimate of the subject beyond its real
" amount. Mortifying and derogatory as such new control must certainly
" be, they would not venture to pronounce that, if the other conditions
" of the charter were found eligible, that would be a sufficient motive for
" refusing it. The general powers of superintendence and control given
" by the former charters were in reality so large, that if they had been
" exercised illiberally or vexatiously, it might have been difficult for the
" Court
176
" Court of Directors to perform their functions ; and that, with respect to
" the present powers, much would depend on the spirit in which they were
" administered. If that spirit be temperate and just, it would be practicable
" tocarry on the Company's business ; if the powers were used in a way
" which men of character and liberal feelings could not brook, the issue
" might be most serious to the system of the Company."
Jacob Bosanquet, Esq. dissented from the Court's resolution of
the 15th July, approving of a report of the Committee of the whole
Court,
" Because he thought the bill pending in Parliament did not by any
" means render justice to the East-India Company, had not provided for
" the great and leading interests of the Indian empire, or was likely finally
" to be beneficial or satisfactory to the Public at large."
Joseph Cotton, SwenyToone, and William Astell, Esquires,
though not approving the whole of the report, recommended a
trial of the proposed measure.
At a General Court held on the 21st July, the Chairman stated
that the bill had passed the House of Lords, where it received
no alteration. A letter from Mr. Astell, dated the 19th July,
was read,
Expressing his concurrence in the recommendation contained in the
report from the Committee of the whole Court to the Proprietors,
to make a fair trial of the proposed charter, under the full persuasion,
that if eventually obstacles should arise from any quarter, or causes to
prevent or impede the execution of it by the Company after their best
endeavours to that end had been used, the responsibility of the failure
would not attach to them ; and stating that, individually, he must
be content to sacrifice private feelings of great mortification at the
diminished power and reduced situation of the Directors, in the hope
and
177
and belief that a liberal exercise of the increased and extended powers of
control (many of which, he did not hesitate to say, he was still unable to
see the public necessity of), would make it practicable and convenient
for men of character and liberal sentiment to act under those regulations.
After a long debate the following resolution was passed, viz.
" Resolved unanimously, That the Court cannot, with reference to the
" interests either of this Company or the Public, contemplate with entire
" satisfaction all the provisions of the bill now pending in Parliament ; ne-
" vertheless, deferring to the sense of the Legislature, and relying on its
" wisdom and justice, in the event of the expectations held forth by the
" bill being disappointed, this Court does not think that it would be expe-
" dient, in the present circumstances of the Company, to decline becoming
" a party to the measure proposed. The Court of Directors are therefore
" authorized to communicate to His Majesty's Ministers, the Company's
" concurrence in the arrangement, together with an assurance, that they
" will zealously use their best endeavours, when the bill shall be passed into
" a law, to fulfil, notwithstanding the new difficulties they will have to
" meet, all the duties which it shall impose, according to its true spirit and
" intention."
The Act 53 Geo. III. cap. 152, was accordingly passed, continu-
ing the exclusive privileges until April 1834.
By the 20th section of that Act,
Authority was reserved to Parliament to make, from time to time,
such provisions as might be deemed necessary for enabling His Majesty's
subjects to carry on trade and traffic directly or circuitously with India,
China being specially excepted.
Under this reservation
An Act was introduced in the next session (1814), termed the Circuit-
ous Trade Act, which permitted trade in ships navigated according to law,
2 A to
178
to and at any intermediate ports, or places, or countries, between the
United Kingdom and the limits of the Company's Charter, situate in
North and South America (except His Majesty's colonies and possessions),
and to and at Madeira, the Canaries, the Cape de Verd Islands, St. Helena,
and the Cape of Good Hope. No alteration was made as to the size of
the vessels, licenses, or otherwise.
In June 1817 a further extension was granted,
By admitting a trade direct from Malta and Gibraltar to and from
the places within the Company's limits, under the 57th Geo. III. cap.
36 j and likewise with the places described in the 54th Geo. III. cap. 34,
all restrictions as to the size of ships employed in such trade were
removed ; at the same time no vessels carrying on that trade of less than
350 tons could be admitted to entry or clear out in the United King-
dom. The governments of Malta and Gibraltar were to issue licenses,
but not to grant special licenses. Ships were not to sail until the master
or commander had delivered a list of passengers and arms on board,
which lists were to be forwarded to the Court of Directors.
By the 57th Geo. III. cap. 95,
The trade within the Company's limits was exempt from the operation
of the navigation laws; and by the 59th Geo. III. cap. 54 (1819),
American vessels are allowed to clear out from the United Kingdom for
India.
In June 1821, by the 1st and 2d Geo. IV. cap. 65,
The Company and others were allowed to trade to and from any
intermediate places between Great Britain and the limits of the Com-
pany's charter, and to discharge the whole or any part of their cargoes,
and to take on board other goods, &c. A trade was likewise permitted,
directly and circuitously, between all places within the Company's limits
and countries in amity with His Majesty, the trade in tea alone ex-
cepted. The size of the ships, &c. &c. to remain unaltered.
In
179
In the year 1822 the subject of a repeal of the size of ships en-
gaging in the Indian trade, with various other points, came under
the consideration of the Company ; who consented to the repeal
of the restriction as to the size of the ships,
Provided that an equalization of duty on East-India and West- India
sugar took place, and India-built ships were admitted to the full privilege
of British registry.
In consequence of the lateness of the period at which these
points were brought forward, the matter was dropped for that
session.
The subject was revived in the following year (1822). The en-
deavour to obtain an equalization of duty on sugars failed, the mo-
tion for a committee being lost.
On the 26th June 1822, a copy of a minute of the Lords of the
Treasury was laid before the House of Commons, and ordered to be
printed ;
Detailing the proceedings which had taken place since July 1821, to
effect a settlement of the accounts between the Public and the East-
India Company j and the determination of the Lords of the Treasury
to propose to Parliament, that the Public should pay to the Company
the sum of £1,300,000; such sum to be considered as closing the
accounts between the Government and the Company to the 30th April
1822, and to be applied in part discharge of the loan raised for the
East-India Company in 1812.
The sum of £557,322, beyond the said sum of £1,300,000, being
necessary to complete the redemption of the £2,500,000, raised by
loan in 1812 for the service of the Company, arrangements were made
to meet that sum on the part of the Company ; and the Act of 3d Geo.
IV. cap. 93, was passed in the month of July, to carry into execution
2 A 2 the
180
the settlement between His Majesty and the East-India Company, by
which the account between Government and the Company was closed
to 30th April 1822, and repayment made by the Company to the
Public of the £2,500,000 : the future charges on which were trans-
ferred to the Consolidated Fund.
A bill for consolidating the several laws as to the trade with India
was brought forward, and passed into a law on the 18th July 1823
(the 4th Geo. IV. cap. 80),
Repealing so much of the Act of the 53d Geo. IV. cap. 155, as
authorizes the trade to and from the ports and places within the limits
of the Company's charter (excepting China), and as respects the dis-
position in the United Kingdom of all articles manufactured of silk,
hair, and cotton-wool, or any mixture thereof; and likewise the whole
of the 54th Geo. III. cap. 34, commonly called the Circuitous Trade
Act; of the 55 th Geo. III. cap. 116, as to the registry of India ships ;
of the 57th Geo. III. cap 36, as to the trade to and from India and the
Mediterranean ; and of the 59th Geo. III. as to the size of ships en-
gaging in the trade between the United Kingdom and New South Wales ;
and the 1st and 2d Geo. IV. cap 65, as to the trade to and from places
within the limits of the Company's charter, and ports or places beyond
the limits belonging to any state or country in amity with His Majesty.
The Act of 4th Geo. IV. cap. 80,
Admits vessels into the trade with India, without any limitation in
respect to the amount of tonnage, and declares a license unnecessary
for ships proceeding in the first instance to one of the principal settle-
ments, whether from the United Kingdom or from the Mediterranean.
The employment of Lascars and other Asiatic sailors is subjected to
special limitation and provision, under regulations to be framed by the
Supreme Government in India, which regulations are to have the effect
of
181
of a law. A penalty is imposed on commanders who shall take out
unlicensed persons to India, and the restrictions as to the resort of
persons to India remain in full force. In July 1825, the 6th Geo. IV.
cap. 1 10 was passed, under which ships or vessels wholly of the build of
some of the colonies in Asia are entitled to registry.
By these successive measures Parliament had acted up to the
reservation in the 20th section of the Act of 1813.
In 1824 an Act was also passed to enable the East-India Com-
pany to trade direct from China to America.
The object of the foregoing review has been to trace, in as con-
densed and connected a form as the extent of the subject would
admit, the leading events relating to the system under which the
home affairs of the East-India Company have been and still con-
tinue to be conducted.
Imperfectly as that object may have been attained, a key is
afforded to a mass of interesting matter, and the principles have
been developed upon which the various legislative measures have
been framed for vesting in the Company their present rights and
privileges.
Those rights may be classed under the heads of
TEMPORARY RIGHTS,
and
RIGHTS IN PERPETUITY.
The Temporary Rights consist in the administration of the
government and revenues of the territories in India, and in the
exclusive trade with China.
From
182
From the first acquisition of the British possessions in India
the government of this country asserted the right of the Crown to
such possessions, and Parliament has decided on the mode of
appropriating the revenues derived from them.
The Company have, at the same time, as strenuously asserted,
and still continue to maintain, their rights with regard to those
territories and revenues.
At the present moment, the question may be left where it has
hitherto been deemed expedient by those most conversant with
Indian affairs to leave it, viz. for future decision (if a decision be
ever called for), without prejudice to the rights either of the Public
or of the Company.
It will have been seen that the goverrment of India, comprising
in it the territories and revenues, har been hitherto vested in
the East-India Company. The policy of that measure has been
but once called in question, and the result of the discussion on
the occasion (in 1784) confirmed the expediency of persevering
(with certain modifications) in that measure.
The principles were then laid down, by which the executive
government of India is connected with that which presides over
the rest of the empire, the rights of the Company being kept in
view ; the entire management of their commercial concerns con-
tinued in the Directors chosen by the Proprietors ; and the con-
duct of the political affairs controlled by members connected with
the Government of this country, who are responsible to Parliament
for the due execution of their offices. It has also ensured the
advantages of local knowledge, of experience in the details of
business, of a personal interest in the well-being of the Company,
and
183
and of a permanent system of policy, with exertion of political
talents and the responsibility of executive officers.
The other branch of the Temporary Rights of the Company is
the exclusive trade with China.
From the earliest period of the Company being called upon to
assume a political character in India, this trade has been of the
highest importance in a financial point of view. It is now the
only source from whence the pecuniary means are derived which
enable the Company to pay the dividends on their capital stock,
to meet their commercial charges, and to effect a remittance to
the amount of a million sterling per annum, in part payment of
the political advances made by the Company at home on ac-
count of the Indian empire.
The Parliamentary Committee on the Foreign Trade of this
country in 1821, " fully admitted the importance which the Com-
" pany justly attached to their maintenance of the monopoly of
" the China trade."
These temporary rights do not cease until April 1834 : four
years from the present time.
Their Rights in Perpetuity are :
To be a body politic and corporate, with perpetual succession.
To acquire, purchase, and dispose at will of lands and tene-
ments in Great Britain to a certain amount : to make settlements
in India, build forts, appoint governors, coin money, raise, train,
and muster forces by sea and by land.
To continue to trade with a joint stock for ever, although the
exclusive right of trading shall be done away.
The
184
The trade with India has ceased to be one of profit to the Com-
pany ; but as a medium of remittance it continues to be indis-
pensable, notwithstanding the deterioration in the rate at which
such remittance is made.
Without anticipating any of the facts and arguments which
will be found in the second part of this paper, it may be asserted
without fear of contradiction, that the East-India Company
cannot continue to administer the government of India, if they
are to depend upon their own pecuniary means, with security to
all the various interests committed to their charge, unless the
exclusive trade in tea is secured to them, and a remittance from
India effected to the extent of ^3,000,000 annually.
To treat the question simply as one of commerce, is to take a
very narrow and a very superficial view of the whole subject.
The system is one which must be viewed in all its parts, to
comprehend fully how the combined powers operate in producing
an efficient administration of the affairs of India, at the same
time that it ensures the management of a vast commercial
concern, which yields the pecuniary means indispensably neces-
sary for the support of the whole.
As a political instrument, the Court of Directors within the last
fifteen years have controlled the expenditure of an Indian Re-
venue amounting in the aggregate to ^360,000,000 and they have
superintended the disbursement of ,§£72,257,735 in this country
on account of territorial charges. They have decided upon
47,000 appeals on personal matters connected with the trust
reposed in them. — 31,000 reports on separate cases or subjects
have
185
have been made to the Court of Directors by the respective
Committees of the Court, whose duty it has been to investigate
the circumstances of each case. To which is to be added the
announcement to the Public of the Court's decisions, which in
the same period amounts to 32,000 letters; besides a multi-
farious miscellaneous correspondence en matters necessarily
arising out of a concern so extensive in its various ramifications
and details. The preparation of accounts for Parliament, the
extensive correspondence with the public departments of the
State and with the Board of Commissioners for the Affairs of
India, many of the points forming matter for despatches to India
and for parliamentary proceedings.
In the correspondence with the Indian Governments, exclusive
of commercial letters, nearly 6,000 despatches, containing 61,000
paragraphs, have been prepared and sent out, comprising an extent
of labour and research which can only be appreciated by those
conversant with the nature of the several subjects and with the
mode of treating them.
With regard to the commercial branch of the Company's affairs,
in the Act of 1813, a separation of the political and commercial
accounts was provided for, in the belief that commerce had derived
material aid from territory.
In the fifteen years, viz. from 1814 to 1828, inclusive, the value
of goods sold and managed by the Company, including private trade,
amounted to the sum of «s£l 39,580,181.
In the same period, the revenue derived by the Public for Tea
duties alone, without any charge for collection, amounted to
^57,125,882.
2 B The
186
The commercial profit on the India and China trade for the same
period was ,§£16,773,000, leaving a surplus commercial profit, after
payment of dividends, of «§£7>279,896, whereof ,§£5,257,420 has been
appropriated to the reduction of Indian debt ; whilst territory is
indebted to commerce at the present time in the sum of .§£5,017,203.*
The details and working of the financial part of the system, toge-
ther with the importance of the China trade, will be fully treated of in
the Second Part of this paper ; and when the whole shall have been
perused, it may be justly declared, in the eloquent terms used by a
departed statesman: " There is no example in the history of the
" world, on the one hand, of the existence of an imperial corporation,
" or on the other, of the concurrence of two co-ordinate authorities
" for so long a series of years, in conducting without shock or con-
" flict the administration of the wonderful, nay almost tremendous
" empire over which the East-India Company and the Crown jointly
" preside."
* Account per Computation, March 1829.
PART II.
FACTS AND OBSERVATIONS
EXPLANATORY OF
THE ACCOUNTS LAID BEFORE PARLIAMENT RESPECTING THE EAST-
INDIA AND CHINA TRADE, AND RESPECTING THE FINANCIAL
AFFAIRS OF THE EAST-INDIA COMPANY.
The commerce of the East-India Company, and especially their
exclusive privilege of trade with China, is an integral part of the
system which the Legislature has sanctioned and prescribed for go-
verning India. The profits of the trade not only pay the dividend
upon the capital advanced in the early enterprizes, which resulted in
the subjection to Great Britain of the vast continent of Hindostan, but
have also contributed essentially to the maintenance of that territory.
It is further to be observed, that the Company's commerce is the
medium for the remittance of that part of the Indian revenues which
is expended in England for political purposes.
By discontinuing the exclusive privilege of trade with China, the
foundation of the system would be subverted. Not, indeed, that the
Company would thereby be annihilated as a commercial body; for,
as has been shewn in the former part of this Memoir, their right to
trade is perpetual ; but their profits, when competitors with the
Public, would be so materially reduced, that it would not be possible
for them to answer ordinary demands, much less to aid the finances
of India. The means of remittance, already inadequate to the de-
mand, would also be proportionally curtailed, whilst the efficiency
and vigour of the territorial administration of India would be
2 C seriously
188
seriously checked by the outcry of the private traders against
the effects of the Company's capital and influence, which are now
matter of complaint in the India trade, and which would be more
seriously felt in China, as they would operate upon a trade con-
ducted there through a privileged body.
It seems obvious, therefore, that the abrogation of the exclusive
right to the China trade would involve one of two consequences to
the Company. Either continuing to administer India, they would
cease to act commercially, claiming with justice large compensation
in return for a surrender of their charter ; or, continuing to trade,
the Company would cease to have any part in the government of
India : in which case they would have many important claims to ad-
just with the Crown, upon the final relinquishment of possessions and
rights to some of which the Company's title has never been disputed ;
and which will be more fully adverted to in the sequel. In the
former of these contingencies, the Company would cease to exist
as a commercial corporation : and then what becomes of that which
constitutes the essence of the present system, the election by a popular
body of a Court of Directors wholly independent of the Crown ?
In the other contingency, that of the Company ceasing to ad*
minister India and continuing to trade, how, it may be asked, is
India in that case to be administered ? Also, how could private
traders expect, at least for a long course of years, to conduct a
profitable trade with China, in competition with the gigantic capital
and commanding influence of the Company ?
From these simple observations it seems evident, that they who
would discontinue the Company's right to the China trade, should
be prepared with a new arrangement for the general management
and
189
and financial support of the Indian territories. The present system
is undoubtedly fuil of anomalies, and one which (as the greatest
statesmen have admitted) it would be difficult to justify upon abstract
reasoning. But the. connexion of this country with India is altoge-
ther anomalous, and defies the strict application of ordinary rules:
experience is the only safe guide in such a matter. The practical
questions are, — What have been the effects of the present system ?
Taken in the whole, has it worked well ? and if so, will it not be
better to maintain it, even at some commercial sacrifices, than to
adopt any new and untried plan ?
" I wish/' said the late Lord Melville in the House of Commons
on the 23d April 1793, " to arrest the attention of the House, and to
" fix it on the advantages which Great Britain actually possesses, and
" then to ask whether it would be wise or politic to forego them, in
" search of greater advantages, which may exist only in imagination?"
That the existing system has worked well in a financial point of view,
can scarcely be denied by any person sufficiently informed upon the
subject. Since the year 1814, the Company out of their commercial
receipts have, either in liquidation of debt or by way of loan, aided
the territory to the extent of more than nine millions sterling, besides
affording to it, as will hereafter be particularly explained, an indirect
advantage in rates of exchange, whereby the commercial branch has
sacrificed no less than seven millions.
Now, had India been managed by the King's Government inde-
pendently of the Company, or by the Company divested of their
trade, the territorial debt of Tndia would have been nine millions
more in amount than it is, and India would also have had to pro-
vide a very large sum to countervail the loss by exchange. The ter-
2 C 2 ritorial
190
ritorial revenue is inadequate to pay all the interest of the present debt,
and therefore these extraordinary aids from commerce have greatly
retarded, if not wholly averted, the crisis at which it might other-
wise have been necessary for the nation to have contributed to the
support of India.
Under the existing system, all the expenses of the Indian Govern-
ments, including the charge of maintaining a large part of the
King's army, have been defrayed without any call on the finances
of Great Britain ; which, on the contrary, have been relieved during
the present charter, by a voluntary undertaking on the part of the
Company to charge their funds with the payment of ^£60,000 per
annum for half-pay and pensions to the King's troops ; and no less a
sum upon average, than three millions sterling per annum out of the
Indian revenues has been safely remitted through the Company's trade,
and absolutely spent in England, to the great advantage of the
nation.
In addition to all this, the dividend has been regularly paid at the
rate fixed by Parliament, and the country been furnished with an
annual revenue of between three and four millions sterling in tea
duty, free of all charge or risk in its collection. The expense of col-
lecting that amouut of revenue could not fall short of five per cent., or
nearly ££200,000 per annum, besides the difficulty of substituting
any system for computing an ad valorem duty upon tea which shall
be as fair and as productive as that which now exists, by which the
price at the Company's sales governs the duty payable.
It will perhaps be said, that the revenues of India ought to defray
all the expenses of the Indian Government without any aid from
commerce. The fact is, however, that there has been, and still is,<
a
191
a territorial deficit of serious amount ; and it will not be contended
that this evil could be lessened by a change in the constitution of
the home government of India, as no such alteration could furnish
a more efficient check upon extravagant or undue appropriations of
the funds of the Company than that which is maintained by the
Board of Commissioners and the Court of Directors, acting jointly
with a concurrent jurisdiction, but with no other concurrent object in
which they have a mutual interest, than that of governing India for
the advantage of the natives of that country and beneficially to Great
Britain. This check is the charm of the present system. If the
administration of India were committed exclusively to the King's
Government, or if the Company were to become the mere ministerial
agent for executing the will of the Government, there would be no
such check, and it would be in vain to expect that the Indian
territory would be less dependent on external financial aid, than
whilst the check existed. India would still require support, and
what the Company's commerce now furnishes for that purpose,
the nation would then have to supply.
It may however be argued, that whatever be the advantages
resulting from the tenure of India under the Company, or rather
that, whatever disadvantages might arise from a total change of
that system, they would be more than compensated by the benefits
of an open trade with China, which it is urged by the advocates of
that measure, would occasion a large increased export of British
mannfactures to China, and a corresponding return of produce to
Great Britain ; thereby benefiting the revenue in a much larger
ratio than would be sufficient to countervail the present advantage of
free collection of tea duties, and also diffusing wealth among our
manufacturers
192
manufacturers, and comfort throughout the population, in their being
furnished with abundance of tea at a low price.
The persons who use such arguments will doubtless refer to the
results of the opening of the trade with India, which has certainly
been followed by a large increase in the quantities of British
manufactured goods exported thither.
It is therefore necessary briefly to examine the statements of the
Indian trade.
It must be premised, that those statements are computed, so far
as respects imports into India, at the invoice value of the several
articles, and as respects exports from India at a permanent value,
fixed many years previously to the opening of the trade ; so that
the value of the imports is stated at its real amount, whilst that of
the exports is arbitrary ; and as, of late years, there has been a
serious depreciation of the sale proceeds of Indian produce, it follows
that, in a comparative view of the exports from India, a corresponding
deduction should be made from the official valuations.
Accounts have been laid before Parliament of the value of imports
into and exports from India, from and to Great Britain, America,
and Foreign Europe, in each year from 1811-12 to 1826-27, ana *
the following is a summary of the combined results.
In the four years from 1811-12 to 1814-15, the imports into India
averaged in invoice value 1,66,58,058 rupees annually. In the follow-
ing twelve years those imports averaged 3,80,48,492 rupees. Since
the opening of the trade, therefore, the average increase in the im-
ports into India has been in invoice value 2,13,90,434 rupees annually.
In the four years from 1811-12 to 1814-15, the annual official
value of exports from India to Great Britain, America, and Foreign
Europe
193
Europe, was upon an average 3,00,29 ,839 rupees ; and in the follow-
ing twelve years it was 4,33,41,675 rupees annually. The average
increase in the exports from India since the opening of the trade
has therefore been no more than 1,33,11,836 rupees per annum,
which leaves 80,78,598 rupees of the increased exports wholly un-
accounted for. Hence it is evident, that so far as a judgment can
be formed from the statements in question, the increase in the ex-
ports has produced, on the whole, serious loss.
This will be the more apparent on separating the Company's from
the private trade.
In the four years from 1811-12 to 1814-15, the invoice value of
the Company's imports into India was 58,85,483 rupees per annum ;
and in the following twelve years it has been 47,16,681 rupees an-
nually. Here there is a decrease in the Company's imports into India
of 11,68,802 rupees per annum.
On the other hand, the Company's exports from India have in-
creased from 1,26,85,346 rupees per annum, the average from
1811-12 to 1814-15, to 1,41,13,528 rupees per annum, the average
of the following twelve years. In this point of view, the balance of
the Company's returns from India has, during the open trade, been
25,96,984 rupees per annum more than it was before.
The imports into India in private-trade have increased in the
periods in question, from 1,07,72,574 rupees to 3,29,02,694 rupees
per annum ; and the private-trade exports from India have increased,
from 1,73,55,493 rupees to 2,92 28,147 rupees per annum. Con-
sequently, the balance of the private-trade returns from India has
been 1,02,57,466 rupees less than it was before the open trade.
The foregoing statements are sufficient to shew, that the experi-
ment
194
ment of opening the trade with India is not to be considered to have
succeeded, merely because it has been followed by an increase in the
quantity of manufactures sent thither. The important point of en-
quiry is, — Has India, in addition to the remittances required for
government purposes and for the transfer of private fortunes, made
commercial returns adequate to the increased exports from Europe
and America ? If not (and it is clear she has not), the increase has
occasioned, not gain, but loss. That loss may not, indeed, have fallen
mainly on the exporter. It has, probably, been divided between him
and the other class of remitters, including the Company : but on
whomsoever it has fallen, the nation has sustained it.
To all this it may be objected, that it is contrary to the nature of
things, to suppose that a country will take more of goods than she
can yield of produce in return. Such is certainly true as respects two
independent countries trading one with the other ; but the argument
is fallacious when applied to India, from whence large remittances
are required independently of the transactions of commerce. There
is no such thing as balance or reciprocity in this case.
It may further be remarked, not only that distress among manu-
facturers frequently forces sales of their goods at a loss, but also that,
in a country like England, with a superabundance of capital, with
machinery which the proprietors would rather work for a time at no
profit than suffer to decay, and with an immense population constantly
looking to new marts for the fruits of their industry, there will
always be a tendency to speculate at heavy risks, and in spite of the
failure of previous enterprizes ; and that it would require a much lon-
ger course of experience than that afforded since the opening of the
India trade, effectually to check unprofitable exports.
The
195
The advocates of the free trade have occasionally admitted, that
returns proportioned to the exports have not been received : and this
failure has actually been urged as a reason for throwing open the
China trade, which, it is alleged, would enable the exporters of
British manufactures to India to effect their returns. But surely this
argument militates against the doctrine strongly advanced by the
very persons who use it, that a free trade with China would create a
new mart for British manufactures. The fact seems to be, that an
excess of manufactured goods has been sent to India; and this fact
may well induce doubts of the correctness of the favourite theory, that
a free trade with China would lead to an increased sale of our ma-
nufactures.
But admitting, for the sake of argument, that India did yield pro-
fitable returns for all the goods sent thither, it would not by any
means follow, that the same kinds of goods would find a market in
China. The use of British manufactures to the extent to which
it has gone in India, and which has tended to destroy the native
manufactures, has been facilitated by a reduction of duties, and
by the low rate of freight at which ships can convey goods from
England to India, owing to the extensive use made of them by
passengers.
Such advantages could not be extended to China, where the native
manufacturer would be protected by local laws. It cannot reason-
ably be imagined that such a government, over such a people, habitu-
ally industrious and clever at handiwork, would patiently witness the
general use of British manufactures, or would be persuaded to tolerate
it, by the consideration that China would not take of those manufac-
tures to any greater extent than it was profitable for herself to do so.
2 D This
196
This and other arguments of political economy, however sound, would
not have any effect on the government of the Celestial Empire, who
more perhaps than any government in the world, are wedded to the
opinion, that foreign trade is detrimental to the wealth and interests
of a nation.
Nor should it he forgotten, that the door has long been, and still is
open for the exportation of manufactured goods to China by British
merchants vid India, or by the Americans and other foreigners direct.
The Americans, notwithstanding the large amount of their trade
with China, appear to have exported of British manufactured goods
to no greater extent than 867,902 dollars annually, upon an average
of the three years ended the 30th April 182/ ; whilst the exports of
the same kinds of goods by the Company and their officers, averaged
in the same period 3,179,279 dollars. Can it be doubted, that if
there were really a good market in China for the sale of manufac-
tured articles to a greater extent, the Americans would have availed
themselves of it ?
Supposing, however, that China did become a market for a more
extensive sale of British manufactures, the Chinese could only take
them in lieu of some of those articles which are now exchanged for
their produce. The funds for purchasing the Company's investments in
China consist of the proceeds of British manufactures and of Indian pro.
duce. If British manufactures were substituted for Indian produce,
the manufacturers of Great Britain might derive an advantage ; but it
would be at the cost of India, and India is quite unable to bear the
sacrifice. Besides, though the manufacturer might possibly gain some-
thing, the nation would lose in as great a proportion, inasmuch as Indian
produce furnishes a more profitable remittance to China than British
manufactures.
197
manufactures. This is a convincing proof that China, as might be
expected of a manufacturing country, chooses to import the raw ma-
terial in preference to manufactured goods.
If the trade were open, the cost of tea to the consumer in England
must be influenced by what it costs the exporter of it from China ; and
therefore, if he bought it with the proceeds of British manufactures,
he would buy it more dearly than if it were purchased, as at present,
principally with the proceeds of Indian produce, and consequently the
price to the consumer would be enhanced.
Here there is another strong argument opposed to the idea of a
profitable increase in the export of British manufactures to China, it
being obvious that the private merchant would make his purchases
of teas in the way most advantageous to himself, without reference
to the particular interests of the manufacturers.
The importance of preserving China as a market for Indian pro-
duce is sufficiently apparent in the fact, that the imports of cotton
and opium into China from India, in the country trade, amounted on
an average of the last three years to no less than 14,401,764 dollars
annually.
It may perhaps be said, that an increase of British manufactures
sent to China would be surplus to all other articles now sent thither,
whether from England or from India, and would be paid for by an
additional export of teas; but this could not be, unless there were a
demand for tea in England to a greater extent than at present ; and
even did the demand exist, it by no means follows that it could be met
without a deterioration in quality ; and perhaps to the Company's
care in the selection of the tea, more than any other circumstance,
is to be ascribed its very extensive use by the inhabitants of Great
2 D 2 Britain
198
Britain compared with that of other countries. The printed state-
ments shew that the Company's importations have more than kept
pace with the demand. It appears that the average amount brought
from China in the five years from 1809-10 to 1813-14 was
23,420,105 lbs.; that the average brought in the last five years has
been 30,752,364 lbs.; and that a considerable proportion of what the
Company have offered for sale has been refused. In the year 1828
no less an amount was rejected than 1,317,920 lbs. : a strong fact
this in refutation of the plausible theory, that a free trade with China
would lead to a profitable increase in the import of teas from thence.
The Americans, who are equally partial to tea with the English,
appear to have brought from China to the United States, upon an
average of 1826 and 1827 (the only years given in the American
account) 7,987,849 lbs. of tea; which, assuming the population at
ten millions, is at the rate of 4-5ths of a pound per head.
The quantity brought to England is at the rate of one pound and
a half per head for the whole of the United Kingdom, and of two
pounds per head for Great Britain, excluding Ireland. To these
facts add the considerations that the American trade with China is a
free trade, that the duties upon teas imported into the United States
are comparatively small, whilst those on teas imported into Great
Britain are one hundred per cent., and some idea may be formed of
the extent of delusion into which they fall, who imagine that a free
trade with China would create an increased demand for tea.
It is indeed admitted, that the consumption of other articles, parti-
cularly coffee, has increased in a much larger ratio than that of
tea ; but coffee loses in weight in the roasting of it, and is more
quickly consumed than tea. One pound of tea will go as far as
three
\
199
three pounds of unroasted coffee ; so that, supposing the commu-
nity to be equally consumers of tea and of coffee, increase of con-
sumption of these articles consequent on increase of population would
be in the same proportion.
But, again, the capacity of producing coffee is unlimited : it grows
in a variety of soils and climates. With tea the case is different : it
is produced no where but in Chiua, and there only in a particular
district. Let it also be remembered, that the duty upon coffee has
been materially reduced, and that no reduction has been made in the
duty upon tea. The high duty is the true cause why more tea is
not consumed.
The continuance of the duties upon tea is a question, the consi-
deration of which belongs to the King's Government rather than the
Company, who, so far from being interested in maintaining the
present duties, would be materially benefitted by a reduction in their
amount.
It will also be for the King's Government and for Parliament to
consider, whether an unrestrained intercourse with China might not
be attended with the risk of loss to Great Britain of that part of her
valuable commerce. This is a national question of serious moment.
It seems highly probable that the China trade is indebted for its
continuance hitherto, rather to the interested exertions of the Hong
than to a sense of its value on the part of the Chinese government.
Be this as it may, there can be no doubt that the influence of the
Company's servants at Canton has been a main cause of the pro-
tection which the local authorities there have given to the trade of
foreigners in general. If that influence were to cease, and the Com-
pany's establishment were to be broken up, the Hong, who now
adjusts
200
adjust all disputes between the Chinese and foreigners, might be
indifferent, or perhaps worse, unless the parties concerned were
dealers directly with themselves.
It should always be borne in mind, that the China trade is con-
ducted by a monopoly acting in China as well as by an exclusive
Company in England, and that if by destroying the latter we under-
mine the interests of the former, we may possibly produce a crisis
terminating our connexion with that singular nation.
Should it be said that all this contingent evil might be averted by
the continuance of the Company, who although ceasing to possess
the exciusive privilege might still trade, it may be again remarked
(and we cannot too strongly urge the consequence as inevitable), that
deprived of the exclusive privilege, the Company must either cease to
be concerned in the administration of India, or they must relinquish
their trade. If the Company are to compete with the private trader
in the China market, it must be exclusively as merchants ; and in
that case the question before proposed forcibly recurs, — How is India
to be administered, and how is Great Britain to obtain the funds
required for the political expenditure, and which are now supplied
through the Company's commerce ?
Schemes will perhaps be suggested for effecting this remittance,
by receiving private bills upon England in exchange for cash advanced
in India and in China. But if there be any truth in the argument
upon which a free trade with China is sought to be obtained, viz.
the increased export of British manufactures, the proceeds of such
exports would be the funds with which the private trader would pur-
chase his tea. Again, what is to be the security to the Govern-
ment? Are they to have a lien uponthe cargo. If so, how is the
proportion
201
proportion of risk upon each cargo to be regulated ? If by a fixed
standard, the Government will always be at the mercy of specula-
tion, which may frequently lead to consignments not saleable when
they arrive, and when the Government will want the money. Ad-
vances upon the security of cargo may be advantageously made by
an individual watching with the vigilance of a self-interested party
the state of the markets, and exercising, from the same motive,
sound discretion as to the amount of his advance ; but the system
would be totally inapplicable to the remittance by a Government of
three millions annually. The only secure method of remittance
through private channels would be for the Government to receive
money in England in exchange for bills ; but the success of a scheme
of this sort would in itself militate against the views of the British
manufacturer, whose exports it would check : and it is also worthy
of observation, that the Company have made trial of such a scheme
and have failed, the offers of cash in exchange for bills having been
very limited, and all at rates less favourable than those realized
through the Company's trade.
It has, indeed, been said that the Company might effect its
remittances in bullion ; but as India possesses no mines of gold or
silver, she would have no other bullion to furnish than what she
might obtain in return for merchandize.
The official accounts shew that during most of the years of the
present charter, the Company have effected their remittances in
merchandize more profitably than they could have done in bul-
lion ; but of late, and at present, the reverse is the case.
If, under these circumstances, the Company were to give up
bringing merchandize, and to substitute for it bullion, merchan-
dize
202
dize must still be brought in order to get the bullion ; — and who
would bring it at a loss ? — The idea of the Company's remitting in
bullion to save loss upon merchandize, means nothing more than
that the Company should transfer the loss of their remittances to
private merchants ; and, in order to the success of the scheme,
private merchants must be found willing to bear the loss.
Abstractedly, there can be no doubt that any chasm caused by
the exportation of bullion from one country to another, is speedily
supplied by the ordinary operations of trade ; but considering the
question practically as applied to India, is it not obvious that the
Government remittances from thence, even though they were
effected in bullion or in bills,must sooner or later be provided for by
Indian produce, and that the loss upon the produce must, upon an
average and in the long-run, fall upon the remitter ?
The financial aid derived by the Indian territory from the trade
of the Company has as yet been only glanced at. It shall now be
more fully explained.
Previously to the passing of the last Charter Act, the accounts
of the Company in their territorial and commercial capacities were
so blended together, as to make it impracticable to ascertain with
accuracy the financial results of each branch.
This circumstance was pointedly adverted to by the Select Com-
mittee of the House of Commons on the Company's affairs in their
fourth report, which was ordered to be printed on the 10th April
1812, The Committee observed as follows :
•* The House is already apprized, that although the transactions of the
" Treasury at home are in their character principally commercial, they are
" nevertheless closely interwoven with others of a political nature, and that
" to
203
" to an extent which renders the difficulty of distinct separation much
" greater than has been experienced in the examination of the accounts
" confined to the affairs of India. The manner in which the books have
" been kept in the latter case enabled your Committee to make some
" distinction ; but in the home accounts, the entire receipt and expenditure
'* in each year is compressed into one general cash account, in which what
" is political is frequently blended with what is apparently directly
" commercial."
The Committee then exonerated the Court of Directors from all
blame for the mode in which the books were kept, and remarked :
" The accounts appear to have been prepared in strict conformity to
" the system under which the Company's affairs have been conducted, of
" combined political and commercial management, the separation of which
4< has not been hitherto required."
With a view not only of remedying this defect of system, but
also of producing means for the solution of the problem so fre-
quently proposed, — whether the financial effect of the combination
of the territory and trade were prejudicial or otherwise to the for-
mer,— it was determined that the accounts of the two branches
should be kept separate in future ; and the Court of Directors
were accordingly required, by Act 53d George III. cap. 55, sec.
64, to lay a plan for that purpose before the Board of Com-
missioners, which, as approved and altered by that Board, was
to be carried into effect.
A plan was in consequence established, embracing the various
descriptions of receipt and expenditure, classed under the respec-
tive heads of territorial and commercial. This plan, which was
laid before Parliament on the 9th May 1816, has been strictly
adhered to.
2 E Previously
204
Previously to exhibiting the results of the accounts so kept, it
will be necessavy to offer a brief explanation of two parts of the
plan of separation.
The first respects the rate of exchange observed in converting
the monies of India into sterling, and may be thus briefly stated :
The territorial branch requires funds in England to disburse for
political charges, and the commercial branch requires funds in
India to provide investments of goods. The commercial branch,
therefore, advances to the territory the monies which it requires in
England, and the Act of 53 Geo. III. cap. 155, sect. 56, provides
that a sum equal to these advances, after deducting the amount
of commercial expenditure in India, shall be annually set apart
out of the territorial revenues, for the purpose of investment or
remittance at the option of the Court of Directors. The advances
in England being made in sterling, and the repayment in India in
sicca rupees, a question naturally arose as to the rate of conversion.
It had been the practice to observe the following arbitrary rates
of exchange in the accounts rendered to Parliament, viz.
2s. 3*84 the Sicca Rupee,
2s. 3-428 the Madras Rupee, and
2s. 3* the Bombay Rupee ;
and the Board proposed that similar rates should be observed in
the repayment in India of the sums advanced in England.
The Court objected to this, upon the grounds that the rates were
altogether erroneous, and that by the observance of them, Parlia-
ment would be deceived instead of being informed as to the results
of the separation of accounts : and the Court proposed that the rates
should, if permanent, be founded on the bullion par ; and if fluc-
tuating
205
tuating, on the exchange of the day; upon the principle that the
monies spent at home for the territory were to be regarded as so
much remitted to India by the commerce.
The Board, notwithstanding repeated and earnest remonstrance,
have refused to depart from their first proposal, and consequently
the accounts between the two branches of the Company's affairs
have been kept at the old arbitrary rates.
A statement has been prepared, showing the difference which
would have been caused by the commercial branch being repaid its
advances at the mercantile exchange, instead of at the rates pre-
scribed by the Board.
The difference from 1814-15 to 1828-29 would have been no less
than ,^7, 187,178 in favour of the Commercial branch.
The other circumstance upon which some explanation is neces-
sary, is the character of the home bond debt ; which in all the
accounts is stated " without specific application to either branch
" of the Company's affairs, it not being determined to what
" extent the debt had its origin from political causes."
The bond debt has been incurred principally, if not altogether,
on the political account ; because, although bonds were originally
issued for commercial purposes, yet all such bonds would have
been long since redeemed by commercial profits, if those profits
had not been appropriated to the use of the Indian territory. Pre-
viously, indeed, to the separation of accounts, it was by some
doubted whether commerce was a gaining concern. The actual
accounts framed upon the principle of separation have settled
that question ; and as those accounts show large profits since
1813, it may be inferred that there must have been profits in pre-
2 E 2 vious
206
vious years which were applied to the benefit of India, and which,
but for that appropriation of them, might have been used in dis-
charging the bond debt. The Select Committee, indeed, in their
Fourth Report, admitted that between 1793 and 1810 there had
been " a surplus commercial profit of ^2, 164,533," which at the
close of the last charter had probably increased to an amount
equal to the whole of the outstanding bond debt.
But further, the Acts of Parliament authorizing the issue of bonds
may be confidently referred to, as furnishing grounds for ascribing
a political character to the bond debt. Vide especially 51 Geo.
III. cap. 641, which distinctly declares the necessity for borrow-
ing money upon bond to have been occasioned by payments in
England on the political account.
A further reason why the bond debt should be considered terri-
torial is, that the commercial surplus which, under the Act of 1813,
was to be applied, with certain limitations, in liquidation of the
territorial debt in India or the bond debt at home, has been much
more than sufficient to have discharged all the bond debt, and has
been almost wholly appropriated to the discharge of the Indian
debt.
In perusing the following summary of the financial results of the
two branches of the Company's affairs, the reader will bear in mind
what has now been stated upon the subject of rates of exchange
and the bond debt, as tending materially to affect those results
disadvantageously to the territorial, and advantageously to the
commercial branch.
We will first state the general financial results of the Company
in their political capacity, from the renewal of their privileges in
179 J
207
1J93 to 18-27-28, the last year of which the accounts have been re-
ceived, with an estimate applicable to 1823-29 This will exhibit
the situation of the territorial branch.
During the twenty years for which the government of India was
by the Act of 1793 continued in the Company, their territorial in-
come was more than doubled. The average annual income in the
first three of those years was ,§£7,975,572, and in the last three of
those years, ^16,838,959.
During the fourteen years of the term granted in 1813, of which
the accounts have been received, there has been a considerable
further increase of the territorial income, the average of which in
the last three years, up to 1827-28, was ,§£22,519,135 per annum.
In viewing the income of the Indian Government, it is important
always to remember that the amount is stated in gross, and therefore
comprehends all those portions which must be expended in the col-
lection of the revenue, in the manufacture of salt and opium, and
in the payment of the numerous stipends under the several treaties
and engagements by which the Company possess the territory.
Without attempting accurately to shew the precise amount of
the gross revenue thus necessarily appropriated, it may with
safety be assumed to have amounted in the three last years to
.§£5,500,000 annually; thus leaving ^17,019,135 as the nett re-
venue which has been applicable to the charges of the civil and
military administration of India, and the payment of the interest
on the debt.
The territorial charges of India have augmented in a greater ra-
tio than the receipts. Their average annual amount in the first
three of the years under the Act of 1 793 was^BJ ,&2? y 1 5 1 annually.
In
208
In the three years which concluded the term under that Act, the
average annual charge was .§£16,804,987, and in the last three
years, up to 1827-28, it has increased to ^26,106,126
The proportions of these increases applicable to the civil and
military departments respectively, and to the interest of the debt
and the expenditure incurred in England, are as follow, viz.
Civil
Military
Interest on debt ...
Political charges in \
England J
Total
Average of | Average of
three Years j three Years
beginning ended
1794.-5. 1813-14.
£. £.
2,890,993 6,710,039
3,790,276 ! 7,056,824
416,072
1,540,507
529,810 I 1,507,567
7,627,151 16814,987
Increase
under last
Charter.
Average of
three Years
ended
1827-28.
Increase
during pr.
Charter.
£. £.
3,819,096 10,481,132 | 3,771
3,266,548 11,684,217
1,124,435 1,747,330
977,757
2,103,447
9,187,836 26,016,126
4,627,393
206,823
595,880
Total Increase
since begin-
ning of term
granted in
1793.
£.
7,590,139
7,893,941
1,331,258
1,573,637
9,201,139 18,388,975
By combining the foregoing statements, it will appear that in
the term fixed by the Act of 1793, there was, upon averages of
the first three years, a surplus of ,§£348,421 per annum, and of the
last three years of that term a surplus of ^23,972 per annum; and
that in the last three years of which the accounts have been closed,
there has been, upon an average, a territorial deficit of ^fi 3,496,991
per annum.
It should here, however, be observed, that in the years which
exhibit this deficiency the Burmese war operated most seriously
on the finances of India, whereas the other periods comprised in
the foregoing comparison, viz. that at the commencement and
that
209
that at the close of the charter of 1793, were both periods of
peace: excepting only the year 1813-14, when the Nepaul war
occurred, but which did not produce any important effect on the
finances of that year.
It may perhaps be useful to contrast the last three years, which
as before stated, shew an annual average deficit of ^3,496,991,
with three of the years under the Act of 1 793, in which the cir-
cumstances of India occasioning expense bore some parallel to
those which have latterly taken place.
For this purpose, the years 1803-4, 1804-5, and 1805-6 may be
properly selected. The first two were years of war; and the
latter, although a year of peace, was one in which the financial
effects of the war were seriously felt. The average deficit of those
years was ,§£2,769,248, which is 38727,743 less than the average
deficit of the last three years.
The aggregate result of the whole twenty years under the Act
of 1793 was a nett deficiency of ^23,417,402.*
The aggregate result of the fourteen years under the Act of
1813 has been a nett deficiency of ^20,047,478,f which by the
addition of interest which the Court claim on the balance annually
due from the territorial to the commercial branch, will be en-
creased to x£2 1,578,696.
It
* Fifteen years of deficit £25,574,019
Five years of surplus 2,156,617
£23,417,402
f Eleven years of deficit £21,754,886
Three years of surplus 1,707,478
£20,047,478
210
It is important to remember, that these several sums in sterling
are computed at the before-mentioned high rates of exchange.
The revenues of India, applicable to the expense of its govern-
ment, and the amounts in which those revenues have proved
deficient, would both appear considerably less in sterling, if the
computation were made either at the bullion par or the mercantile
exchange.
The registered debt of India has not increased proportionally
with the deficiency of revenue. At the commencement of 1793
the debt amounted to ,§£5,570,720, in 1814 to .§£26,672,578, and
in 1828 to ^£39,519,797 : to which must be added the balance
due from the territorial to the commercial branch of the Com-
pany's affairs, amounting with interest to ,§£4,731,230. This
augments the total amount of debt to ,§£44,251,027, being an
increase since the Act of 1813 of .§£17,578,449, which is
,§£4,000,247 less than the territorial deficit in the same period.
This difference is wholly attributable to the effect produced
upon the debt of India, by the appropriation towards its liqui-
dation of the surplus of the commercial profits.
The embarrassed state of the finances of India, as exhibited
above, has led both the Court of Directors and the Government
abroad to adopt vigorous measures for reducing the expenditure.
The estimate for 1828-29 exhibits a territorial deficit of
^£644, 187, which is an amelioration of .§£2,852,804, as compared
with the average result of the preceding three years; of which
,§£834,018 is expected to be produced by augmentation of revenue,
and .§£2,018,786, by reduction of charge.
Supposing the actual accounts of 1 828-29 to prove as favourable
as
211
as the estimate indicates, there will still remain to be accomplished
a further improvement of large amount, in order to the finances of
India being placed in a wholesome state.
The income in time of peace should certainly exceed the ex-
penditure ; and considering how little probability there is that
the revenues will, upon an average of future years, be more pro-
ductive than in the last three years of which these accounts have
been closed, it would seem that the charges must be reduced at
least £1 ,500,000 per annum below the amount at which they are
stated in the estimate of 1828-29 *
Such being the state and prospects of the territorial branch of
the Company's affairs, it will be important to examine more parti-
cularly than has yet been done, the nature and extent of the
assistance afforded to that branch by the Company's trade.
The account termed " Commercial profits of the Company in
England' ' comprises only the proceeds of sales within each year.
The charge of freight, which appears to be as high as sixteen per
cent, on the cost of the goods, and the charges of merchandize,
which appear to be about five per cent, on the sale amount, are
deducted from the prime cost, and the difference' constitutes profit
or loss.
It is further important to state, that in consequence of the
orders of the Board, the sums laid out in India monies in the
purchase of goods, are converted into sterling at rates very
2 F materially
* Estimated deficit of 1828-29 £644,187
Excess of estimated revenue beyond average of last three years, actual 834,018
£1,478,205
212
materially exceeding either the intrinsic value or the mercantile
exchange.
The result of the account made out upon these principles is,
that in the fifteen years from 1814-15 to 1828-29, there has been
in the aggregate, including interest on the balance due from the
territorial branch, a surplus of ^87,2^9, 896, after paying the interest
of the bond debt and the dividend to the Proprietors. The surplus
has of late materially fallen off. The average of the first five years
was =£777>441 per annum ; of the second five years, ,§£409,090 per
annum ; of the last five years, ^£269,477 per annum ; and in the
concluding year of the latter period the surplus was only .§£62,895.
Of the before-mentioned amount of aggregate profit ^£4, 923,021
have been applied in discharge of India debt : the remaining amount
of ^2,0:22,476 is unappropriated. The whole of it, however, has
been advanced by the commerce to the territory in the general
account between those branches, the balance of which is stated to
amount to ^5,017,203, which exceeds the unappropriated surplus
of commercial profits. This excess can, of course, be properly ac-
counted for only upon the presumption, that there has been a
proportionate reduction of floating capital, independently of the
balance of the account between the two branches.
From the results above stated it is obvious, that the Indian terri-
tory has derived aid from the Company's trade to the full extent of
the surplus profits, viz. ^B7,2J9,S96, exclusive of the farther sum
advanced.
It is also clear, that but for the rates of exchange fixed by the
Board, and which have operated largely to the benefit of the territory,
the
213
the surplus profits would have been much greater. If the account
were made up upon the principles contended for by the Court, the
addition to the profits would be seven millions sterling.
Although, prospectively, there is no probability of the Company's
being able to afford from their commercial profits aid to the same
extent, yet it can scarcely admit of doubt, that by availing them-
selves of the termination of old contracts, to make fresh engage-
ments of tonnage at lower rates of freight, and observing correct
principles in the exchange of the India monies into sterling, the
profits would be still so considerable as to allow of some measure
of assistance being afforded to the Indian territory.
These profits might be increased by the Company's restricting
themselves to the China trade, and totally abandoning the trade
with India, upon which there has been a loss in each of the last
nine years, amounting in the w T hole period to ^£2,182,606; but the
objection to such a measure is, that the India trade is a principal
channel for the remittance of political funds from India.
The aggregate payments required to be made in England, out
of commercial funds, on the Company's own account, political
and commercial, exclusive of the cost of merchandize exported,
amounts, as per margin,* to about four millions seven hundred
2 F 2 thousand
* Political, on an average, £3,010,518, which is likely rather to increase than diminish. From
which, however, must be deducted receipts on the separate account of the territory, about
£300,000 per annum, thus reducing the political charge to £2,710,518
Commercial Charges, exclusive of Cost of Merchandize £1,200,000
Dividends 630,000
1,830,000
Interest on Bonds 158,000
£4,,758,518
214
thousand pounds ; and that without reference, of course, to tea
duties, the account of which is kept distinct both as a receipt and
as a disbursement, and therefore does not affect the question of
the remittance.
Of the said sum two millions are expended in commercial pay-
ments, including freight, commercial charges general, the interest
on the bonds, and the dividends to the Proprietors ; and the re-
maining sum of two millions seven hundred and fifty thousand
pounds is expended on the political account.
The remittances, taken upon an average of the whole period
since 1814, and after deducting cost of commercial exports paid
for in England, appear to be effected in the proportion of about
three millions from China, and one million seven hundred and
fifty thousand pounds from India.
If the Company were to abandon their India trade, there would
probably be an abatement of about ^£300,000 in the commercial
payments, and of <s£l, 750,000 in the commercial receipts ; which
would be limited to those from the China trade, viz. ^£3,000,000.
The first charge upon this sum would be the commercial payments,
viz. «s£l, 700,000, and consequently no more than =£1,300,000
would remain for political payments, amounting, as before stated,
after deducting territorial receipts, to ^2,710,518 per annum.
How to provide for the deficiency is the difficult question to be
solved, in any proposal for the Company's abandoning the India
trade ; whilst the fact, that the China trade itself furnishes means
to the Indian territory amounting to nearly ,£1,000,000, is a strong
argument in favour of continuing that trade upon its present
footing ; it being obvious, that if the Company's trade altogether
♦ ceases,
215
ceases other means of remittance must be provided for the Indian
territory, to the extent of nearly three millions annually.
In order to complete the view of the Company's finances, a
statement shall now be attempted of their financial situation, con-
sidered simply as a commercial corporation.
According to the last account of stock per computation, the
balance of commercial assets amounted to ^21,731,869, including
a sum of <g£8, 142,103 under the head of " territorial branch, for
" territorial and political payments in England between 1st May
if 1814 and 1st May 1828, including interest." A note to the
account states : " this balance is subject to reduction by the
" amount of the advances made in India to the commercial branch
" in 1827-28, estimated at ^3,124,900 ;" but as these advances
are for investments, it is clear that their amount can be considered
in no other light than as an available asset. The remaining sum
of ^£5,017,203 is the estimated amount of balance, with interest
due from the territorial to the commercial branch, of which, how-
ever, =£2,022,476 is ascertained surplus ; which being ultimately
appropriable under the Act of the 53d George III. cap. 155, to
the discharge of the territorial debt in India, or the bond debt in
England, cannot be considered as an asset applicable to the liqui-
dation of commercial obligations, except in so far as that surplus
might be applied to the discharge of bond debt.
Deducting, therefore, the said sum of =£2,022,476, the commercial
assets are reduced to £ 19,709,393, which may be regarded as the
Company's capital.
A very large portion of these assets consists of goods unsold, the
value of which would probably be materially affected by throwing
open
216
open the China trade; and it is important to remark, that in order
to ensure to the Public a regular supply of tea, the Company are
required by the Act of the 24th George III. cap. 38, sec. 5, always
to provide for one year's consumption being in store. Supposing
that provision to remain unrepealed until the expiration of the
Company's present term, there would at that time be on hand the
tea in warehouse, that in transit, and that ordered in China. This
consideration presents a cogent reason for the question of the
charter being settled at a period sufficiently early to enable the
Company to protect themselves from the loss on so heavy a stock.
Prudence suggests that some allowance should be made in such a
computation as that now attempted, for depreciation in the value of
goods, and for the expenses attending their sale. We will therefore
assume an abatement of one million, thus reducing the assets to
^18,700,000.
The only other items requiring notice are those of the " East-
India house and warehouses," valued at ,§£1,259,000; and "ships,
sloops, and vessels," valued at ,§£174,574; making together the sum
of ^1,433,574. Now although it cannot be doubted that many of
the buildings and ships which this item comprehends would produce
large rental, yet it may not be prudent to calculate on realizing the
full value assumed ; and as the Company would necessarily have to
provide a considerable sum in fulfilment of outstanding commer-
cial obligations, in the shape of pensions to commercial servants
and unexpired contracts, the amount of which cannot be well
estimated, it may perhaps be desirable to consider the one as a set-off
against the other, and with that view to leave out of the account
both the value of house and warehouses and ships as an asset,
and
2ir
and the pensions and uncompleted contracts as a debt. In this
view, therefore, the commercial assets are reduced to about
,§£17,250,000 sterling : which, there is every reason to believe,
would be realized, if due time were given previously to any change
of system, and caution and prudence observed in managing the
concerns.
The demands upon these assets will now be noticed.
The bond-holders have, it is conceived, the first claim in law.
But here the important question arises, which has been explained
in a former part of this Paper, whether that claim should not,
at least in part, be provided for out of the territorial revenue
of India.
For the purpose of pursuing the calculation respecting the com-
mercial debts and assets of the Company, let it be supposed that
the bond debt should be equally divided : the commercial branch
would then have to pay on that account about .§£1,900,000. This
would reduce the assets to ,§£1 5,350,000, which would remain as
the bond fide property of the Proprietors, the nominal value of
whose stock is six millions sterling. Of this stock, ,§£2,800,000
was, by the authority of Parliament, subscribed at rates con-
siderably exceeding the nominal amount of stock, the last of
which rates was ,§£200 money for .§£100 stock ; at which
.§£2,000,000 of money was paid as the equivalent for ^£1 ,000,000
of stock.
Combining this fact with the provisions of the 3d George III.
cap. 52, sect. 114, and 53 George III. cap. 155, sect. 59, which
both recognize twelve millions as the money-value of six millions
stock, it may be inferred that .§£200 per cent, is the lowest value
at which Parliament could compute the stock.
The
218 v
The practice of Parliament, indeed, as well as some other con-
siderations, would appear to justify the pretensions of the Pro-
prietors to the market value of the stock should it exceed ^8200
per cent. For example, in 1786, when an increase of the capital
stock was authorized, Parliament fixed the rate of subscription at
gBlbb per cent., the market value. In 1789 the same principle was
observed, when the rate was fixed at <§£174 per cent. ; and in 1793,
when it was increased to ^200 per cent.
But may it not also be argued, that the Proprietors are entitled
to look to their dividend as the index to the value of their stock ?
It would take at the least ^300 to purchase in Government secu-
rities a perpetual annuity of gSlO. 10s ; and, in this view, the Pro-
prietors would have to receive in the whole eighteen millions as the
consideration for six millions of stock, and the payment of this would
require about two and a-half millions sterling more than the before-
mentioned amount of commercial assets.
This deficiency might be partly made up by the bond debt being
wholly charged to the Indian territory, although it seems certain that
the territory would not have the means of providing for such an addi-
tional burthen. But from whatsoever source payment should come,
the Proprietors would, it is conceived, have a fair and reasonable
claim to the amount.
The late Lord Melville, indeed, did not hesitate, as a responsible
adviser of the Crown, to assert in Parliament, without qualification,
the right of the Proprietors, in the event of their being deprived of
their privileges, to compensation, even though their commercial
assets should be more than sufficient to repay the subscribed
capital.
" But
219
" But from all I have stated," said that distinguished person, " it must
" occur to the most superficial observer, that not only the original capital
" with this addition, but an immense sum more, would belong to the Pro-
" prietors. I have made no allowance for all the property they would
" have in India, consisting both of quick and dead stock ; neither have I
" taken any notice of the interest they have in the territorial revenues.
" Whatever may be the determination respecting those revenues, it is clear
" to every person, that the interest of the Company must be considered
" either by the actual possession of them, or by a just compensation in
" some shape or other, all which must belong to the Proprietors of India
" stock."
Upon another occasion the same eminent individual stated the
claims of the Proprietors in the following decided terms :
" If the exclusive charter should expire in 179*, still the Company would
" be a body corporate in perpetuity, and entitled to trade upon a joint stock.
" To whom, in this case, would the most important seats of trade in India
" belong ? To the Company undoubtedly. Under their original and perpe-
" tual charter they have legally purchased or acquired Fort St. George, St.
" Helena, Bombay, and Calcutta, and long before they were possessed of
" the Duannee. These possessions are their patrimonial property, and
" cannot be taken from them. Fort St. George was made a settle-
" ment by the old Company in 1620, St. Helena in 1651, Bombay in
" 1668, Calcutta and Fort William in 1689. Upon the whole, exclusive of
" the Duannee, they have an unalienable right to valuable landed posses-
" sions amounting at least to £250,000 per annum. In addition to these the
** whole factories and commercial establishments, both in India and the
" eastern seas, undoubtedly belong to them."
Another substantial ground upon which the Proprietors would be
entitled to look for compensation beyond the amount of their own
2 G com-
220
commercial assets is, that at least one-sixth of their capital was sub-
scribed to meet a deficiency consequent on the payments which were
made out of the commercial funds in the year 1 789» in discharge of
bills drawn from India on account of the expenses of war, and in
transfer of territorial debts.*
The risks which the Company ran in their early undertakings, the
limitations imposed by Parliament upon their individual participation
in the profits of their trade, and the objects to which the surplus
profits have from time to time been applied, might be fairly urged in
support of such a claim, which would be the more entitled to consi-
deration if the Company were required to relinquish their trade alto-
gether.
For although the exclusive privilege of the China trade should be
discontinued, the Company's right to trade is, as before observed, per-
petual; and it may be presumed that, for some years at least, with good
management upon mercantile principles, the Company might exercise
that right with much greater proportionate benefit than the private
merchant, whose operations the Company could control, check, and
impede, by continuing dealings upon a scale and with a capital such
as wholly to baffle the calculations of an individual. As was ob-
served by Mr. Dundas (the late Lord Melville), in his speech in
the House of Commons on the 13th of July 1789 :
" Although the Company were not to be favoured with a renewal of their
" charter, and although it were to be deprived of all interest in the terri-
" torial revenues posterior to that period, still they must remain an incor-
" porated
* Vide proceedings of the House of Commons on a bill to authorize an increase of the Com-
pany's capital, July 1789.
221
" porated Company, against whom no exclusive rights can be granted, and
" of course have it in their power to continue a great commercial Com-
" pany, possessing advantages by their long establishment which no new
" adventurers could hope for a long time to enjoy."
This latter consideration would probably lead to a proposal for the
surrender of the Company's charter ; but such a concession could
not be expected, except upon the footing of indemnification.
I.
IHISE00K S ¥ A M E ^ w ^B ArE
/
