Hastings and the
gentlemen
of the
Council have not afforded any ground for such an
expectation.
Council have not afforded any ground for such an
expectation.
Edmund Burke
ON THE AFFAIRS OF INDIA.
49
sils and sheet copper, woollen cloth, and other commodities of little comparative value, no sort of merchandise is sent from England that is in demand for the wants or desires of the native inhabitants.
When an account is taken of the inter- Badeffects
of investcourse (for it is not commerce) which is ment.
carried on between Bengal and England, the pernicious effects of the system of investment from revenue
will appear in the strongest point of view. In that
view, the whole exported produce of the country, so
far as the Company is concerned, is not exchanged in
the course of barter, but is taken away without any
return or payment whatsoever. In a commercial
light, therefore, England becomes annually bankrupt.
to Bengal to the amount nearly of its whole dealing;
or rather, the country has suffered what is tantamount to an annual plunder of its manufactures and
its produce to the value of twelve hundred thousand
pounds.
In time of peace, three foreign companies Foreign
appear at first sight to bring their contri- companies.
bution of trade to the supply of this continual drain.
These are the companies of France, Holland, and
Denmark. But when the object is consid- Consequences of
ered more nearly, instead of relief, these their trade.
companies, who from their want of authority in the
country might seem to trade upon a principle merely
commercial, will be found to add their full proportion
to the calamity brought upon Bengal by the destructive system of the ruling power; because the greater
part of the capital of all these companies, and perhaps
the whole capital of some of them, is furnished exactly as the British is, out of the revenues of the country. The civil and military servants of the English VOL. VIII. 4
? ? ? ? 50 NINTH REPORT OF SELECT COMMITTEE
East India Company being restricted in drawing bills
upoll Europe, and none of' them ever making or proposing an establisllment in India, a very great part
of their fortunes, well or ill gotten, is in all probability thrown, as fast as required, into the cash of these
companies.
In all other countries, the revenue, following the
natural course and order of things, arises out of their
commerce. Here, by a mischievous inversion of that
order, the whole foreign maritime trade, whether
English, French, Dutch, or Danish, arises from the
revenues; and these are carried out of the country
without producing anything to compensate so heavy
a loss.
Foreign Your Committee have not been able to
companies'
investments. discover the entire value of the investment
made by foreign companies. But, as the investment
which the English East India Company derived from
its revenues, and even from its public credit, is for
the year 1783 to be wholly stopped, it has been proposed to private persons to make a subscription for
an investment oil their own account. This investment is to be equal to the sum of 800,0001. Another
loan has been also made for an investment on the
Company's account to China of 200,0001. This makes
a million; and there is no question that much more
could be readily had for bills upon Europe. Now, as
there is no doubt that the whole of the money remitted is the property of British subljects, (none else haviiig any interest in remitting to Eiurope,) it is not unfair to suppose that a very great part, if not the whole, of what may firnd its way into this new channel is not
newly created, but only diverted from those channels
in which it formerly rall, that is, the cash of the foreign trading companies.
? ? ? ? ON THE AFFAIRS OF INDIA. 51
Besides the investment made in goods by Ofthe silver
foreign companies from the funds of British china.
subjects, these subjects have been for some time in
the practice of sending very great sums in gold and
silver directly to China on their own account. In
a memorial presented to the Governor-General and
Council, in March, 1782, it appears that the principal money lent by British subjects to one company
of merchants in China then amounted to seven millions of dollars, about one million seven hundred
thousand pounds sterling; and not the smallest particle of silver sent to China ever returns to India.
It is not easy to determine in what proportions this
enormous sum of money has been sent from Madras
or from Bengal; but it equally exhausts a country
belonging to this kingdom, whether it comes from
the one or from the other.
But that the greatness of all these drains, Revenue
above the
and their effects, may be rendered more investment,
visible, your Committee have turned their how applied.
consideration to the employment of those parts of
the Bengal revenue which are not employed in the
Company's own investments for China and for Europe. What is taken over and above the investment (when any investment can be made) from the gross revenue, either for the charge of collection or
for civil and military establishments, is in time of
peace two millions at the least. From the portion of
that sum which goes to the support of civil government the natives are almost wholly excluded, as they
are from the principal collections of revenue. With
very few exceptions, they are only employed as servants and agents to Europeans, or in the inferior
departments of collection, when it is absolutely im
? ? ? ? 52 NINTH REPORT OF SELECT COMMITTEE
possible to proceed a step without their assistance.
For some time after the acquisition of the territorial
Allowance revenue, the sum of 420,0001. a year was
to Nabob of
Bengal. paid, according to the stipulation of a treaty,
to the Nabob of Bengal, for the support of his government. This sum, however inconsiderable, compared to
the revenues of the province, yet, distributed through
the various departments of civil administration, served
in some degree to preserve the natives of the better
sort, particularly those of the Mahomedan profession,
from being utterly ruined. The people of that persuasion, not being so generally engaged in trade, and not
having on their conquest of Bengal divested the ancient Gentoo proprietors of their lands of inheritance,
had for their chief, if not their sole support, the share
of a moderate conqueror in all offices, civil and military. But your Committee find that this arrangement
was of a short duration. Without the least regard to
the subsistence of this innocent people, or to the faith
of the agreement on which they were brought under
the British government, this sum was reduced by a
How re- new treaty to 320,0001. , and soon after, (upduced. on a pretence of the present Nabob's minority, and a temporary sequestration for the discharge of his debts,) to 160,0001. : but when he arrived at his
majority, and when the debts were paid, ( if ever they
were paid,) the sequestration still continued; and so
far as the late advices may be understood, the allowance to the Nabob appears still to stand at the
reduced sum of 160,0001.
Native The other resource of the Mahomedans,
officers. and of the Gentoos of certain of the higher
castes, was the army. In this army, nine tenths of
which consists of natives, no native, of whatever de
? ? ? ? ON THE AFFAIRS OF INDIA. 53
scription, holds any rank higher than that of a Subahdar Commandant, that is, of an -officer below the rank
of an English subaltern, who is appointed to each
company of the native soldiery.
Your Committee here would be under- All lucrative
employstood to state the ordinary establishment: ments in the
hands of the
for the war may have made some alteration. English.
All the honorable, all the lucrative situations of the
army, all the supplies and contracts of whatever species that belong to it, are solely in the hands of the
English; so that whatever is beyond the mere subsistence of a common soldier and some officers of a
lower rank, together with the immediate expenses of
the English officers at their table, is sooner or later,
in one shape or another, sent out of the country.
Such was the state of Bengal even in time of profound peace, and before the whole weight of the public charge fell upon that unhappy country for the support of other parts of India, which have been desolated in such a manner as to contribute little or
nothing to their own protection.
Your Committee have given this short comparative
account of the effects of the maritime traffic of Bengal, when in its natural state, and as it has stood
since the prevalence of the system of an investment
from the revenues. But before the forma- Former
state of
tion of that system Bengal did by no means trade.
depend for its resources on its maritime commerce.
the inland trade, from whence it derived a very
great supply of silver and gold and many kinds of
merchantable goods, was very considerable. The
higher provinces of the Mogul Empire were then populous and opulent, and intercourse to an immense
amount was carried on between them and Bengal.
? ? ? ? 54 NINTH REPORT OF SELECT COMMITTEE
A great trade also passed through these provinces
from all the countries on the frontier of Persia, and
the frontier provinces of Tartary, as well as from
Surat and Baroach on. the western side of India.
These parts opened to Bengal a communication with
the Persian Gulf and with the Red Sea, and through
them with the whole Turkish and the maritime parts
of the Persian Empire, besides the commercial intercourse which it maintained with those and many other countries through its own seaports.
During that period the remittances to the Mogul's
treasury from Bengal were never very large, at least
for any considerable time, nor very regularly sent;
and the impositions of the state were soon repaid
with interest through the medium of a lucrative
commerce. But the disorders of Persia, since the
death of Kouli Khan, have wholly destroyed the trade
And the of that country; and the trade to Turkey, by
trade to
Turkey. Jidda and Bussorah, which was the greatest and perhaps best branch of the Indian trade,
is very much diminished. The fall of the throne
of the Mogul emperors has drawn with it that of
the great marts of Agra and Delhi. The utmost
confusion of the northwestern provinces followed this
revolution, which was not absolutely complete until
it received the last hand from Great Britain. Still
greater calamities have fallen upon the fine provinces
of Rohilcund and Oude, and on the countries of Corah and Allahabad. By the operations of the British arms and influence, they are in many places turned
to mere deserts, or so reduced and decayed as to
afford very few materials or means of commerce.
State of Such is the actual condition of the trade
trade in the
Carnatic. of Bengal since the establishment of the
? ? ? ? ON THE AFFAIRS OF INDIA. 55
British power there. The commerce of the Carnatic,
as far as the inquiries of your Committee have extended, did not appear with a better aspect, even before the invasion of Hyder Ali Khan, and the consequent desolation, which for many years to come must exclude it from any considerable part of the trading
system.
It appears, on the examination of an intelligent person concerned in trade, and who resided at Madras
for several years, that on his arrival there, which
was in the year 1767, that city was in a flourishing
condition, and one of the first marts in India; but
when he left it, in 1779, there was little or no trade
remaining, and but one ship belonging to the whole
place. The evidence of this gentleman purports, that
at his first acquaintance with the Carnatic it was a
well-cultivated and populous country, and as such consumed many articles of merchandise; that at his departure he left it much circumscribed in trade, greatly
in the decline as to population and culture, and with
a correspondent decay of the territorial revenue.
Your Committee find that there has also been from
Madras an investment on the Company's account, taking one year with another, very nearly on the same
principles and with the same effects as that from Bengal; and they think it is highly probable, that, besides
the large sums remitted directly from Madras to China, there has likewise been a great deal on a private
account, for that and other countries, invested in the
cash of foreign European powers trading on the coast
of Coromandel. But your Committee have not extended their inquiries relative to the commerce of the
countries dependent on Madras so far as they have
done with regard to Bengal. They have reason to ap
? ? ? ? 56 NINTH REPORT OF SELECT COMMITTEE
prehend that the condition is rather worse; but if
the House requires a more minute examination of
this important subject, your Committee is willing to
enter into it without delay.
III. --EFFECT OF THE REVENUE INVESTMENT ON
THE COMPANY.
HITHERTO your Committee has considered this system of revenue investment; substituted in the place
of a commercial link between India and Europe, so
far as it affects India only: they are now to consider
it as it affects the Company. So long as that corporation continued to receive a vast quantity of merchantable goods without any disbursement for the purchase, so long it possessed wherewithal to continue a dividend to pay debts, and to contribute to the
state. But it must have been always evident to considerate persons, that this vast extraction of wealth
from a country lessening in its resources in proportion to the increase of its burdens was not calculated
for a very long duration. For a while the Company's
servants kept up this investment, not by improving
commerce, manufacture, or agriculture, but by forcibly raising the land-rents, on the principles and in
the manner hereafter to be described. When these
extortions disappointed or threatened to disappoint expectation, in order to purvey for the avarice which
raged in England, they sought for expedients in
breaches of all the agreements by which they were
bound by any payment to the country powers, and
in exciting disturbances among all the neighboring
princes. Stimulating their ambition, and fomentin,
? ? ? ? ON THE AFFAIRS OF INDIA. 57
their mutual animosities, they sold to them reciprocally their common servitude and ruin.
The Governor-General, Mr. Hastings, and the
Council, tell the Directors, " that the supply for the
investment has arisen from casual and extraordinary
resources, which they could not expect always to
command. " In an earlier minute he expresses himself still more distinctly: he says, "If the internal resources of a state fail it, or are not equal to its occasional wants, whence can it obtain immediate relief but from external means? " Indeed, the investment
has not been for any long time the natural product
of the revenue of Bengal. When, by the vast charge
and by the ill return of an evil political and military
traffic, and by a prodigal increase of establishments,
and a profuse conduct in distributing agencies and
contracts, they found themselves under difficulties,
instead of being cured of their immoral and impolitic delusion, they plunged deeper into it, and were drawn from expedient to expedient for the supply of
the investment into that endless chain of wars which
this House by its resolutions has so justly condemned.
At home these measures were sometimes countenanced, sometimes winked at, sometimes censured, but always with an acceptance of whatever profit
they afforded.
At length the funds for the investment and for
these wars together could no longer be supplied. In
the year 1778 the provision for the investment from
the revenues and from the monopolies stood very
high. It was estimated at a million four hundred
thousand pounds; and of this it appears that a great
deal was realized. But this was the high flood-tide
of the investment; for in that year they announce
? ? ? ? 58 NINTH REPORT OF SELECT COMMITTEE
its probable decline, and that such extensive supplies
could not be continued. The advances to the Board
of Trade became less punctual, and many disputes
arose about the time of making them. However,
knowing that all their credit at home depended on
the investment, or upon an opinion of its magnitude,
whilst they repeat their warning of a probable deficiency, and that their " finances bore an unfavorable
aspect," in the year 1779 they rate their investment
still higher. But their payments becoming less and
less regular, and the war carrying away all the supplies, at length Mr. Hastings, in December, 1780, denounced sentence of approaching dissolution to this system, and tells the Directors that "he bore too
high a respect for their characters to treat them with
the management of a preparatory and gradual introduction to an unpleasing report: that it is the only
substantial information he shall have to convey in
that letter. " In confidence, therefore, of their fortitude, he tells them without ceremony, " that there
will be a necessity of making a large reduction, or
possibly a total suspension, of their investment;that they had already been reduced to borrow near
700,0001. This resource," says he, " cannot last; it
must cease at a certain period, and that perhaps not
far distant. "
He was not mistaken in his prognostic. Loans now
becoming the regular resource for retrieving the
investment, whose ruin was inevitable, the Council
enable the Board of Trade, in April, 1781, to grant
certificates for government bonds at eight per cent
interest for about 650,0001. The investment was
fixed at 900,0001.
But now another alarming system appeared. These
? ? ? ? ON THE AFFAIRS OF INDIA. 59
new bonds overloaded the market. Those which had
been formerly issued were at a discount; the Board
of Trade was obliged to advance, therefore, a fourth
more than usual to the contractors. This seemed to
satisfy that description of dealers. But as those who
bought on agency were limited to no terms of mutual
advantage, and the bonds on the new issue falling
from three to eight, nine, and ten per cent discount,
the agents were unable to furnish at the usual prices.
Accordingly a discount was settled on such terms as
could be made: the lowest discount, and that at two
places only, was at four per cent; which, with the
interest on the bonds, made (besides the earlier advance) at the least twelve per cent additional charge upon all goods. It was evident, that, as the investment, instead of being supported by the revenues,
was sunk by the fall of their credit, so the net revenues were diminished by the daily accumulation of
an interest accruing on account of the investment.
What was done to alleviate one complaint thus aggravating the other, and at length proving pernicious to both, this trade on bonds likewise came to its period.
Your Committee has reason to think that the bonds
have since that time sunk to a discount much greater
even than what is now stated. The Board of Trade
justly denominates their resource for that year " the
sinking credit of a paper currency, laboring, from the
uncommon scarcity of specie, under disadvantages
scarcely surmountable. " From this they value themselves " on having effected an ostensible provision, at least for that investment. " For 1783 nothing appears
even ostensible.
By this failure a total revolution ensued, of the most
? ? ? ? 60 NINTH REPORT OF SELECT COMMITTEE
extraordinary nature, and to which your Committee
wish to call the particular attention of the House.
For the Council-General, in their letter of the 8th of
April, 1782, after stating that they were disappointed in their expectations, (how grounded it does not appear,) " thought that they should be able to spare
a sum to the Board of Trade," -- tell the Court of
Directors, " that they had adopted a new method of
keeping up. the investment, by private subscribers
for eighty lacs of rupees, which will find cargoes for
their ships on the usual terms of privilege, at the risk
of the individuals, and is to be repaid to them according to the produce of the sales in England," - and they tell the Directors, that " a copy of the plan makes a
number in their separate dispatches over land. "
It is impossible, in reporting this revolution to the
House, to avoid remarking with what fidelity Mr.
Hastings and his Council have adhered to the mode
of transmitting their accounts which your Committee
found it necessary to mark and censure in their First
Report. Its pernicious tendency is there fully set
forth. They were peculiarly called on for a most
accurate state of their affairs, in order to explain the
necessity of having recourse to such a scheme, as well
as for a full and correct account of the scheme itself.
But they send only the above short minute by one
dispatch over land, whilst the copy of the plan itself,
on which the Directors must form their judgment, is
sent separately in another dispatch over land, which
has never arrived. A third dispatch, which also contained the plan, was sent by a sea conveyance, and arrived late. The Directors have, for very obvious
reasons, ordered, by a strict injunction, that they
should send duplicates of all their dispatches by
? ? ? ? ON THE AFFAIRS OF INDIA. 61
every ship. The spirit of this rule, perhaps, ought
to extend to every mode of conveyance. In this
case, so far from sending a duplicate, they do not
send even one perfect account. They announce a
plan by one conveyance, and they send it by another
conveyance, with other delays and other risks.
At length, at nearly four months' distance, the
plan has been received, and appears to be substantially that which had been announced, but developing in the particulars many new circumstances of the greatest importance. By this plan it appears that
the subscription, even in idea or pretence, is not for
the use of the Company, but that the subscribers are
united into a sort of society for the remitting their
private fortunes: the goods, indeed, are said to be
shipped on the Company's account, and they are directed to be sold on the same account, and at the usual
periods of sales; but, after the payment of duties, and
such other allowances as they choose to make, in the
eleventh article they provide " that the remainder of
the sales shall revert to the subscribers, and be declared
to be their property, and divided in proportion to their
respective shares. " The compensation which they
allow in this plan to their masters for their brokerage
is, that, if, after deducting all the charges which they
impose, " the amount of the sales should be found to
exceed two shillings and twopence for the current
rupee of the invoice account, it shall be taken by the
Company. " For the management of this concern in
Bengal they choose commissioners by their own authority. By the same authority they form them into
a body, they put them under rules and regulations,
and they empower them also to make regulations of
their own. They remit, by the like authority, the
? ? ? ? 62 NINTH REPORT OF SELECT COMMITTEE
duties to which all private trade is subject; and they
charge the whole concern with seven per cent, to be
paid from the net produce of the sales in England, as
a recompense to the commissioners: for this the commissioners contract to bear all the charges on the
goods to the time of shipping.
The servants having formed this plan of trade, and
a new commission for the conduct of it, on their private account, it is a matter of consideration to know
who the commissioners are. They turn out to be
the three senior servants of the Company's Board of
Trade, who choose to take upon them to be the factors of others for large emoluments, whilst they receive salaries of two thousand pounds and fifteen hundred pounds a year from the Company. As the Company have no other fund than the new investment from whence they are to be paid for the care of their
servants' property, this commission and those salaries
being to take place of their brokerage, they in effect
render it very difficult, if not impossible, for them to
derive advantage from their new occupation.
As to the benefit of this plan: besides preventing
the loss which must happen from the Company's ships
returning empty to Europe, and the stopping of all
trade between India and England, the authors of it
state, that it will " open a new channel of remittance,
and abolish the practice, by precluding the necessity,
of remitting private fortunes by foreign bottoms, and
that it may lead to some permanent mode for remittaiice of private fortunes, and of combining it with
the regular provision of the Company's investment,
- that it will yield some profit to the Company without risk, and the national gain will be the same as
upon the regular trade. "
? ? ? ? ON THE AFFAIRS OF INDIA. 63
As to the combination of this mode of remittance
with the Company's investment, nothing can be affirmed concerning it until some satisfactory assurance
call be held out that such an investment can ever be
realized. Mr.
Hastings and the gentlemen of the
Council have not afforded any ground for such an
expectation. That the Indian trade may become a
permanent vehicle of the private fortunes of the Comparly's servants is very probable, -that is, as permanent as the means of acquiring fortunes in India; but that some profit will accrue to the Company is absolutely impossible. The Company are to bear all the
charge outwards, and a very great part of that homewards; and their only compensation is the surplus
commission on the sale of other people's goods. The
nation will undoubtedly avoid great loss and detriment, which would be the inevitable consequence of
the total cessation of the trade with Bengal and the
ships returning without cargoes. But if this temporary expedient should be improved into a system, no
occasional advantages to be derived from it would be
sufficient to balance the mischiefs of finding a great
Parliamentary corporation turned into a vehicle for
remitting to England the private fortunes of those for
whose benefit the territorial possessions in India. are
in effect and substance under this project to be solely
lield.
By this extraordinary scheme the Company is totally overturned, and all its relations inverted. From
bleitig a body collcerned in trade on their own account, and employing their servants as factors, the
servants have at one stroke taken the whole trade
into their own hands, on their own capital of
800,0001. , at their own risk, and the Company are
? ? ? ? 64 NINTH REPORT OF SELECT COMMITTEE
become agents and factors to them, to sell by com
mission their goods for their profit.
To enable your Committee to form some judgment
upon the profit which may accrue to the Company
from its new relation and employment, they directed
that an estimate should be made of the probable proceeds of an investment conducted on the principles
of that intended to be realized for 1783. By this estimate, which is subjoined,* it appears to your Com* Estimate of the Sale Amount and Net Proceeds in England of the Cargoes to be sent from Bengal, agreeable to the Plan received by Letter dated the 8th April, 1782.
This calculation supposes the eighty lac investments will be equal to
the tonnage of five ships.
b 2. To custom. . ~320,000
o 3. " freight. . 200,000
d' 4. " 5 per cent duty on
~ 1,300,000. . 65,000
e 5. " 2 do. warehouse
room do. . . 26,000
7 do. commission
on ~ 604,500. 42,315
~ 653,315. 6. " Balance. . 562,185
~ 1,215,500 ~ 1,215,500
1. The sale amount is computed on an average of the sales of the two
last years' imports.
b 2. The custom is computed on an average of what was paid on piecegoods and raw silk of said imports, adding additional imposts.
3. The ships going out of this season, (1782,) by which the above investment is expected to be sent home, are taken up at 471. 5s. per ton, for
the homeward cargo; this charge amounts to 35,8151. each ship; the additional wages to the men, which the Company pay, and a very small
charge for demurrage, will increase the freight, &c. , to 40,0001. per ship,
agreeable to above estimate.
d 4. The duty of five per cent is charged by the Company on the gross
sale amount of all private trade licensed to be brought from India: the
amount of this duty is the only benefit the Company are likely to receive
from the subscription investment.
e 5. This charge is likewise made on private trade goods, and is little,
if anything, more than the real expense the Company are at on account
of the same; therefore no benefit will probably arise to the Company
from it on the sale of the said investment.
r 6. This is the sum which will probably be realized in England, and
is only equal to is. 5d. per rupee, on the eighty lacs subscribed.
1. By sale amount of piece-goods and
raw silk. . ~1,300,000 Discount 61 per
cent allowed the buyers. . . 84,500
? ? ? ? ON THE AFFAIRS OF INDIA. 65
mittee, that, so far from any surplus profit from this
transaction, the Bengal adventurers themselves, instead of realizing 2s. 2d. the rupee, (the standard
they fix for their payment,) will not receive the is.
9d. which is its utmost value in silver at the Mint,
nor probably above is. 5d. With this certain loss
before their eyes, it is impossible that they can ever
complete their subscription, unless, by management
among themselves, they should be able to procure the
goods for their own account upon other terms than
those on which they purchased them for their masters, or unless they have for the supply of the Company on their hands a quantity of goods which they cannot otherwise dispose of. This latter case is not,
very improbable, from their proposing to send ten
sixteenths of the whole investment in silk, -- which,
as will be seen hereafter, the Company has prohibited
to be sent on their account, as a disadvantageous article. Nothing but the servants being overloaded can
rationally account for their choice of so great a proportion of so dubious a commodity.
On the state made by two reports of a committee
of the General Court in 1782, their affairs were even
then reduced to a low ebb. But under the arrangement announced by Mr. Hastings and his colleagues,
it does not appear, after this period of the servants'
investment, from what fund the proprietors are to
make any dividend at all. The objects of the sale
from whence the dividend is to arise are not their
goods: they stand accountable to others for the
whole probable produce. The state of the Company's commerce will therefore become an object of
serious consideration: an affair, as your Committee
apprehends, of as much difficulty as ever tried the facVOL. VIII. 5
? ? ? ? 66 NINTH REPORT' OF SELECT COMMITTEE
ulties of this House. For, on the one hand, it is plain
that the system of providing the Company's import
into Europe, resting almost wholly by an investment
from its territorial revenues, has failed: during its
continuance it was supported on principles fatal to
the prosperity of that country. Oin the other hand,
if the nominal commerce of the Company is suffered
to be carried on for the account of the servants
abroad, by investing the emoluments made in their
stations, these emoluments are therefore inclusively
authorized, and with them the practices from which
they accrue. All Parliamentary attempts to reform
this system will be contradictory to its institution.
If, for instance, five hundred thousand pounds sterling annually be necessary for this kind of investment, any regulation which may prevent the acquisition of that sum operates against the investment which is the end proposed by the plan.
On this new scheme, (which is neither calculated
for a future security nor for a present relief to the
Company,) it is not visible in what manner the settlements in India canl be at all upheld. The gentlemen in employments abroad call for the whole produce of the year's investment from Bengal; but for the payment of the counter-investment from Europe,
which is for the far greater part sent out for the support of their power, no provision at all is made: they
have not, it seems, agreed that it should be charged
to their account, or that any deduction should be
made for it from the produce of their sales in Leadenhall Street. How far such a scheme is preferable
to the total suspension of trade your Committee cannot positively determine. In all likelihood, extraordinary expedients were necessary; but the causes
? ? ? ? ON THE AFFAIRS OF INDIA. 67
which induced this necessity ought to be more fully
inquired into; for the last step in a series of conduct
may be justifiable upon principles that suppose great
blame in those which preceded it.
After your Committee had made the foregoing observations upon the plan of Mr. Hastings and his colleagues, transmitted to the Court of Directors, an extract of the Madras Consultations was a few days
ago laid before us. This extract contains a letter
from the Governor-General and Council of Bengal to
the Presidency of Fort St. George, which affords a
very striking, though to your Committee by no means
an unexpected, picture of the instability of their opinions and conduct. Oil the 8th of April the servants
had regularly formed and digested the above-mentioned plan, which was to form the basis for the investment of their own fortunes, and to furnish the sole means of the commercial existence of their masters.
Before the 10th of the following May, which is the
date of their letter to Madras, they inform Lord
Macartney that they had fundamentally altered the
whole scheme. "Instead," say they, "of allowing
the subscribers to retain an interest in the goods, they
are to be provided entirely on account of the Company, and transported at their risk; and the subscribers,
instead of receiving certificates payable out of the
produce of the sales in Europe, are to be granted receipts, on the payment of their advances, bearing an
interest of eight per cent per annum, until exchanged
for drafts on the Court of Directors, payable 365 days
after sight, at the rate of two shillings per current
rupee, - which drafts shall be granted in the proper
time, of three eighths of the amount subscribed, on
the 31st of December next, and the remaining five
eighths on the 31st of December, 1783. "
? ? ? ? 68 NINTH REPORT OF SELECT COMMITTEE
The plan of April divests the Company of all property in Bengal goods transported to Europe: but in recompense they are freed from all the risk and expense, they are not loaded with interest, and they are not embarrassed with bills. The plan of May reinstates them in their old relation: but in return, their revenues in Bengal are charged with an interest of
eight per cent on the sum subscribed, until bills shall
be drawn; they are made proprietors of cargoes purchased, under the disadvantage of that interest, at their own hazard; they are subjected to all losses;
and they are involved in Europe for payments of bills
to the amount of eighty lacs of rupees, at two shillings
the rupee, - that is, in bills for eight hundred thousand pounds sterling. It is probably on account of
the previous interest of eight per cent that the value
of the rupee on this scheme is reduced. Mr. Hastings
and his colleagues announce to Lord Macartney no
other than the foregoing alteration in their plan.
It is discouraging to attempt any sort of observation on plans thus shifting their principle whilst their merits are under examination. The judgment formed
on the scheme of April has nothing to do with the
project of May. Your Committee has not suppressed
any part of the reflections which occurred to them on
the former of these plans: first, because the Company knows of no other by any regular transmissions; secondly, because it is by no means certain that before the expiration of June the Governor-General and Council may not revert to the plan of April. They
speak of that plan as likely to be, or make a part of
one that shall be, permanent. Many reasons are alleged by its authors in its favor, grounded on the
state of their affairs; none whatever are assigned for
? ? ? ? ON THE AFFAIRS OF INDIA. 69
the alteration. It is, indeed, morally certain that persons who had money to remit must have made the
same calculation which has been made by the directions of your Committee, and the result must have
been equally clear to them,- which is, that, instead
of realizing two shillings and twopence the rupee on
their subscription, as they proposed, they could never
hope to see more than one shilling and ninepence.
This calculation probably shook the main pillar of
the project of April. But, on the other hand, as the
subscribers to the second scheme can have no certain
assurance that the Company will accept bills so far
exceeding their allowance in this particular, the necessity of remitting their fortunes may beat them
back to their old ground. The Danish Company was
the only means of remitting which remained. Attempts have been made with success to revive a Portuguese trade for that purpose. It is by no means clear whether Mr. Hastings and his colleagues will
adhere to either of the foregoing plans, or, indeed,
whether any investment at all to that amount can be
realized; because nothing but the convenience of remitting the gains of British subjects to London can
support any of these projects.
The situation of the Company, under this perpetual
variation in the system of their investment, is truly
perplexing. The manner in which they arrive at
any knowledge of it is no less so. The letter to Lord
Macartney, by which the variation is discovered, was
not intended for transmission to the Directors. It
was merely for the information of those who were
admitted to a share of the subscription at Madras.
When Mr. Hastings sent this information to those
subscribers, he might well enough have presumed an
? ? ? ? 70 NINTH REPORT OF SELECT COMMITTEE
event to happen which did happen, -that is, that a
vessel might be dispatched from Madras to Europe:
and indeed, by that, and by every devisable means, he
ought not only to have apprised the Directors of this
most material change in the plan of the investment,
but to have entered fully into the grounds and reasons of his making it.
It appears to your Committee that the ships which
brought to England the plan of the 8th of April did
not sail from Bengal until the 1st of May. If the
change had been in contemplation for any time before
the 30th of April, two days would have sufficed to
send an account of it, and it might have arrived
along with the plan which it affected. If, therefore,
such a change was in agitation before the sailing of
the ships, and yet was concealed when it might have
been communicated, the concealment is censurable.
It is not improbable that some change of the kind
was made or meditated before the sailing of the ships
for Europe: for it is hardly to be imagined that reasons wholly unlooked-for should appear for setting aside a plan concerning the success of which the
Council-General seemed so very confident, that a new
one should be proposed, that its merits should be
discussed among the moneyed men, that it should
be adopted in Council, and officially ready for transmission to Madras, in twelve or thirteen days. In this perplexity of plan and of transmission, the Court
of Directors may have made an arrangement of their
affairs on the groundwork of the first scheme, which
was officially and authentically conveyed to them.
The fundamental alteration of that plan in India
might require another of a very different kind in
England, which the arrangements taken in conse
? ? ? ? ON THE AFFAIRS OF INDIA. 71
quence of the first might make it difficult, if not
impossible, to execute. What must add to the confusion is, that the alteration has not the regular and official authority of the original plan, and may be
presumed to indicate with certainty nothing more
than that the business is again afloat, and that no
scheme is finally determined on. Thus the Company
is left without any fixed data upon which they can
make a rational disposition of their affairs.
The fact is, that the principles and economy of
the Company's trade have been so completely corrupted by turning it into a vehicle for tribute, that, whenever circumstances require it to be replaced
again upon a bottom truly commercial, hardly anything but confusion and disasters can be expected as the first results. Even before the acquisition of
the territorial revenues, the system of the Company's commerce was not formed upon principles the most favorable to its prosperity; for, whilst, on the
one hand, that body received encouragement by royal
and Parliamentary charters, was invested with several ample privileges, and even with a delegation of the most essential prerogatives of the crown,on the other, its commerce was watched with an invidious jealousy, as a species of dealing dangerous
to the national interests. In that light, with regard
to the Company's imports, there was a total prohibition from domestic use of the most considerable articles of their trade, --that is, of all silk stuffs,
and stained and painted cottons. The British market was in a great measure interdicted to the British trader. Whatever advantages might arise to the
general trading interests of the kingdom by this
restraint, its East India interest was undoubtedly
? ? ? ? 72 NINTH REPORT OF SELECT COMMITTEE
injured by it. The Company is also, and has been
from a very early period, obliged to furnish the Orddance with a quantity of saltpetre at a certain price,
without any reference to the standard of the markets either of purchase or of sale. With regard to
their export, they were put also under difficulties
upon very mistaken notions; for they were obliged
to export annually a certain proportion of British
manufactures, even though they should find for them
in India none or but an unprofitable want. This
compulsory export might operate, and in some instances has operated, in a manner more grievous
than a tax to the amount of the loss in trade: for
the payment of a tax is in general divided in unequal portions between the vender and consumer,
the largest part falling upon the latter; in the case
before us the tax may be as a dead charge on the
trading capital of the Company.
The spirit of all these regulations naturally tended
to weaken, in the very original constitution of the
Company, the main-spring of the commercial machine, the principles of profit and loss. And the mischief arising from an inattention to those principles has constantly increased with the increase of its power. For when the Company had acquired the rights
of sovereignty in India, it was not to be expected
that the attention to profit and loss would have increased. The idea of remitting tribute in goods
naturally produced an indifference to their price
and quality, --the goods themselves appearing little
else than a sort of package to the tribute. Merchandise taken as tribute, or bought in lieu of it, can
never long be of a kind or of a price fitted to a market which stands solely on its commercial reputation.
? ? ? ? ON THE AFFAIRS OF INDIA. 73
The indifference of the mercantile sovereign to his
trading advantages naturally relaxed the diligence of
his subordinate factor-magistrates through all their
gradations and in all their functions; it gave rise, at
least so far as the principal was concerned, to much
neglect of price and of goodness in their purchases.
If ever they showed any extraordinary degrees of accuracy and selection, it would naturally be in favor
of that interest to which they could not be indifferent. The Company might suffer above, the natives
might suffer below; the intermediate party must
profit to the prejudice of both.
Your Committee are of opinion that the Company
is now arrived at that point, when, the investment
from surplus revenue or from the spoil of war ceasing, it is become much more necessary to fix its commerce upon a commercial basis. And this opinion led your Committee to a detailed review of all the
articles of the Indian traffic upon which the profit
and loss was steady; and we have chosen a period
of four years, during the continluance of the revenue
investment, and prior to any borrowing or any extraordinary drawing of bills, in order to find out how
far the trade, under circumstances when it will be
necessary to carry it on by borrowing, or by bills,
or by exportation of bullion, can be sustained in
the former course, so as to secure the capital and
to afford a reasonable dividend. And your Corn.
mittee find that in the first four years the investment from Bengal amounted to 4,176,5251. ; upon
2,260,2771. there was a gain of 186,3371. , and upon
1,916,2481. a loss of 705,5661. : so that the excess
of loss above gain, upon the whole of the foregoing
capital, was in the four years no less than 519,2291.
? ? ? ? 74 NINTH REPORT OF SELECT COMMITTEE
If the trade were confined to Bengal, and the Company were to trade on those terms upon a capital
borrowed at eight per cent Indian interest, their revenues in that province would be soon so overpowered with debt, that those revenues, instead of supporting the trade, would be totally destroyed by it. If, on the other hand, the Company traded upon bills
with every advantage, far from being in a condition
to divide the smallest percentage, their bankruptcy
here would be inevitable.
Your Committee then turned to the trade of the
other factories and Presidencies, and they constantly
found, that, as the power and dominion of the Company was less, their profit on the goods was greater.
The investments of Madras, Bombay, and Bencoolen
have, in the foregoing four years, upon a capital of
1,151,1761. , had a gain upon the whole of 329,6221.
The greatest of all is that of Bencoolen, which, on
a, capital of 76,5711. , produced a profit of 107,7601.
This, however, is but a small branch of the Company's trade.
sils and sheet copper, woollen cloth, and other commodities of little comparative value, no sort of merchandise is sent from England that is in demand for the wants or desires of the native inhabitants.
When an account is taken of the inter- Badeffects
of investcourse (for it is not commerce) which is ment.
carried on between Bengal and England, the pernicious effects of the system of investment from revenue
will appear in the strongest point of view. In that
view, the whole exported produce of the country, so
far as the Company is concerned, is not exchanged in
the course of barter, but is taken away without any
return or payment whatsoever. In a commercial
light, therefore, England becomes annually bankrupt.
to Bengal to the amount nearly of its whole dealing;
or rather, the country has suffered what is tantamount to an annual plunder of its manufactures and
its produce to the value of twelve hundred thousand
pounds.
In time of peace, three foreign companies Foreign
appear at first sight to bring their contri- companies.
bution of trade to the supply of this continual drain.
These are the companies of France, Holland, and
Denmark. But when the object is consid- Consequences of
ered more nearly, instead of relief, these their trade.
companies, who from their want of authority in the
country might seem to trade upon a principle merely
commercial, will be found to add their full proportion
to the calamity brought upon Bengal by the destructive system of the ruling power; because the greater
part of the capital of all these companies, and perhaps
the whole capital of some of them, is furnished exactly as the British is, out of the revenues of the country. The civil and military servants of the English VOL. VIII. 4
? ? ? ? 50 NINTH REPORT OF SELECT COMMITTEE
East India Company being restricted in drawing bills
upoll Europe, and none of' them ever making or proposing an establisllment in India, a very great part
of their fortunes, well or ill gotten, is in all probability thrown, as fast as required, into the cash of these
companies.
In all other countries, the revenue, following the
natural course and order of things, arises out of their
commerce. Here, by a mischievous inversion of that
order, the whole foreign maritime trade, whether
English, French, Dutch, or Danish, arises from the
revenues; and these are carried out of the country
without producing anything to compensate so heavy
a loss.
Foreign Your Committee have not been able to
companies'
investments. discover the entire value of the investment
made by foreign companies. But, as the investment
which the English East India Company derived from
its revenues, and even from its public credit, is for
the year 1783 to be wholly stopped, it has been proposed to private persons to make a subscription for
an investment oil their own account. This investment is to be equal to the sum of 800,0001. Another
loan has been also made for an investment on the
Company's account to China of 200,0001. This makes
a million; and there is no question that much more
could be readily had for bills upon Europe. Now, as
there is no doubt that the whole of the money remitted is the property of British subljects, (none else haviiig any interest in remitting to Eiurope,) it is not unfair to suppose that a very great part, if not the whole, of what may firnd its way into this new channel is not
newly created, but only diverted from those channels
in which it formerly rall, that is, the cash of the foreign trading companies.
? ? ? ? ON THE AFFAIRS OF INDIA. 51
Besides the investment made in goods by Ofthe silver
foreign companies from the funds of British china.
subjects, these subjects have been for some time in
the practice of sending very great sums in gold and
silver directly to China on their own account. In
a memorial presented to the Governor-General and
Council, in March, 1782, it appears that the principal money lent by British subjects to one company
of merchants in China then amounted to seven millions of dollars, about one million seven hundred
thousand pounds sterling; and not the smallest particle of silver sent to China ever returns to India.
It is not easy to determine in what proportions this
enormous sum of money has been sent from Madras
or from Bengal; but it equally exhausts a country
belonging to this kingdom, whether it comes from
the one or from the other.
But that the greatness of all these drains, Revenue
above the
and their effects, may be rendered more investment,
visible, your Committee have turned their how applied.
consideration to the employment of those parts of
the Bengal revenue which are not employed in the
Company's own investments for China and for Europe. What is taken over and above the investment (when any investment can be made) from the gross revenue, either for the charge of collection or
for civil and military establishments, is in time of
peace two millions at the least. From the portion of
that sum which goes to the support of civil government the natives are almost wholly excluded, as they
are from the principal collections of revenue. With
very few exceptions, they are only employed as servants and agents to Europeans, or in the inferior
departments of collection, when it is absolutely im
? ? ? ? 52 NINTH REPORT OF SELECT COMMITTEE
possible to proceed a step without their assistance.
For some time after the acquisition of the territorial
Allowance revenue, the sum of 420,0001. a year was
to Nabob of
Bengal. paid, according to the stipulation of a treaty,
to the Nabob of Bengal, for the support of his government. This sum, however inconsiderable, compared to
the revenues of the province, yet, distributed through
the various departments of civil administration, served
in some degree to preserve the natives of the better
sort, particularly those of the Mahomedan profession,
from being utterly ruined. The people of that persuasion, not being so generally engaged in trade, and not
having on their conquest of Bengal divested the ancient Gentoo proprietors of their lands of inheritance,
had for their chief, if not their sole support, the share
of a moderate conqueror in all offices, civil and military. But your Committee find that this arrangement
was of a short duration. Without the least regard to
the subsistence of this innocent people, or to the faith
of the agreement on which they were brought under
the British government, this sum was reduced by a
How re- new treaty to 320,0001. , and soon after, (upduced. on a pretence of the present Nabob's minority, and a temporary sequestration for the discharge of his debts,) to 160,0001. : but when he arrived at his
majority, and when the debts were paid, ( if ever they
were paid,) the sequestration still continued; and so
far as the late advices may be understood, the allowance to the Nabob appears still to stand at the
reduced sum of 160,0001.
Native The other resource of the Mahomedans,
officers. and of the Gentoos of certain of the higher
castes, was the army. In this army, nine tenths of
which consists of natives, no native, of whatever de
? ? ? ? ON THE AFFAIRS OF INDIA. 53
scription, holds any rank higher than that of a Subahdar Commandant, that is, of an -officer below the rank
of an English subaltern, who is appointed to each
company of the native soldiery.
Your Committee here would be under- All lucrative
employstood to state the ordinary establishment: ments in the
hands of the
for the war may have made some alteration. English.
All the honorable, all the lucrative situations of the
army, all the supplies and contracts of whatever species that belong to it, are solely in the hands of the
English; so that whatever is beyond the mere subsistence of a common soldier and some officers of a
lower rank, together with the immediate expenses of
the English officers at their table, is sooner or later,
in one shape or another, sent out of the country.
Such was the state of Bengal even in time of profound peace, and before the whole weight of the public charge fell upon that unhappy country for the support of other parts of India, which have been desolated in such a manner as to contribute little or
nothing to their own protection.
Your Committee have given this short comparative
account of the effects of the maritime traffic of Bengal, when in its natural state, and as it has stood
since the prevalence of the system of an investment
from the revenues. But before the forma- Former
state of
tion of that system Bengal did by no means trade.
depend for its resources on its maritime commerce.
the inland trade, from whence it derived a very
great supply of silver and gold and many kinds of
merchantable goods, was very considerable. The
higher provinces of the Mogul Empire were then populous and opulent, and intercourse to an immense
amount was carried on between them and Bengal.
? ? ? ? 54 NINTH REPORT OF SELECT COMMITTEE
A great trade also passed through these provinces
from all the countries on the frontier of Persia, and
the frontier provinces of Tartary, as well as from
Surat and Baroach on. the western side of India.
These parts opened to Bengal a communication with
the Persian Gulf and with the Red Sea, and through
them with the whole Turkish and the maritime parts
of the Persian Empire, besides the commercial intercourse which it maintained with those and many other countries through its own seaports.
During that period the remittances to the Mogul's
treasury from Bengal were never very large, at least
for any considerable time, nor very regularly sent;
and the impositions of the state were soon repaid
with interest through the medium of a lucrative
commerce. But the disorders of Persia, since the
death of Kouli Khan, have wholly destroyed the trade
And the of that country; and the trade to Turkey, by
trade to
Turkey. Jidda and Bussorah, which was the greatest and perhaps best branch of the Indian trade,
is very much diminished. The fall of the throne
of the Mogul emperors has drawn with it that of
the great marts of Agra and Delhi. The utmost
confusion of the northwestern provinces followed this
revolution, which was not absolutely complete until
it received the last hand from Great Britain. Still
greater calamities have fallen upon the fine provinces
of Rohilcund and Oude, and on the countries of Corah and Allahabad. By the operations of the British arms and influence, they are in many places turned
to mere deserts, or so reduced and decayed as to
afford very few materials or means of commerce.
State of Such is the actual condition of the trade
trade in the
Carnatic. of Bengal since the establishment of the
? ? ? ? ON THE AFFAIRS OF INDIA. 55
British power there. The commerce of the Carnatic,
as far as the inquiries of your Committee have extended, did not appear with a better aspect, even before the invasion of Hyder Ali Khan, and the consequent desolation, which for many years to come must exclude it from any considerable part of the trading
system.
It appears, on the examination of an intelligent person concerned in trade, and who resided at Madras
for several years, that on his arrival there, which
was in the year 1767, that city was in a flourishing
condition, and one of the first marts in India; but
when he left it, in 1779, there was little or no trade
remaining, and but one ship belonging to the whole
place. The evidence of this gentleman purports, that
at his first acquaintance with the Carnatic it was a
well-cultivated and populous country, and as such consumed many articles of merchandise; that at his departure he left it much circumscribed in trade, greatly
in the decline as to population and culture, and with
a correspondent decay of the territorial revenue.
Your Committee find that there has also been from
Madras an investment on the Company's account, taking one year with another, very nearly on the same
principles and with the same effects as that from Bengal; and they think it is highly probable, that, besides
the large sums remitted directly from Madras to China, there has likewise been a great deal on a private
account, for that and other countries, invested in the
cash of foreign European powers trading on the coast
of Coromandel. But your Committee have not extended their inquiries relative to the commerce of the
countries dependent on Madras so far as they have
done with regard to Bengal. They have reason to ap
? ? ? ? 56 NINTH REPORT OF SELECT COMMITTEE
prehend that the condition is rather worse; but if
the House requires a more minute examination of
this important subject, your Committee is willing to
enter into it without delay.
III. --EFFECT OF THE REVENUE INVESTMENT ON
THE COMPANY.
HITHERTO your Committee has considered this system of revenue investment; substituted in the place
of a commercial link between India and Europe, so
far as it affects India only: they are now to consider
it as it affects the Company. So long as that corporation continued to receive a vast quantity of merchantable goods without any disbursement for the purchase, so long it possessed wherewithal to continue a dividend to pay debts, and to contribute to the
state. But it must have been always evident to considerate persons, that this vast extraction of wealth
from a country lessening in its resources in proportion to the increase of its burdens was not calculated
for a very long duration. For a while the Company's
servants kept up this investment, not by improving
commerce, manufacture, or agriculture, but by forcibly raising the land-rents, on the principles and in
the manner hereafter to be described. When these
extortions disappointed or threatened to disappoint expectation, in order to purvey for the avarice which
raged in England, they sought for expedients in
breaches of all the agreements by which they were
bound by any payment to the country powers, and
in exciting disturbances among all the neighboring
princes. Stimulating their ambition, and fomentin,
? ? ? ? ON THE AFFAIRS OF INDIA. 57
their mutual animosities, they sold to them reciprocally their common servitude and ruin.
The Governor-General, Mr. Hastings, and the
Council, tell the Directors, " that the supply for the
investment has arisen from casual and extraordinary
resources, which they could not expect always to
command. " In an earlier minute he expresses himself still more distinctly: he says, "If the internal resources of a state fail it, or are not equal to its occasional wants, whence can it obtain immediate relief but from external means? " Indeed, the investment
has not been for any long time the natural product
of the revenue of Bengal. When, by the vast charge
and by the ill return of an evil political and military
traffic, and by a prodigal increase of establishments,
and a profuse conduct in distributing agencies and
contracts, they found themselves under difficulties,
instead of being cured of their immoral and impolitic delusion, they plunged deeper into it, and were drawn from expedient to expedient for the supply of
the investment into that endless chain of wars which
this House by its resolutions has so justly condemned.
At home these measures were sometimes countenanced, sometimes winked at, sometimes censured, but always with an acceptance of whatever profit
they afforded.
At length the funds for the investment and for
these wars together could no longer be supplied. In
the year 1778 the provision for the investment from
the revenues and from the monopolies stood very
high. It was estimated at a million four hundred
thousand pounds; and of this it appears that a great
deal was realized. But this was the high flood-tide
of the investment; for in that year they announce
? ? ? ? 58 NINTH REPORT OF SELECT COMMITTEE
its probable decline, and that such extensive supplies
could not be continued. The advances to the Board
of Trade became less punctual, and many disputes
arose about the time of making them. However,
knowing that all their credit at home depended on
the investment, or upon an opinion of its magnitude,
whilst they repeat their warning of a probable deficiency, and that their " finances bore an unfavorable
aspect," in the year 1779 they rate their investment
still higher. But their payments becoming less and
less regular, and the war carrying away all the supplies, at length Mr. Hastings, in December, 1780, denounced sentence of approaching dissolution to this system, and tells the Directors that "he bore too
high a respect for their characters to treat them with
the management of a preparatory and gradual introduction to an unpleasing report: that it is the only
substantial information he shall have to convey in
that letter. " In confidence, therefore, of their fortitude, he tells them without ceremony, " that there
will be a necessity of making a large reduction, or
possibly a total suspension, of their investment;that they had already been reduced to borrow near
700,0001. This resource," says he, " cannot last; it
must cease at a certain period, and that perhaps not
far distant. "
He was not mistaken in his prognostic. Loans now
becoming the regular resource for retrieving the
investment, whose ruin was inevitable, the Council
enable the Board of Trade, in April, 1781, to grant
certificates for government bonds at eight per cent
interest for about 650,0001. The investment was
fixed at 900,0001.
But now another alarming system appeared. These
? ? ? ? ON THE AFFAIRS OF INDIA. 59
new bonds overloaded the market. Those which had
been formerly issued were at a discount; the Board
of Trade was obliged to advance, therefore, a fourth
more than usual to the contractors. This seemed to
satisfy that description of dealers. But as those who
bought on agency were limited to no terms of mutual
advantage, and the bonds on the new issue falling
from three to eight, nine, and ten per cent discount,
the agents were unable to furnish at the usual prices.
Accordingly a discount was settled on such terms as
could be made: the lowest discount, and that at two
places only, was at four per cent; which, with the
interest on the bonds, made (besides the earlier advance) at the least twelve per cent additional charge upon all goods. It was evident, that, as the investment, instead of being supported by the revenues,
was sunk by the fall of their credit, so the net revenues were diminished by the daily accumulation of
an interest accruing on account of the investment.
What was done to alleviate one complaint thus aggravating the other, and at length proving pernicious to both, this trade on bonds likewise came to its period.
Your Committee has reason to think that the bonds
have since that time sunk to a discount much greater
even than what is now stated. The Board of Trade
justly denominates their resource for that year " the
sinking credit of a paper currency, laboring, from the
uncommon scarcity of specie, under disadvantages
scarcely surmountable. " From this they value themselves " on having effected an ostensible provision, at least for that investment. " For 1783 nothing appears
even ostensible.
By this failure a total revolution ensued, of the most
? ? ? ? 60 NINTH REPORT OF SELECT COMMITTEE
extraordinary nature, and to which your Committee
wish to call the particular attention of the House.
For the Council-General, in their letter of the 8th of
April, 1782, after stating that they were disappointed in their expectations, (how grounded it does not appear,) " thought that they should be able to spare
a sum to the Board of Trade," -- tell the Court of
Directors, " that they had adopted a new method of
keeping up. the investment, by private subscribers
for eighty lacs of rupees, which will find cargoes for
their ships on the usual terms of privilege, at the risk
of the individuals, and is to be repaid to them according to the produce of the sales in England," - and they tell the Directors, that " a copy of the plan makes a
number in their separate dispatches over land. "
It is impossible, in reporting this revolution to the
House, to avoid remarking with what fidelity Mr.
Hastings and his Council have adhered to the mode
of transmitting their accounts which your Committee
found it necessary to mark and censure in their First
Report. Its pernicious tendency is there fully set
forth. They were peculiarly called on for a most
accurate state of their affairs, in order to explain the
necessity of having recourse to such a scheme, as well
as for a full and correct account of the scheme itself.
But they send only the above short minute by one
dispatch over land, whilst the copy of the plan itself,
on which the Directors must form their judgment, is
sent separately in another dispatch over land, which
has never arrived. A third dispatch, which also contained the plan, was sent by a sea conveyance, and arrived late. The Directors have, for very obvious
reasons, ordered, by a strict injunction, that they
should send duplicates of all their dispatches by
? ? ? ? ON THE AFFAIRS OF INDIA. 61
every ship. The spirit of this rule, perhaps, ought
to extend to every mode of conveyance. In this
case, so far from sending a duplicate, they do not
send even one perfect account. They announce a
plan by one conveyance, and they send it by another
conveyance, with other delays and other risks.
At length, at nearly four months' distance, the
plan has been received, and appears to be substantially that which had been announced, but developing in the particulars many new circumstances of the greatest importance. By this plan it appears that
the subscription, even in idea or pretence, is not for
the use of the Company, but that the subscribers are
united into a sort of society for the remitting their
private fortunes: the goods, indeed, are said to be
shipped on the Company's account, and they are directed to be sold on the same account, and at the usual
periods of sales; but, after the payment of duties, and
such other allowances as they choose to make, in the
eleventh article they provide " that the remainder of
the sales shall revert to the subscribers, and be declared
to be their property, and divided in proportion to their
respective shares. " The compensation which they
allow in this plan to their masters for their brokerage
is, that, if, after deducting all the charges which they
impose, " the amount of the sales should be found to
exceed two shillings and twopence for the current
rupee of the invoice account, it shall be taken by the
Company. " For the management of this concern in
Bengal they choose commissioners by their own authority. By the same authority they form them into
a body, they put them under rules and regulations,
and they empower them also to make regulations of
their own. They remit, by the like authority, the
? ? ? ? 62 NINTH REPORT OF SELECT COMMITTEE
duties to which all private trade is subject; and they
charge the whole concern with seven per cent, to be
paid from the net produce of the sales in England, as
a recompense to the commissioners: for this the commissioners contract to bear all the charges on the
goods to the time of shipping.
The servants having formed this plan of trade, and
a new commission for the conduct of it, on their private account, it is a matter of consideration to know
who the commissioners are. They turn out to be
the three senior servants of the Company's Board of
Trade, who choose to take upon them to be the factors of others for large emoluments, whilst they receive salaries of two thousand pounds and fifteen hundred pounds a year from the Company. As the Company have no other fund than the new investment from whence they are to be paid for the care of their
servants' property, this commission and those salaries
being to take place of their brokerage, they in effect
render it very difficult, if not impossible, for them to
derive advantage from their new occupation.
As to the benefit of this plan: besides preventing
the loss which must happen from the Company's ships
returning empty to Europe, and the stopping of all
trade between India and England, the authors of it
state, that it will " open a new channel of remittance,
and abolish the practice, by precluding the necessity,
of remitting private fortunes by foreign bottoms, and
that it may lead to some permanent mode for remittaiice of private fortunes, and of combining it with
the regular provision of the Company's investment,
- that it will yield some profit to the Company without risk, and the national gain will be the same as
upon the regular trade. "
? ? ? ? ON THE AFFAIRS OF INDIA. 63
As to the combination of this mode of remittance
with the Company's investment, nothing can be affirmed concerning it until some satisfactory assurance
call be held out that such an investment can ever be
realized. Mr.
Hastings and the gentlemen of the
Council have not afforded any ground for such an
expectation. That the Indian trade may become a
permanent vehicle of the private fortunes of the Comparly's servants is very probable, -that is, as permanent as the means of acquiring fortunes in India; but that some profit will accrue to the Company is absolutely impossible. The Company are to bear all the
charge outwards, and a very great part of that homewards; and their only compensation is the surplus
commission on the sale of other people's goods. The
nation will undoubtedly avoid great loss and detriment, which would be the inevitable consequence of
the total cessation of the trade with Bengal and the
ships returning without cargoes. But if this temporary expedient should be improved into a system, no
occasional advantages to be derived from it would be
sufficient to balance the mischiefs of finding a great
Parliamentary corporation turned into a vehicle for
remitting to England the private fortunes of those for
whose benefit the territorial possessions in India. are
in effect and substance under this project to be solely
lield.
By this extraordinary scheme the Company is totally overturned, and all its relations inverted. From
bleitig a body collcerned in trade on their own account, and employing their servants as factors, the
servants have at one stroke taken the whole trade
into their own hands, on their own capital of
800,0001. , at their own risk, and the Company are
? ? ? ? 64 NINTH REPORT OF SELECT COMMITTEE
become agents and factors to them, to sell by com
mission their goods for their profit.
To enable your Committee to form some judgment
upon the profit which may accrue to the Company
from its new relation and employment, they directed
that an estimate should be made of the probable proceeds of an investment conducted on the principles
of that intended to be realized for 1783. By this estimate, which is subjoined,* it appears to your Com* Estimate of the Sale Amount and Net Proceeds in England of the Cargoes to be sent from Bengal, agreeable to the Plan received by Letter dated the 8th April, 1782.
This calculation supposes the eighty lac investments will be equal to
the tonnage of five ships.
b 2. To custom. . ~320,000
o 3. " freight. . 200,000
d' 4. " 5 per cent duty on
~ 1,300,000. . 65,000
e 5. " 2 do. warehouse
room do. . . 26,000
7 do. commission
on ~ 604,500. 42,315
~ 653,315. 6. " Balance. . 562,185
~ 1,215,500 ~ 1,215,500
1. The sale amount is computed on an average of the sales of the two
last years' imports.
b 2. The custom is computed on an average of what was paid on piecegoods and raw silk of said imports, adding additional imposts.
3. The ships going out of this season, (1782,) by which the above investment is expected to be sent home, are taken up at 471. 5s. per ton, for
the homeward cargo; this charge amounts to 35,8151. each ship; the additional wages to the men, which the Company pay, and a very small
charge for demurrage, will increase the freight, &c. , to 40,0001. per ship,
agreeable to above estimate.
d 4. The duty of five per cent is charged by the Company on the gross
sale amount of all private trade licensed to be brought from India: the
amount of this duty is the only benefit the Company are likely to receive
from the subscription investment.
e 5. This charge is likewise made on private trade goods, and is little,
if anything, more than the real expense the Company are at on account
of the same; therefore no benefit will probably arise to the Company
from it on the sale of the said investment.
r 6. This is the sum which will probably be realized in England, and
is only equal to is. 5d. per rupee, on the eighty lacs subscribed.
1. By sale amount of piece-goods and
raw silk. . ~1,300,000 Discount 61 per
cent allowed the buyers. . . 84,500
? ? ? ? ON THE AFFAIRS OF INDIA. 65
mittee, that, so far from any surplus profit from this
transaction, the Bengal adventurers themselves, instead of realizing 2s. 2d. the rupee, (the standard
they fix for their payment,) will not receive the is.
9d. which is its utmost value in silver at the Mint,
nor probably above is. 5d. With this certain loss
before their eyes, it is impossible that they can ever
complete their subscription, unless, by management
among themselves, they should be able to procure the
goods for their own account upon other terms than
those on which they purchased them for their masters, or unless they have for the supply of the Company on their hands a quantity of goods which they cannot otherwise dispose of. This latter case is not,
very improbable, from their proposing to send ten
sixteenths of the whole investment in silk, -- which,
as will be seen hereafter, the Company has prohibited
to be sent on their account, as a disadvantageous article. Nothing but the servants being overloaded can
rationally account for their choice of so great a proportion of so dubious a commodity.
On the state made by two reports of a committee
of the General Court in 1782, their affairs were even
then reduced to a low ebb. But under the arrangement announced by Mr. Hastings and his colleagues,
it does not appear, after this period of the servants'
investment, from what fund the proprietors are to
make any dividend at all. The objects of the sale
from whence the dividend is to arise are not their
goods: they stand accountable to others for the
whole probable produce. The state of the Company's commerce will therefore become an object of
serious consideration: an affair, as your Committee
apprehends, of as much difficulty as ever tried the facVOL. VIII. 5
? ? ? ? 66 NINTH REPORT' OF SELECT COMMITTEE
ulties of this House. For, on the one hand, it is plain
that the system of providing the Company's import
into Europe, resting almost wholly by an investment
from its territorial revenues, has failed: during its
continuance it was supported on principles fatal to
the prosperity of that country. Oin the other hand,
if the nominal commerce of the Company is suffered
to be carried on for the account of the servants
abroad, by investing the emoluments made in their
stations, these emoluments are therefore inclusively
authorized, and with them the practices from which
they accrue. All Parliamentary attempts to reform
this system will be contradictory to its institution.
If, for instance, five hundred thousand pounds sterling annually be necessary for this kind of investment, any regulation which may prevent the acquisition of that sum operates against the investment which is the end proposed by the plan.
On this new scheme, (which is neither calculated
for a future security nor for a present relief to the
Company,) it is not visible in what manner the settlements in India canl be at all upheld. The gentlemen in employments abroad call for the whole produce of the year's investment from Bengal; but for the payment of the counter-investment from Europe,
which is for the far greater part sent out for the support of their power, no provision at all is made: they
have not, it seems, agreed that it should be charged
to their account, or that any deduction should be
made for it from the produce of their sales in Leadenhall Street. How far such a scheme is preferable
to the total suspension of trade your Committee cannot positively determine. In all likelihood, extraordinary expedients were necessary; but the causes
? ? ? ? ON THE AFFAIRS OF INDIA. 67
which induced this necessity ought to be more fully
inquired into; for the last step in a series of conduct
may be justifiable upon principles that suppose great
blame in those which preceded it.
After your Committee had made the foregoing observations upon the plan of Mr. Hastings and his colleagues, transmitted to the Court of Directors, an extract of the Madras Consultations was a few days
ago laid before us. This extract contains a letter
from the Governor-General and Council of Bengal to
the Presidency of Fort St. George, which affords a
very striking, though to your Committee by no means
an unexpected, picture of the instability of their opinions and conduct. Oil the 8th of April the servants
had regularly formed and digested the above-mentioned plan, which was to form the basis for the investment of their own fortunes, and to furnish the sole means of the commercial existence of their masters.
Before the 10th of the following May, which is the
date of their letter to Madras, they inform Lord
Macartney that they had fundamentally altered the
whole scheme. "Instead," say they, "of allowing
the subscribers to retain an interest in the goods, they
are to be provided entirely on account of the Company, and transported at their risk; and the subscribers,
instead of receiving certificates payable out of the
produce of the sales in Europe, are to be granted receipts, on the payment of their advances, bearing an
interest of eight per cent per annum, until exchanged
for drafts on the Court of Directors, payable 365 days
after sight, at the rate of two shillings per current
rupee, - which drafts shall be granted in the proper
time, of three eighths of the amount subscribed, on
the 31st of December next, and the remaining five
eighths on the 31st of December, 1783. "
? ? ? ? 68 NINTH REPORT OF SELECT COMMITTEE
The plan of April divests the Company of all property in Bengal goods transported to Europe: but in recompense they are freed from all the risk and expense, they are not loaded with interest, and they are not embarrassed with bills. The plan of May reinstates them in their old relation: but in return, their revenues in Bengal are charged with an interest of
eight per cent on the sum subscribed, until bills shall
be drawn; they are made proprietors of cargoes purchased, under the disadvantage of that interest, at their own hazard; they are subjected to all losses;
and they are involved in Europe for payments of bills
to the amount of eighty lacs of rupees, at two shillings
the rupee, - that is, in bills for eight hundred thousand pounds sterling. It is probably on account of
the previous interest of eight per cent that the value
of the rupee on this scheme is reduced. Mr. Hastings
and his colleagues announce to Lord Macartney no
other than the foregoing alteration in their plan.
It is discouraging to attempt any sort of observation on plans thus shifting their principle whilst their merits are under examination. The judgment formed
on the scheme of April has nothing to do with the
project of May. Your Committee has not suppressed
any part of the reflections which occurred to them on
the former of these plans: first, because the Company knows of no other by any regular transmissions; secondly, because it is by no means certain that before the expiration of June the Governor-General and Council may not revert to the plan of April. They
speak of that plan as likely to be, or make a part of
one that shall be, permanent. Many reasons are alleged by its authors in its favor, grounded on the
state of their affairs; none whatever are assigned for
? ? ? ? ON THE AFFAIRS OF INDIA. 69
the alteration. It is, indeed, morally certain that persons who had money to remit must have made the
same calculation which has been made by the directions of your Committee, and the result must have
been equally clear to them,- which is, that, instead
of realizing two shillings and twopence the rupee on
their subscription, as they proposed, they could never
hope to see more than one shilling and ninepence.
This calculation probably shook the main pillar of
the project of April. But, on the other hand, as the
subscribers to the second scheme can have no certain
assurance that the Company will accept bills so far
exceeding their allowance in this particular, the necessity of remitting their fortunes may beat them
back to their old ground. The Danish Company was
the only means of remitting which remained. Attempts have been made with success to revive a Portuguese trade for that purpose. It is by no means clear whether Mr. Hastings and his colleagues will
adhere to either of the foregoing plans, or, indeed,
whether any investment at all to that amount can be
realized; because nothing but the convenience of remitting the gains of British subjects to London can
support any of these projects.
The situation of the Company, under this perpetual
variation in the system of their investment, is truly
perplexing. The manner in which they arrive at
any knowledge of it is no less so. The letter to Lord
Macartney, by which the variation is discovered, was
not intended for transmission to the Directors. It
was merely for the information of those who were
admitted to a share of the subscription at Madras.
When Mr. Hastings sent this information to those
subscribers, he might well enough have presumed an
? ? ? ? 70 NINTH REPORT OF SELECT COMMITTEE
event to happen which did happen, -that is, that a
vessel might be dispatched from Madras to Europe:
and indeed, by that, and by every devisable means, he
ought not only to have apprised the Directors of this
most material change in the plan of the investment,
but to have entered fully into the grounds and reasons of his making it.
It appears to your Committee that the ships which
brought to England the plan of the 8th of April did
not sail from Bengal until the 1st of May. If the
change had been in contemplation for any time before
the 30th of April, two days would have sufficed to
send an account of it, and it might have arrived
along with the plan which it affected. If, therefore,
such a change was in agitation before the sailing of
the ships, and yet was concealed when it might have
been communicated, the concealment is censurable.
It is not improbable that some change of the kind
was made or meditated before the sailing of the ships
for Europe: for it is hardly to be imagined that reasons wholly unlooked-for should appear for setting aside a plan concerning the success of which the
Council-General seemed so very confident, that a new
one should be proposed, that its merits should be
discussed among the moneyed men, that it should
be adopted in Council, and officially ready for transmission to Madras, in twelve or thirteen days. In this perplexity of plan and of transmission, the Court
of Directors may have made an arrangement of their
affairs on the groundwork of the first scheme, which
was officially and authentically conveyed to them.
The fundamental alteration of that plan in India
might require another of a very different kind in
England, which the arrangements taken in conse
? ? ? ? ON THE AFFAIRS OF INDIA. 71
quence of the first might make it difficult, if not
impossible, to execute. What must add to the confusion is, that the alteration has not the regular and official authority of the original plan, and may be
presumed to indicate with certainty nothing more
than that the business is again afloat, and that no
scheme is finally determined on. Thus the Company
is left without any fixed data upon which they can
make a rational disposition of their affairs.
The fact is, that the principles and economy of
the Company's trade have been so completely corrupted by turning it into a vehicle for tribute, that, whenever circumstances require it to be replaced
again upon a bottom truly commercial, hardly anything but confusion and disasters can be expected as the first results. Even before the acquisition of
the territorial revenues, the system of the Company's commerce was not formed upon principles the most favorable to its prosperity; for, whilst, on the
one hand, that body received encouragement by royal
and Parliamentary charters, was invested with several ample privileges, and even with a delegation of the most essential prerogatives of the crown,on the other, its commerce was watched with an invidious jealousy, as a species of dealing dangerous
to the national interests. In that light, with regard
to the Company's imports, there was a total prohibition from domestic use of the most considerable articles of their trade, --that is, of all silk stuffs,
and stained and painted cottons. The British market was in a great measure interdicted to the British trader. Whatever advantages might arise to the
general trading interests of the kingdom by this
restraint, its East India interest was undoubtedly
? ? ? ? 72 NINTH REPORT OF SELECT COMMITTEE
injured by it. The Company is also, and has been
from a very early period, obliged to furnish the Orddance with a quantity of saltpetre at a certain price,
without any reference to the standard of the markets either of purchase or of sale. With regard to
their export, they were put also under difficulties
upon very mistaken notions; for they were obliged
to export annually a certain proportion of British
manufactures, even though they should find for them
in India none or but an unprofitable want. This
compulsory export might operate, and in some instances has operated, in a manner more grievous
than a tax to the amount of the loss in trade: for
the payment of a tax is in general divided in unequal portions between the vender and consumer,
the largest part falling upon the latter; in the case
before us the tax may be as a dead charge on the
trading capital of the Company.
The spirit of all these regulations naturally tended
to weaken, in the very original constitution of the
Company, the main-spring of the commercial machine, the principles of profit and loss. And the mischief arising from an inattention to those principles has constantly increased with the increase of its power. For when the Company had acquired the rights
of sovereignty in India, it was not to be expected
that the attention to profit and loss would have increased. The idea of remitting tribute in goods
naturally produced an indifference to their price
and quality, --the goods themselves appearing little
else than a sort of package to the tribute. Merchandise taken as tribute, or bought in lieu of it, can
never long be of a kind or of a price fitted to a market which stands solely on its commercial reputation.
? ? ? ? ON THE AFFAIRS OF INDIA. 73
The indifference of the mercantile sovereign to his
trading advantages naturally relaxed the diligence of
his subordinate factor-magistrates through all their
gradations and in all their functions; it gave rise, at
least so far as the principal was concerned, to much
neglect of price and of goodness in their purchases.
If ever they showed any extraordinary degrees of accuracy and selection, it would naturally be in favor
of that interest to which they could not be indifferent. The Company might suffer above, the natives
might suffer below; the intermediate party must
profit to the prejudice of both.
Your Committee are of opinion that the Company
is now arrived at that point, when, the investment
from surplus revenue or from the spoil of war ceasing, it is become much more necessary to fix its commerce upon a commercial basis. And this opinion led your Committee to a detailed review of all the
articles of the Indian traffic upon which the profit
and loss was steady; and we have chosen a period
of four years, during the continluance of the revenue
investment, and prior to any borrowing or any extraordinary drawing of bills, in order to find out how
far the trade, under circumstances when it will be
necessary to carry it on by borrowing, or by bills,
or by exportation of bullion, can be sustained in
the former course, so as to secure the capital and
to afford a reasonable dividend. And your Corn.
mittee find that in the first four years the investment from Bengal amounted to 4,176,5251. ; upon
2,260,2771. there was a gain of 186,3371. , and upon
1,916,2481. a loss of 705,5661. : so that the excess
of loss above gain, upon the whole of the foregoing
capital, was in the four years no less than 519,2291.
? ? ? ? 74 NINTH REPORT OF SELECT COMMITTEE
If the trade were confined to Bengal, and the Company were to trade on those terms upon a capital
borrowed at eight per cent Indian interest, their revenues in that province would be soon so overpowered with debt, that those revenues, instead of supporting the trade, would be totally destroyed by it. If, on the other hand, the Company traded upon bills
with every advantage, far from being in a condition
to divide the smallest percentage, their bankruptcy
here would be inevitable.
Your Committee then turned to the trade of the
other factories and Presidencies, and they constantly
found, that, as the power and dominion of the Company was less, their profit on the goods was greater.
The investments of Madras, Bombay, and Bencoolen
have, in the foregoing four years, upon a capital of
1,151,1761. , had a gain upon the whole of 329,6221.
The greatest of all is that of Bencoolen, which, on
a, capital of 76,5711. , produced a profit of 107,7601.
This, however, is but a small branch of the Company's trade.
