ors, and a dividend conformable to the general results of the trade made among the proprietors. It has been alleged, however, that when zeal was no longer stimulated by individual interest, the commercial transactions were not conducted with the same economy, and yielded less advantageous returns. The company afterward involved their affairs in the confusion of different interests. An addition to their capital being from time to time required, was procured by a new joint-stock; and sums were subscribed by fresh bodies of adventurers, which were to be separately managed. Thus, by the year 1650, four distinct subscriptions were formed. Meantime the directors were harassed, not only by the competition of numerous interlopers, but by demands from respectable merchants to be admitted to a share in this lucrative traffic. The principles of commercial, as well as of political, liberty widely pervaded the na tion; the Levant and Muscovy trades had been thrown open with the happiest effects; and it was urged that equal benefits would accrue from opening to the nation in general that of India. In 1635, a new association, headed by Sir William Courten, obtained permission from the king, who was allowed a share in the adventure, to embark in an independent trade with that country. The concern, however, was not well conducted, and could not make head against the hostility of the company, who advanced multiplied charges against it. At length the privilege was withdrawn; but the directors agreed to incorporate the capital with their own, forming what was termed the United Jointstock. Its proprietors, however, in 1655, were empowered by Cromwell to resume a separate commerce. Jealousies were roused to the highest pitch; and, after several warm discussions, it was agreed that the exclusive system should be fully re-established, and that the different stocks, which had led to such confusion, should be consolidated. From this time the transactions were carried on, if not in a more profitable, at least in a more systematic manner.

During a course of years from this date, though the company laboured under embarrassment, the general prosperity of the country enabled them to extend their commerce. Their outward investment in goods and bullion, which in 1662 did not exceed 65,000l., rose in 1673 to 228,000l. This apparent success produced, however, the usual effect

THE COMPANY'S EARLY PROCEEDINGS.

275

of exciting emulation among the rest of the community. In 1688 the plan of a subscription for a new joint-stock was taken into consideration by the king and council, though without obtaining their sanction. After the revolution the prevailing spirit of liberty rendered the zeal of private adventurers still more active. The company, however, had still influence enough, in 1693, to procure from the crown a charter for twenty-one years, which authorized them to extend their capital from 756,000l., to 1,500,000l. But the House of Commons the same year passed a vote directly annulling this grant. That assembly was the more confirmed in their hostility, when, having, instituted an inquiry, they discovered that large sums had been paid as bribes to the Duke of Leeds and other public officers. In 1698, a bill was brought into Parliament for the establishment of another company. The principles of commercial legislation, however, being yet in their infancy, this measure was not founded upon any sound or liberal basis. It in no degree threw open the trade, but merely transferred the monopoly from one body to another; and a direct injustice was committed by allowing the new association to commence their operation immediately; their predecessors being by their charter entitled to a notice of three years before their exclusive trade should cease. ally, and this was the real source of their too ample privileges, the new company agreed to advance to government two millions sterling at eight per cent.; a most preposterous arrangement, whereby they deprived themselves of the capital with which their trade ought to have been carried on. The consequence was, that in their first voyage they were only able to send out an investment of 178,000l., while their rivals, for the same season, sent one of 525,000l. But the old company redoubled their efforts, conducted their affairs with increased prudence and caution, and by their great experience proved themselves superior to their new competitors. The V most violent dissensions broke out in India between the rival associations; each representing the other in the blackest colours to the native powers, who were much disposed to listen to the statements of both. Hence arose an apprehension that the very existence of British trade in India was in peril. It seemed necessary, by some means or other, to terminate this unprofitable conflict; and, after suitable negotia

Fin

tion, the companies agreed to a compromise, and to act thenceforth under the title of the United Company of Merchants trading to the East Indies. Godolphin, reckoned the greatest statesman of the age, was appointed arbiter, and on the basis of his decision was formed a constitution, which with slight alterations, has subsisted to the present day. There was nominated a court of proprietors, comprising all who held stock to the amount of 500l. These were to meet four times a year, or oftener if necessary, to make regulations for the management of the company's affairs, and deter mine the amount of dividend. They elected a committee of twenty-four, called afterward the Court of Directors, who, with a chairman, conducted all the details of business and traffic. This was a government purely democratic; for, though Mr. Mill compares the chairman and directors to the king and lords, they had in fact no legislative power nor independent functions whatever; they were the mere servants of the body of proprietors. Yet the fact is, that, instead of suffering any of the inconveniences of democratic rule, it has proved almost a complete oligarchy, centering, as might be expected, in the court of directors.

In 1730 a strenuous effort was made, by petitions from the chief mercantile towns, to have the Indian trade thrown open to the nation, allowing the company to retain the forts and other establishments, and to receive an allowance on the imports and exports. But the latter had influence sufficient to defeat this application, and to procure a farther extension of their charter for thirty-three years.

During this interval the circumstances of the company underwent an entire and most important change. At first they attempted nothing more than to maintain factories for the accommodation of their agents, and places of deposite for their goods. Sir Thomas Roe, their ambassador to the Mogul court, had strenuously advised them to proceed no farther, and to avoid fortified stations, which, besides involving large expenses, were likely to excite jealousy in the native princes, and to occasion ruinous wars. Yet the ma

rauding character of the Indian chiefs renders it doubtful how far such a plan could have been pursued with safety. The company therefore, as formerly observed, erected several forts: they had even, in 1689, conceived the design of establishing dominion in India, and of making revenue one

FINANCIAL DISTRESS.

277

of their sources of emolument. Yet down to 1744 they had acquired only a few small districts around Bombay, Madras, and Calcutta. The war which then broke out in the Carnatic had the effect of converting them into a military power, and of rendering them, after various struggles, virtual sovereigns of that part of the country. Much more memorable results arose out of the war in Bengal and the victories of Clive, when they obtained the dewannee, including the real occupancy of that province, with Bahar and Orissa, forming a territory more extensive, and at that time supposed more opulent, than the whole of Great Britain. This event created an extraordinary sensation, and inspired both themselves and the nation with an extravagant idea of their wealth; their stock rose to 263, and dividends were declared at 124 per cent. These treasures, however, soon became an object of jealousy and desire both to the people and the government. The question was mooted, whether any body of subjects could exercise an authority independent of the supreme power; nor were ministers slow to pronounce that the king must be the real and only sovereign of every territory conquered by the British arms. This alarming claim was for the time evaded by an agree ment made in 1797, that the company should annually pay 400,000l. into the exchequer, and reduce their dividend to ten per cent.; upon which they were allowed for two years to retain their Indian acquisitions. In 1769 a similar ar rangement extended their power for five years longer. But at this epoch a disastrous crisis had arrived in their affairs. That wealth, supposed so immense, which had excited their own exultation and the envy of the public, proved in a great measure illusory. The revenues of the conquered provinces, though very considerable, were found inadequate to defray the expenses of war, the rapacity of their servants, and the exorbitant dividends which the proprietors thought themselves entitled to demand. Their affairs were now in a state of extreme embarrassment, which they in vain endeavoured to mitigate by loans from the bank, first of 400,000l., and then of 200,000l. They were then under the necessity of stating to government their absolute want of an accommodation to the amount of a million and a half sterling. This application placed them entirely at the mercy of the minister; who determined indeed, after some hesitation, to VOL. II.-A a

grant the request, but under conditions which might promote both his own influence and that of the crown. His terms were, that the exchequer should lend 1,400,000. at four per cent., and forego the stipulated annual payment of 400,000l. till that debt were discharged. In return the company were not to divide above six per cent. till that object should be accomplished; and on their extrication from difficulties were to pay to the revenue three-fourths of their surplus receipts at home. The latter point was loudly denounced by the company as exorbitant and oppressive. In fact, however, it proved very nugatory, since the relief from embarrassment, and the possession of a surplus, proved to be visions that glittered before their eyes, but were never realized. The minister followed up this measure by another still more offensive, regulating their constitution both at home and in India. The qualification for a proprietor was raised from 500l. to 1000l., and only a fourth part instead of the whole of the directors was to be annually elected. Bengal and the territories annexed to it were to be ruled by a governor-general with 25,000l. a-year, and four counsellors with 8000l. each; while law was to be administered by a chief-justice with 8000l. a-year, and three judges with 60001. These last were to be appointed by the crown, while the governor and council were to be named in the first instance by Parliament; after which the patronage of these offices was to revert to the directors,-subject, however, to the approbation of government. The company strenuously remonstrated against this measure as an infringement of their chartered privileges; but as they had to contend with the ministry, and were unpopular with the nation, all opposition on their part was fruitless. the

Meantime they were actively endeavouring to repress disorders which began to appear in their Indian dominions. It was with this object chiefly that Clive went out for the second time, though circumstances soon afterward led also to a vast extension of their territorial property. The two primary objects of his mission were, to put an end to the exaction of presents by British officers, who had enriched themselves at the expense of the native powers, and to suppress the internal trade, in a great measure monopolized by them, which had been the source of accumulated evils. The first of these measures he enforced with vigour, obli