upon the Company.

395

CHAP. 7.

1769.

investment, or the goods transmitted to them from BOOK IV. India and China. If the quantity of these goods was less in value than afforded a surplus equal to the amount of the bills which were drawn upon them, they remained so far deficient in the ability to pay. And if the goods were sent in too exorbitant a quantity, the market was insufficient to carry them off.

An opposition of interests was thus created between the governing part of the servants abroad, and the Courts of Directors and Proprietors at home. For the facility of their operations, and the success of their government, it was of great importance for the servants to preserve a full treasury in India, secured by a small investment, and the receipt of money for bills. It was the interest of the Directors to have an ample supply of money at home, which on the other hand could only be produced by a large investment, and a moderate transmission of bills. The Directors, accordingly, had given very explicit instructions on this subject; and in their letter of the 11th of November, 1768, after acknowledging the growing deficiency of the funds in India, had said; "Nevertheless, we cannot suffer ourselves to be drawn upon to an unlimited amount, the state of the Company's affairs here not yet admitting us to answer large drafts upon us from India; but should the exigency of your affairs require your receiving money into your treasury, we prefer the mode of borrowing at interest to that of granting bills upon us: We therefore permit you to take up such sums on interest, for one year certain, as will answer your various demands, which are to be paid off at the expiration of that period, or as soon after as the state of your treasury will admit of. You are therefore to confine your drafts upon us, by the ships to be dispatched from your Presidency in the season of 1769,

BOOK IV. to the same amount as we allowed last year, viz, CHAP. 7. 70,000Z." 1

When the amount of the sums which it was the desire of individuals to send home exceeded the amount which it was permitted to the government in India to receive, in other words to draw bills for upon the Company at home, the parties who were deprived of this channel of remittance betook themselves to the French and Dutch factories, and paid the money into their treasuries for bills upon their respective companies, payable in Europe. This, from an early period of Mr. Verelst's administration, had constituted a heavy subject of complaint; as making these subordinate settlers to abound with money, while the English were oppressed with want. As he ascribed the financial difficulties of the Company's government merely to a defect of currency, not of revenue, so he ascribed the defect of currency to the remittances which were forced into the Dutch and French channels; though neither of these nations carried any specie out of India, and were only saved to a certain extent the necessity of importing bullion. To him it appeared surprising that the Dutch and French

Eighth Keport from the Committee of Secrecy, 1773, Appendix, No. i. In their letter 17th March, 1769, they so far modify their former directions as to say, "Upon reconsidering the subject of remittances, we find it so connected with that of the investment, that the increase of the former must always depend on that of the latter. The produce of our sales here is the only channel of our receipts; and our flourishing situation in India would not avail us, if we were to suffer ourselves to be drawn upon to the amount of the cost of our homeward cargoes. In order therefore to unite the advantages of the Company and their servants, we do permit you to increase your remittances, by the ships dispatched from Bengal in the season of 1769, beyond the limitation in our letter of the 11th November last, so far as one half of the sum which your investment sent home in that season shall exceed the amount of sixty lacks. But if you do not send home an investment exceeding that sum, you must then confine your drafts upon us agreeably to our said letter of the 11th November last."

through the French and Dutch Companies.

397

1769.

Companies should find it easy to pay the bills which BOOK IV. were drawn upon them for money received in India; but CHAP. 7. that the English Company should find it impossible; and he ascribed the restrictions which they imposed to a timid and narrow spirit. One circumstance, however, which constituted a most important dif ference, he was ill situated to perceive. The French and Dutch Companies were chiefly commercial; and whatever money was received in India was laid out in the purchase of goods; these goods were carried to Europe, and sold before the bills became due; the bills were paid out of the proceeds; and a great trade was thus carried on upon English capital. The English Company, on the other hand, was become a regal, as well as a commercial body; the money

In his letter to the Directors, dated 26th September, 1768, he says, "The extent of the Dutch and French credit exceeds all conception, and their bills are even solicited as favours. The precise sums received by them for some years I have endeavoured to ascertain, though hitherto without success; but if we only form our idea from the bills drawn this year from Europe on individuals here and Madras, the amount will appear prodigious and alarming. Advices of drafts and letters of credit have been already received to the amount of twenty-eight lacks on Bengal, and ten on Madras; and I have the most certain information that their treasures at Pondicherry and Chandernagore are amply furnished with all provision for both their investments and expenses for three years to come. You have often complained of the increase and superiority of the French and Dutch investments; but your orders and regulations have furnished them with the most extensive means of both. It is in vain to threaten dismission from your service, or forfeiture of your protection, for sending home money by foreign cash, while you open no doors for remittances yourselves. Such menaces may render the practice more secret and cautious; but will never diminish, much less remove the evil." Verelst's Appendix, p. 113. So much did Mr. Verelst's imagination deceive him, in regard to the prosperity of the English rivals, that the exclusive privileges of the French Company, after they had struggled for some time on the verge of bankruptcy, were suspended by the King, and the trade laid open to all the nation. They were found unable to extricate themselves from their difficulties; and resigning their effects into the hands of government, for certain government annuities to the proprietors of stock, the Company were in reality dissolved. Raynal, liv. viii. sect. 26, 27.

1769.

BOOK IV. which was paid for remittance into their treasury in CHAP. 7. India was absorbed in the expense of the govern ment; and so much only as could be spared was employed in the purchase of investment. This was one cause undoubtedly of the comparative inability of the English Directors to pay the bills which were drawn upon them.

In the Consultation of the 23d of October, in consideration of great exigency, it was resolved, that the Board would receive all monies tendered to the Company's treasury from that day to the 1st of November, 1770; and at the option of the lenders, grant, either interest notes payable in one year; or receipts bearing interest at eight per cent. for bills to be granted at the sailing of the first ship after the 22d of November, 1770, payable with three per cent. interest, in equal proportions on each tender, at one, two, and three years sight. And as a resource to the Directors, it was resolved to enlarge the invest ment by purchasing, not with ready money, but with bonds at eight per cent., and one year's credit. This was the last considerable act in which the Governor was engaged. He resigned his office on the 24th of December, and was succeeded by Mr. Cartier. new treaty had been concluded with Suja Dowla, which allayed whatever suspicions the ambiguous conduct of that Governor had raised, and Mr. Verelst left the three provinces in profound tranquillity.'

A

The principal materials, before the public, for the history of Verelst's administration, are found in the Reports of the Two Committees of 1772, and in the Appendix to his own View of Bengal. Information, but demanding to be cautiously gleaned, is obtained from the numerous Tracts of the day.

Nizam Ali.

399

CHAP. VIII.

Subahdar of Deccan dethroned by his brotherThe English take possession of the Northern Circars-Make a Treaty with the Subahdar of Deccan-Which embroils them with Hyder Ali -History of Hyder Ali-Hyder's first war with the English-New Treaty with the Subahdar-Peace with Hyder.

CARNATIC remained but a short time free from the BOOK IV. pressure of the neighbouring powers. In the superior CHAP. 8. government of Deccan, Nizam Ali, who had re- 1765. sumed, upon the departure of Bussy, the commanding station which he formerly occupied, made no delay in employing all his advantages to effect the dethronement of his feeble-minded brother. On the 18th of July, 1761, he committed the Subahdar to a prison; and invested himself with the full powers and insignia of the government.

The treaty, by the provisions of which the pretensions of England and France were at this time adjusted, affords a singular illustration of the obvious and neglected truth, that the knowledge requisite for good government in India cannot be possessed by rulers sitting and deliberating in Europe. By the treaty of Paris, concluded on the 10th of February, 1763, Salabut Jung was acknowledged as lawful Subahdar of Deccan, after he had been nearly two years dethroned, and another reigning in his stead. This instrument indeed, which recognised Salabut