¹¹⁵ "The old English East India Company was established in 1600 by a charter from Queen Elizabeth."

• It traded as a regulated company in its first 12 voyages to India.
• It had separate stocks only in the general ships of the company.
• "In 1612, it united into a joint stock."
• Its charter was not confirmed by act of parliament and conveyed an exclusive privilege.
• "For many years it was not much disturbed by interlopers."
• Its capital never exceeded £744,000 at £50 a share.
  • The share price was not so exorbitant nor its dealings so extensive to cause gross negligence, profusion, gross malversation.
• It had a successful trade for many years despite some extraordinary losses caused by:
  • the malice of the Dutch East India Company, and
  • other accidents.
• But in time, when the principles of liberty were better understood, it became more doubtful how far a Royal Charter, not confirmed by act of parliament, could convey an exclusive privilege.
  • The decisions of the courts of justice on this question were not uniform.
  • They varied with:
    • the government's authority, and
    • the humours of the times.
• Interlopers multiplied on the company.
  • From the end of the reign of Charles II to the reign of William III, they brought it great distress.
• In 1698, a proposal was made to parliament to advance £2 million to government at 8%, provided the subscribers were collected into a new East India Company with exclusive privileges.
  • The old East India Company offered £700,000, nearly the amount of their capital, at 4% on the same conditions.
  • Public credit was such in a bad state, that it was more convenient for government to borrow £2 million at 8% than £700,000 at 4%.
• The proposal of the new subscribers was accepted.
  • A new East India Company established.
  • The old East India Company could continue until 1701.
    • At the same time, it subscribed £315,000 very artfully into the new company's stock.
• The act of parliament failed to emphasize that all subscribers of the £2 million loan were all obliged to unite into a joint stock.
  • A few private traders had subscriptions of only £7,200.
    • They insisted on the privilege of trading their own stocks separately at their own risk.
    • The old East India Company had a right to a separate trade on its old stock until 1701.
      • Like the private traders, it had a right to a separate trade on the £315,000 it had subscribed into the new company's stock.
• The competition of the two companies with each other and with private traders almost ruined both.
• In 1730, a proposal was made to parliament for putting its trade under a regulated company and laying it open.
  • The East India Company opposed this proposal.
    • They were very strongly against the miserable effects of this competition.
    • They said that:
      • In India, the competition raised the price of goods so high that they were not worth buying.
      • In England, the competition overstocked the market.
        • It sunk the price of goods so low that no profit could be made.
• The plentiful supply undoubtedly was a great advantage and conveniency to the public.
  • It reduced the price of Indian goods so much in the English market.
  • But it did not raise the price of goods very much in the Indian market.
  • All the extraordinary demand that competition could bring was just a drop of water in the immense ocean of Indian commerce.
• "The increase of demand though in the beginning it may sometimes raise the price of goods, never fails to lower it in the run."
  • It encourages production and increases the competition of the producers.
    • Those producers turn to new divisions of labour and improvements never thought of in order to undersell one another.
• The company complained about:
  • the cheapness of consumption, and
  • the encouragement given to production.
• These are precisely the two great effects promoted by political economy.
• The competition they complained of was not allowed to continue for long.
  • In 1702, the two companies were united by an indenture tripartite, to which the queen was the third party.
  • In 1708, by an act of parliament, they were perfectly consolidated into one company as The United Company of Merchants trading to the East Indies.
  • This act had a clause which allowed the separate traders to continue their trade until September 29, 1711.
  • At the same time, it empowered the directors, upon three years notice, to:
    • redeem their little capital of £7,200, and
    • convert the whole stock of the company into a joint stock.
• The company's capital was increased from £2 million to £3.2 million through a new loan to the government.
• In 1743, the company advanced another £1 million to the government.
  • This million was raised by selling annuities and contracting bond-debts, not by a call on the proprietors.
    • It did not increase the stock on which the proprietors could claim a dividend.
    • It increased their trading stock.
      • Their trading stock was equally liable with the other £3.2 million to the losses and debts by the company.
• From 1708 or 1711, this company fully established the successful monopoly of English commerce to the East Indies.
  • A moderate dividend was annually given to their proprietors from its profits.
• The French war began in 1741.
  • Mr. Dupleix was the French governor of Pondicherry.
  • His ambition involved the French in:
    • the Carnatic wars and
    • the politics of the Indian princes.
  • After many extraordinary successes and losses, they lost Madras.
    • Madras was their principal settlement in India back then.
    • It was restored to the French by the treaty of Aix-la-Chapelle.
  • At this time, the spirit of war and conquest possessed their servants in India and never left them.
• Another French war began in 1755.
  • The company defended Madras, took Pondicherry, and recovered Calcutta.
  • They acquired the revenues of more than £3 million a year from this rich and extensive territory.
• In 1767, their crown laid claim to their territorial acquisitions and its revenue.
  • The company agreed to pay the government £400,000 a year in compensation for this claim.
  • Before this, they gradually increased their dividend from 6% to 10%.
  • From their capital of £3.2 million, they increased it by £128,000 or raised it from £192,000 to £320,000 a year.
  • They were attempting to raise it to 12.5%.
  • It would have made their annual payments to their proprietors equal to their £400,000 annual payment to government.
• But during the two years when their agreement with government was to take place, they were restrained by two successive acts of parliament from increasing the dividend.
  • Their object was to enable the company to pay their debts faster.
    • Their debts were then estimated at more than £6-7 million sterling.
• In 1769, the company renewed their agreement with government for five years more.
  • It stipulated that during those five years, it should be allowed to gradually increase its dividend to 12.5%, never increasing it more than 1% per year.
  • At its highest, this dividend increase could increase its annual payments to the proprietors and government only by £608,000 more than what it was before their recent territorial acquisitions.
• The net revenue of those territorial acquisitions from an account by the Cruttenden East Indiaman in 1768 was £2,048,747.
  • At the same time, the company had another revenue of £439,000:
    • partly from lands, and
    • chiefly from the customs at their settlements.
  • At this time, their trade profits was:
    • at least £400,000 a year, according to their chairman before the House of Commons,
    • at least £500,000 a year, according to their accountant,
    • at least equal to the highest dividend that was to be paid to their proprietors, according to the lowest account.
• So great a revenue might certainly have afforded an increase of £608,000 in their annual payments.
  • At the same time, it would have left a large sinking fund sufficient for speedy debt reduction.
• In 1773, their debts increased by:
  1. An arrear in the payment of the £400,000
  2. Another payment to the custom-house for duties unpaid
  3. A large debt to the bank for money borrowed
  4. A fourth payment for bills drawn on them from India of more than £1,200,000 and wantonly accepted
• These accumulated claims obliged them to:
  • immediately reduce their dividend to 6%, and
  • supplicate to government:
    • a release from further payment of the stipulated £400,000 a year, and
    • a loan of £1,400,000 to save them from immediate bankruptcy.
• The great increase of their fortune only served to furnish their servants with:
  • a pretext for greater profusion, and
  • a cover for greater malversation than the increase of that fortune.
• The conduct of their servants in India and their affairs in India and Europe were subjected to a parliamentary inquiry.
  • Several very important alternations were made in the constitution of their government at home and abroad.
  • In India, their principal settlements of Madras, Bombay, and Calcutta were previously independent of one another.
    • They were subjected to a governor-general.
      • He was assisted by a council of four assessors.
    • Parliament assumed to itself the first nomination of this governor and council who were to reside at Calcutta.
    • Calcutta became the most important English settlement in India, replacing Madras.
      • The court of Calcutta was originally instituted for mercantile cases in the city.
        • It gradually extended its jurisdiction with the extension of the empire.
        • It was now reduced and confined to its original purpose.
        • Instead of it, a new supreme court was established.
          • It had a chief justice and three judges to be appointed by the crown.
• In Europe, the necessary qualification to entitle a proprietor to vote at their general courts were:
  • £500, which was the original share price of a stock of the company, and
  • at least six months ownership of this stock.
• Parliament changed the qualifications by:
  • raising the price to £1,000,
  • declaring that the share should be acquired by one's own purchase and not by inheritance, and
  • at least one year ownership of this stock.
• The court of 24 directors was before chosen annually.
• Now, each director should be chosen for four years.
  • Six of them should go out of office by rotation every year.
  • They cannot be re-chosen at the election for six new directors for the ensuing year.
• With these alterations, the courts of the proprietors and the courts of directors were expected to act with more dignity and steadiness than before.
  • But it seems impossible to render those courts fit to govern because most of their members had too little interest in the prosperity of the empire.
  • Frequently a man of great, sometimes even a man of small fortune, is willing to purchase £1,000 share in India stock merely for the influence it gives him by a vote in the court of proprietors.
    • It gives him a share in the appointment of the plunderers of India, not in the plunder.
      • The court of directors appoint those plunderers.
        • Those directors are under the influence of the proprietors.
          • The proprietors elect those directors and sometimes overrule the appointments of their servants in India.
    • If a man can enjoy this influence for a few years, then he can provide for his friends.
      • He frequently cares little about the dividend, or even the value of the stock his vote is founded.
      • He seldom cares at all about:
        • the prosperity of the great empire
        • the government of which that vote gives him a share
• No other sovereigns could ever be so perfectly indifferent as most of such proprietors are about:
  • the happiness or misery of their subjects
  • the improvement or waste of their dominions
  • the glory or disgrace of their administration
  • irresistible moral causes
• This indifference was more likely to be increased by some of the new regulations made by the parliamentary inquiry.
  • For example, a resolution of the House of Commons declared:
    • The company can only divide 8% on their capital when:
      • the £1,400,000 lent to the company by government are paid
      • their bond-debts are reduced to £1,500,000
• Whatever remained of their revenues and neat profits at home should be divided into four parts:
  • Three of them are to be paid into the exchequer for public use
  • The fourth to be reserved as a fund for:
    • the further reduction of their bond-debts or
    • the discharge of other contingent exigencies of the company
• But if the company were bad stewards and bad sovereigns when their net revenue and profits belonged to themselves, they were surely would not be better when:
  • 3/4 of the net revenue belonged to other people
  • 1/4 of the net revenue were to be inspected and approved by other people, for the company's benefit.

¹¹⁶ It might be more agreeable to the company that their own servants and dependants should be allowed to embezzle whatever surplus remains after paying the 8% dividend than letting the surplus go to other people.

• This will make their servants differ with those people.
• The interest of those servants and dependants might predominate in the court of proprietors to dispose it to support acts of depredation.
• With the majority of proprietors, the court's authority might be reduced.

¹¹⁷ The regulations of 1773, accordingly, did not end the disorders of the company's government in India.

• At one time, they collected more than 3 millions sterling into the Calcutta treasury during a momentary fit of good conduct.
  • They afterwards extended their access to some of the richest and most fertile countries in India.
    • All was wasted and destroyed.

• They found themselves unprepared to stop the incursion of Hyder Ali.
  • Because of those disorders, the company is now (1784) in greater distress than ever.
  • To prevent immediate bankruptcy, it again is reduced to supplicate the aid of government.
• Different plans have been proposed by the different parties in parliament for its  better management.
  • All those plans agree in supposing the obvious that it is unfit to govern its territorial possessions.
  • Even the company itself is  convinced of its own incapacity, that it is willing to give them up to government.

¹¹⁸ The right of making peace and war in distant and barbarous countries is connected with the right of possessing forts and garrisons there.

• The joint stock companies constantly exercised the right of making war and peace and had it expressly conferred on them.
  • They unjustly, capriciously, and cruelly exercised this right.

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Next: Chapter 1q: Intellectual Property