to raise the price and debase the quality of the goods; and this again fell upon the revenues, out of which the payment for the goods was to arise. The observations of the Company on that occasion are just and sagacious; and they will not permit the least doubt concerning the policy of these unnatural trades. "The amount of our Bengal cargoes, from 1769 to 1773, is 2,901,194l. sterling; and if the average increase of price be estimated at twenty-five per cent only, the amount of such increase is 725,298l. sterling. The above circumstances are exceedingly alarming to us; but what must be our concern, to find by the advices of our President and Council of 1773, that a further advance of forty per cent on Bengal goods was expected, and allowed to be the consequence of advertisements then published, authorizing a free trade in the service? We find the Duanné revenues are in general farmed for five years, and the aggregate increase estimated at only 183,170l. sterling (on a supposition that such increase will be realized); yet if the annual investment be sixty lacs, and the advance of price thirty per cent only, such advance will exceed the increase of the revenue by no less than 829,330l. sterling."
The indignation which the Directors felt at being reduced to this distressing situation was expressed to their servants in very strong terms. They attributed the whole to their practices, and say, "We are far from being convinced that the competition which tends to raise the price of goods in Bengal is wholly between public European companies, or between merchants in general who export to foreign markets: we are rather of opinion that the sources of this grand evil have been the extraordinary privileges granted to individuals in our service or under our license to trade without restriction throughout the provinces of Bengal, and the encouragement they have had to extend their trade to the uttermost, even in such goods as were proper for our investment, by observing the success of those persons who have from time to time found means to dispose of their merchandise to our Governor and Council, though of so bad a quality as to be sold here with great difficulty, after having been frequently refused, and put up at the next sale without price, to the very great discredit and disadvantage of the Company." In all probability the Directors were not mistaken; for, upon an inquiry instituted soon after, it was found that Cantû Babû, the banian or native steward and manager to Mr. Hastings, (late President,) held two of these contracts in his own name and that of his son for considerably more than 150,000l. This discovery brought on a prohibition from the Court of Directors of that suspicious and dangerous dealing in the stewards of persons in high office. The same man held likewise farms to the amount of 140,000l. a year of the landed revenue, with the same suspicious appearance, contrary to the regulations made under Mr. Hastings's own administration.
In the mortifying dilemma to which the Directors found themselves reduced, whereby the ruin of the revenues either by the freedom or the restraint of trade was evident, they considered the first as most rapid and urgent, and therefore once more revert to the system of their ancient preëmption, and destroy that freedom which they had so lately and with so much solemnity proclaimed, and that before it could be abused or even enjoyed. They declare, that, "unwilling as we are to return to the former coercive system of providing an investment, or to abridge that freedom of commerce which has been so lately established in Bengal, yet at the same time finding it our indispensable duty to strike at the root of an evil which has been so severely felt by the Company, and which can no longer be supported, we hereby direct that all persons whatever in the Company's service, or under our protection, be absolutely prohibited, by public advertisement, from trading in any of those articles which compose our investment, directly or indirectly, except on account of and for the East India Company, until their investment is completed."
As soon as this order was received in Bengal, it was construed, as indeed the words seemed directly to warrant, to exclude all natives as well as servants from the trade, until the Company was supplied. The Company's preëmption was now authoritatively reëstablished, and some feeble and ostensible regulations were made to relieve the weavers who might suffer by it. The Directors imagined that the reëstablishment of their coercive system would remove the evil which fraud and artifice had grafted upon one more rational and liberal. But they were mistaken; for it only varied, if it did so much as vary, the abuse. The servants might as essentially injure their interest by a direct exercise of their power as by pretexts drawn from the freedom of the natives,—but with this fatal difference, that the frauds upon the Company must be of shorter duration under a scheme of freedom. That state admitted, and indeed led to, means of discovery and correction; whereas the system of coercion was likely to be permanent. It carried force further than served the purposes of those who authorized it: it tended to cover all frauds with obscurity, and to bury all complaint in despair. The next year, therefore, that is, in the year 1776, the Company, who complained that their orders had been extended beyond their intentions, made a third revolution in the trade of Bengal. It was set free again,—so far, at least, as regarded the native merchants,—but in so imperfect a manner as evidently to leave the roots of old abuses in the ground. The Supreme Court of Judicature about this time (1776) also fulminated a charge against monopolies, without any exception of those authorized by the Company: but it does not appear that anything very material was done in consequence of it.
The trade became nominally free; but the course of business established in consequence of coercive monopoly was not easily altered. In order to render more distinct the principles which led to the establishment of a course and habit of business so very difficult to change as long as those principles exist, your Committee think it will not be useless here to enter into the history of the regulations made in the first and favorite matter of the Company's investment, the trade in raw silk, from the commencement of these regulations to the Company's perhaps finally abandoning all share in the trade which was their object.
RAW SILK
The trade in raw silk was at all times more popular in England than really advantageous to the Company. In addition to the old jealousy which prevailed between the Company and the manufactory interest of England, they came to labor under no small odium on account of the distresses of India. The public in England perceived, and felt with a proper sympathy, the sufferings of the Eastern provinces in all cases in which they might be attributed to the abuses of power exercised under the Company's authority. But they were not equally sensible to the evils which arose from a system of sacrificing the being of that country to the advantage of this. They entered very readily into the former, but with regard to the latter were slow and incredulous. It is not, therefore, extraordinary that the Company should endeavor to ingratiate themselves with the public by falling in with its prejudices. Thus they were led to increase the grievance in order to allay the clamor. They continued still, upon a larger scale, and still more systematically, that plan of conduct which was the principal, though not the most blamed, cause of the decay and depopulation of the country committed to their care.
With that view, and to furnish a cheap supply of materials to the manufactures of England, they formed a scheme which tended to destroy, or at least essentially to impair, the whole manufacturing interest of Bengal. A policy of that sort could not fail of being highly popular, when the Company submitted itself as an instrument for the improvement of British manufactures, instead of being their most dangerous rival, as heretofore they had been always represented.
They accordingly notified to their Presidency in Bengal, in their letter of the 17th of March, 1769, that "there was no branch of their trade they more ardently wish to extend than that of raw silk." They disclaim, however, all desire of employing compulsory measures for that purpose, but recommended every mode of encouragement, and particularly by augmented wages, "in order to induce manufacturers of wrought silk to quit that branch and take to the winding of raw silk."
Having thus found means to draw hands from the manufacture, and confiding in the strength of a capital drawn from the public revenues, they pursue their ideas from the purchase of their manufacture to the purchase of the material in its crudest state. "We recommend you to give an increased price, if necessary, so as to take that trade out of the hands of other merchants and rival nations." A double bounty was thus given against the manufactures, both in the labor and in the materials.
It is very
