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CHAP. 7.

1767.

its vicinity to the district of Bettea afforded great BOOK TV opportunities for the improvement of trade; that all intercourse was now destroyed; and that the accomplishment of the object was easy. On the last point, at least, the authors of the war were not very correctly informed; and found they had miscalculated the difficulties of subduing a country, surrounded by mountains, and accessible only by a few narrow and nearly impenetrable defiles. The officer sent to command the expedition was unable to proceed, and wrote for reinforcements. The Presidency were violently disappointed; and felt a strong inclination to wreak their vengeance upon the Commander. Being obliged to send assistance to Madras, they were unable to afford reinforcements, and recalled the detachment. The war with Hyder Ali had now broken out in the Carnatic; and considerable supplies, both in men and money, were demanded from Bengal. This year, financial distress began to be experienced. Complaints were first emitted of the scarcity of money ; ascribed, not to impoverishment of the country, but to a drain of specie, occasioned by the annual exportation of the precious metals, chiefly to China, on account of the Company's investment, and also in other directions ; while the usual supplies of bullion from Europe (the Company providing their investment from the revenues, the Dutch and French from the fortunes of the English consigned to them for transmission) were almost wholly cut off.?

· Letters from the Presidency, to the Directors, Verelst’s Appendix.

? In the letter of the Select Committee to the Directors, dated Fort William, September 26th, 1767, they say, We have frequently expressed

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BOOK IV
CHAP. 7.

1768.

Early in the year 1768, arrived the Company's peremptory order for abolishing entirely the trade of their servants in salt, and other articles of interior traffic; for laying it open, and confining it to the natives; and for restricting their servants entirely to the maritime branches of commerce.

The commission of one and one-eighth per cent. upon the dewannee revenues, which by the Select Committee had been settled upon the Governor as a compensation for relinquishing his share in the salt trade, was also commanded to cease. For as much, however, as the income of their servants, if thus cut off from irregular sources of gain, was represented as

to you our apprehensions lest the annual exportation of treasure to China would produce a scarcity of money in the country. This subject becomes every day more serious, as we already feel in a very sensible manner, the effects of the considerable drain made from the silver currency.” And in their letter of the 16th of December, they add, “We foresee the difficulties before us in making provision agreeably to your orders for supplying China with silver bullion even for this season. We have before repeatedly requested your attention to the consequences of this exportation of bullion; and we now beg leave to recommend the subject to your most serious consideration-assuring you, that, should we find it at all practicable to make the usual remittances next year to China, the measure will prove fatal to your investment, and ruinous to the commerce of Bengal.”—The absurdity of the theory which they invented to account for the want of money, that is, of resources, (to wit, the drain of specie,) is shown by this fact; that the price of commodities all the while, instead of falling, had immensely risen. See the testimonies of Hastings and Francis, in their minutes on the revenue plans, Sixth Report of the Select Committee in 1781, Appendix xiv. and xv.

1 " Past experience,” they say, “has so impressed us with the idea of the necessity of confining our servants, and Europeans residing under our protection, within the ancient limits of our export and import trade, that we look on every innovation in the inland trade as an intrusion on the natural right of the natives of the country, who now more particu. larly claim our protection; and we esteem it as much our duty to maintain this barrier between the two commercial rights, as to defend the provinces from foreign invasion.” Letter from the Directors, dated 20th November, 1767.

CHAF. 7.

1768.

not sufficiently opulent, the Company granted a commission of two and a half per cent. upon the net produce of the dewannee revenues, to be divided into 100 equal shares, and distributed in the following proportions: to the Governor, thirty-one shares ; to the second in Council, four and a half; to the rest of the Select Committee, not having a chiefship, each three and a half shares; to the Members of the Council not having a chiefship, each one and a half; to the Commander-in-chief, seven and a half shares ; to Colonels each, two and a half; Lieutenant-Colonels, eaeh, one and a half; and to Majors three fourths. An additional pay was allotted to Captains, of three shillings, Lieutenants two shillings, and Ensigns one shilling per day.

Some uneasiness still continued with respect to the designs of Shuja-ad-dowla; between whom and the Emperor considerable discordance prevailed. The Directors had forwarded the most positive orders for recalling the brigade from Allahabad; and for confining the operations of the Company's army entirely within the limits of the Company's territory. The Council thought it necessary to disobey; and in their letter went so far as to say that they “ must express their great astonishment at such an absolute restriction, without permitting them upon the spot to judge how far, from time and circumstances, it might be detrimental to their affairs."

The most important particular in the situation of the Company in Bengal was the growing scarcity of pecuniary means. In the letter from the Select Committee to the Court of Directors, dated 21st November, 1768, “ You will perceive,” they say,

BOOK IV
CHAP. 7.

1769.

by the state of your treasury, a total inability to discharge many sums which you are indebted to individuals for deposits in your cash, as well as to issue any part of the considerable advances required for the service of every public department. And you will no longer deem us reprehensible, if a decrease in the amount of your future investments, and a debasement of their quality, should prove the consequence.”

By a correspondence between the Presidencies of Fort William and Fort St. George, in the beginning of March, 1769, the dangerous consequences to be apprehended from the exhausted state of their treasuries, and the necessity of establishing a fund against future emergencies, were mutually explained and acknowledged. In two separate consultations, held by the President and Council at Fort William, in the months of May and August, the utility, or rather the indispensable necessity, of such a fund underwent a solemn discussion; and was pronounced to be without dispute. But as the expences of the government left no resource for the creation of it, except the diminution of the investment, or quantity of goods transmitted to the Company in England, they resolved upon that reduction, and limited to forty-five lacks the investment of the year.

Even this resource was in a very short time perceived to be insufficient. On the 23rd of October a deficiency of 6,63,055 rupees appeared on the balance of receipts and disbursements; and the President and Council in their Minute declared, “That however the public might have been flattered, they could not flatter themselves, with any expectations from

CHAP. 7.

1

1769.

their revenue ; and that the only expedient within BOOK IV their reach was to open their treasury doors for remittances.”

These remittances consisted chiefly of the money or fortunes of the individuals who had grown rich in the Company's service, and who were desirous of transmitting their acquisitions to Europe. Such persons were eager to pay their money to the Company's government in India, upon receiving an obligation for repayment from the Company in England; in the language of commerce, for a bill upon the Company payable in England. The money thus received, in other words borrowed, was applied to the exigencies of the service; and by augmenting their resources was always highly agreeable to the servants in India. The payment however of these loans or bills in England was apt to become exceedingly inconvenient to the Directors. The sole fund out of which the payment could be made was the sale of the investment, or the goods transmitted to them from 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,

| The President and Council of Fort William, in their letter (dated the 21st of March, 1769) to the President and Council of Fort St. George, speak in pathetic terms of “the incontestable evidence they had transmitted to their honourable masters of the exaggerated light in which their new acquired advantages had been placed,” and the change of views which they expected them in consequence to adopt.

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