1698.

Book I. corporate under the name of the "General Society." This charter empowered the subscribers to trade, on the terms of a regulated Company, each subscriber for his own account. The greater part, however, of the subscribers desired to trade upon a joint-stock: and another charter, dated the 5th of the same month, formed this portion of the subscribers, exclusive of the small remainder, into a joint-stock Company, by the name of "the English Company trading to the East Indies." *

Imperfections of the mea

sure.

Efforts and powers of the

Old Company.

"In all this very material affair," says Anderson, "there certainly was a strange jumble of inconsistencies, contradictions, and difficulties, not easily to be accounted for in the conduct of men of judgment." The London Company, who had a right by their charter to the exclusive trade to India till three years after notice, had reason to complain of this injustice that the English Company were empowered to trade to India immediately, while they had the poor compensation of trading for three years along with them. There was palpable absurdity in abolishing one exclusive company only to erect another; when the former had acted no otherwise than the latter would act. Even the departure from joint-stock management, if trade on the principle of individual inspection and personal interest had been looked to as the source of improvement, might have been accomplished, without the erection of two exclusive companies, by only abolishing the joint-stock regulation of the old one. But the chief mark of the ignorance, at that time, of parliament, in the art and science of government, was their abstracting from a trading body, under the name of loan to government, the whole of their trading capital; and expecting them to traffic largely and profitably when destitute of funds. The vast advance to government, the place of which they feebly supplied by credit, beggared the English Company, and ensured their ruin from the first.

The old, or London Company, lost not their hopes. They were allowed to trade for three years on their own charter; and availing themselves of the clause in the act, which permitted corporations to hold stock of the New Company, they resolved to subscribe into this fund as largely as possible, and, under the privilege of private adventure, allowed by the charter of the English Company, to trade separately and in their own name, after the three years of their charter should be expired. The sum which they were enabled to appropriate to this purpose was 315,000/. ‡

* Macpherson's Annals, ii. 699. Bruce, iii. 257, 258. Preamble to the Stat. 6. A. c. 17.

† Anderson's Hist. of Commerce, Macpherson, ii. 700.

Bruce, iii. 256, 257. Macpherson, ii. 700. Smith's Wealth of Nations, iii. 133.

$

1699.

In the instructions to their servants abroad they represented the late measures CHAP. V. of parliament as rather the result of the power of a particular party than the fruit of legislative wisdom: "The Interlopers," so they called the New Company," had prevailed by their offer of having the trade free, and not on a jointstock;" but they were resolved by large equipments (if their servants would only second their endeavours) to frustrate the speculations of those opponents: "Two East India Companies in England," these are their own words, "could no more subsist without destroying one the other, than two Kings, at the same time regnant in the same kingdom: that now a civil battle was to be fought between the Old and the New Company; and that two or three years must end this war, as the Old or the New must give way: that, being veterans, if their servants abroad would do their duty they did not doubt of the victory: that if

the world laughed at the pains the two Companies took to ruin each other they

I could not help it, as they were on good ground and had a charter.” *

the New As

When the time arrived for paying the instalments of the subscriptions to the Feebleness of stock of the New Company, many of the subscribers, not finding it easy to raise sociation. the money, were under the necessity of selling their shares. They fell to a discount; and the despondency hence arising operated to produce still greater depression.†

The first voyage, which the New Company fitted out, consisted of three ships with a stock of 178,000l. To this state of imbecility did the absorption of their capital reduce their operations. The sum to which they were thus limited for commencing their trade but little exceeded the interest which they were annually to receive from government.

strength of

With such means the New Company constituted a very unequal competitor Greater with the Old. The equipments of the Old Company, for the same season, the Old Com1698-99, amounted to thirteen sail of shipping, 5,000 tons burthen, and stock pany. estimated at 525,000l. Under the difficulties with which they had to contend at home, they resolved by the most submissive and respectful behaviour, as well as by offer of services, to cultivate the favour of the Moguls. Their endeavours were not unsuccessful. They obtained a grant of the towns of Chuttanuttee, Govindpore, and Calcutta, and began, but cautiously, so as not to alarm the native government, to construct a fort. It was denominated Fort William; and the station was constituted a Presidency.§

To secure the advantages to which they looked from their subscription of

*Bruce, iii. 257.

+ Ib. 259, 260.

+ Ib. 285.

Ib. 264, 268, 300..

1700.

BOOK. I. 315,000l. into the stock of the English Company, they had sufficient influence to obtain an act of parliament, by which they were continued a corporation, entitled, after the period of their own charter, to trade, on their own account, under the charter of the New Company, to the amount of the stock they had subscribed.*

Effects of the rivalship of

panies.

The rivalship of the two Companies produced, in India, all those acts of the two Com- mutual opposition and hostility, which naturally flowed from the circumstances in which they were placed. They laboured to supplant one another in the good opinion of the native inhabitants and the native governments. They defamed one another. They obstructed the operations of one another. And at last their animosities and contentions broke out into undissembled violence and oppression. Sir William Norris, whom the New Company, with the King's permission, had sent as their Ambassador to the Mogul court, arrived at Surat in the month of December, 1700. After several acts, insulting and injurious to the London Company, whom he accused of obstructing him in all his measures and designs, he seized three of the Council, and delivered them to the Mogul Governor, who detained them till they found security for their appearance. The President and the Council were afterwards, by an order of the Mogul government, put in confinement; and Sir Nicholas Waite, the English Company's Consul at Surat, declared, in his correspondence with the Directors of that Company, that he had solicited this act of severity, because the London Company's servants had used treasonable expressions towards the King; and had made use of their interest with the Governor of Surat to oppose the privileges which the Ambassador of the English Company was soliciting at the court of the Mogul.†

Attempts to form a coalition.

As the injury which these destructive contentions produced to the nation soon affected the public mind, and was deplored in proportion to the imaginary benefits of the trade, an union of the two Companies was generally desired, and strongly recommended. Upon the first depression in the market of the stock of the New Company, an inclination had on their part been manifested towards a coalition. But what disposed the one party to such a measure, suggested the hope of greater advantage, and more complete revenge, to the other, by holding back from it. The King himself, when in March, 1700, he received the Directors of the London Company, on the subject of the act which continued them a corporate body, recommended to their serious consideration an union of the two Companies, as the measure which would most promote

* Bruce, iii. 293, 326, 350.

+ Ib. 260 to 370, 374 to 379, 410.

1702.

what they both held out as a great national object, the Indian trade. The CHAP. V. Company paid so far respect to the royal authority as to call a General Court of Proprietors for taking the subject into consideration; but after this step they appeared disposed to let the subject rest. Toward the close, however, of the year, the King, by a special message, required to know what proceedings they had adopted in consequence of his advice. Upon this the Directors summoned a General Court, and the following evasive resolution was voted:-" That this Company, as they have always been, so are they still ready to embrace every opportunity by which they may manifest their duty to his Majesty, and zeal for the public good, and that they are desirous to contribute their utmost endeavours for the preservation of the East India trade to this kingdom, and are willing to agree with the New Company upon reasonable terms." The English Company were more explicit; they readily specified the conditions on which they were willing to form a coalition; upon which the London Company proposed that seven individuals on each side should be appointed, to whom the negotiation should be entrusted, and by whom the terms should be discussed.*

As the expiration approached of the three years which were granted to the London Company to continue trade on their whole stock, they became more inclined to an accommodation. In their first proposal they aimed at the extinction of the rival Company. As a committee of the House of Commons had been formed, " to receive proposals for paying off the national debts, and advancing the credit of the nation," they made a proposition to pay off the 2,000,000l. which government had borrowed at usurious interest from the English Company, and to hold the debt at five per cent. The proposal, though entertained by the committee, was not relished by the House; and this project was defeated. The distress, however, in which the Company were now involved, their stock having within the last ten years fluctuated from 300 to 37 per cent., rendered some speedy remedy indispensable. The committee of seven, which had been proposed in the Answer to the King, was now resorted to in earnest, and was empowered by a General Court, on the 17th April, 1701, to make and receive proposals for the union of the two Companies.

ed.

It was the beginning of January, in the succeeding year, before the following Union effectgeneral terms were adjusted and approved: That the Court of twenty-four Managers or Directors should be composed of twelve individuals chosen by each Company; that of the annual exports, the amount of which should be fixed by

1708.

BOOK I. the Court of Managers, a half should be furnished by each Company; that the Court of Managers should have the entire direction of all matters relating to trade and settlements subsequent to this union; but that the factors of each Company should manage separately the stocks which each had sent out previous to the date of that transaction; that seven years should be allowed to wind up the separate concerns of each Company; and that, after that period, one great joint-stock should be formed by the final union of the funds of both. This agreement was confirmed by the General Courts of both Companies on the 27th April, 1702.*

An indenture tripartite, including the Queen and the two East India Companies, was the instrument adopted for giving legal efficacy to the transaction. For equalizing the shares of the two Companies the following scheme was devised. The London Company, it was agreed, should purchase at par as much of the capital of the English Company lent to government, as, added to the 315,000l. which they had already subscribed, should render the proportion of each equal. The dead stock of the London Company was estimated at 330,000l.; and that of the English Company at 70,000l.; upon which the latter paid 130,000l. for equalizing the shares of this part of the common estate. On the 22d July, 1702, the indenture passed under the great seal; and the two parties took the common name of The United Company of Merchants trading to the East Indies.†

On the foundation on which the affairs of the two Companies were in this manner placed, they proceeded with considerable jarrings and contention, especially between the functionaries in India, till the season 1707-8, when an event occurred, which necessitated the accommodation of differences, and accelerated

* Bruce, iii. 424 to 426. Of the subtleties which at this time entered into the policy of the Company, the following is a specimen. Sir Basil Firebrace, or Firebrass, a notorious jobber, who had been an interloper, and afterwards joined with the London Company, was now an intriguer for both Companies. At a General Court of the London Company, on the 23d April, 1701, this man stated, that he had a scheme to propose, which he doubted not would accomplish the union desired; but required to know what recompense should be allowed him, if he effected this important point. By an act of the Court, the committee of seven were authorized to negotiate with Sir Basil, the recompense which he ought to receive. The committee, after repeated conferences with the gentleman, proposed to the Court of Committees, that if he effected the union, 150,000l. of the stock of the Company should be transferred to him on his paying 80l. per cent. In other words, he was to receive 20 per cent. on 150,000l., or a reward of 30,000l. for the success of his intrigues. Ibid. See also Macpherson, ii. 663.

Bruce, iii. 486 to 491.