Lord Castlereagh said, that the share he had borne, and the interest he must always continue to feel in the administration of India, made him desirous of troubling the committee with such observations as the course of the present debate, and the general state of the Company's affairs at this period, suggested.—It was not necessary that he should detain them upon the detail of the accounts, which were the immediate subject of the committee's consideration. The different results had been very fairly and clearly opened by the noble lord, and so far as the statement related to the actual accounts for the year 1803–4 abroad, and those in estimate for 1804–5, he had the satisfaction of entirely concurring in the view his lordship had given of those accounts.—Owing certainly to no omission for which the noble lord could be responsible, but from the documents not having been received in due course from India, the committee had only now before them what ought more properly to have constituted the Budget of the preceding year, and had to regret that the information was still so much in arrear, as to deprive them of the means of forming ally very precise judgment of the present state of the Company's finances.—Notwithstanding the defective nature of the materials, he was glad that the present discussion had taken place. It was not likely that gentlemen reasoning upon results that can only now be given on estimate, and drawing their inferences from combinations of accounts intricate in themselves, and such as cannot be easily reconciled in a single discussion of this nature, should frequently find it impossible to agree in any very precise conclusion. At the same time, the debate served to bring into view,and into discussion many leading points connected with the management of this important concern, with sufficient accuracy, to be productive of practical advantage to the administration of Indian affairs. He had always considered the publick service much indebted to those gentlemen who provoked enquiry and discussion upon Indian subjects, from an intimate persuasion that it was attended with beneficial consequences both abroad and at home. Under this impres- sion of duty, he should state to the committee his sentiments upon the leading points which had been adverted to in the course of the present debate, and more particularly on the probable state of the Company's affairs at the winding up of the Indian war, and the measures which he deemed it requisite should be taken thereupon, with a view of enabling the Company effectually to avail themselves of their general resources, in meeting the pressure of the heavy debt which had grown up abroad.—He could not but regret that in discussing the situation of the Company's affairs, gentlemen so frequently neglected to take the obvious distinction (which they never failed to do as a matter of course, when speaking of our affairs at home) between a period of war and peace. When they ventured to speak of the insolvency of the Company, and attempted to prove it by a comparison of their annual means, independent of loans, with their late expenditure, it would be well they would consider, whether the insolvency of the government at home, or of any government in the world might not, in time of war, be established by the same mode of reasoning. It would be as untrue with respect to an individual to bring forward a year of extraordinary outgoings as the measure of his expenditure, and to conclude him ruined, because he could not meet such an extent of charge, without having recourse to loans.—Another mode in which it is attempted to establish this theory of insolvency, is, to suppose the Company dissolved, and called upon like any common banker, at a moment's warning, to pay, not only all just demands upon them, but also to repay themselves, their capital stock subscribed. It is then said, where are your means? can you turn your wealth into money? must not the Company acknowlege itself bankrupt?—It is hardly necessary to observe on the absurdity of resembling a great body of this description, created for the double purpose of trade and government (in which capacity it was to be hoped, for the sake of the constitutional liberties of the country, they would in all times, under proper regulations, continue to endure) with an ordinary trader; but if this very inappropriate comparison is to be made, would not a manufacturer, who had sunk much of his capital in machinery, not in itself of a description to be easily turned into money, though productive to him of considerable annual profit, be as open to a sentence of bankruptcy, upon these principles, as the Company? It is hardly fair of gentlemen who wish to throw open the Company's trade, or to carry forward any other speculative project with respect to India, to endeavour thus indirectly to attain their ends, by holding out to the publick exaggerated and gloomy representations of the affairs of a commercial body, whose credit, and consequently whose interests must, if these statements are believed, be thereby materially injured.—But, even upon the grounds Of their own reasoning, their conclusion may be disproved. They set out by very unfairly considering they entire Indian debt as a sole and absolute charge upon the Company's funds, distinct from the territories. Now, assuming the day arrived when parliament should think fit to vest the government of India in other hands, can it be supposed that, upon an equitable settlement between the Public and the Company, the latter upon the expiration of their charter, which may be considered in the nature of a lease for 21 years under the state, would be ultimately saddled with these loans, so far as they have been contracted, not for any temporary or commercial interest of the Company, but for the permanent defence and security of those valuable possessions? It is obvious that an adjustment must he made on this head, the extent and nature of which must depend on a variety of considerations.—It is enough at present to point out the fallacy, in any general balance of the Company's affairs, of considering the Indian Debt as wholly chargeable upon them, as a trading company.—But, even on this supposition, the result is not so discouraging, when the Assets, Dead Stock, and absolute rights of the Company, are set oft against the Gross debts. India Debt, April 1804 22,586,207 Debt in Europe, March 1805 6,012,196 Total £.28,548,403 Capital Stock 7,780,000 Total Debts £.36,328,403 Assets in India, April 1804 14,452,343 Assets at Home, March 1305. 20,442,659 £.34,895,002 Debts, including Capital 36,328,403 Assets 34,895,002 Balance against £ 1,433,401 This balance will certainly stand less favourably, when the accounts are received, bringing down the expences abroad to April 1806, before which time the peace reductions could not begin materially to operate, and a considerable reduction must be made, though by no means to the extent gentlemen are disposed to push it, from the Assets for bad Debts and Demands on government not allowed; but, on the other hand, the Company have a considerable claim on any final settlement for their Dead stock amounting to 9,994,208l. They would also still stand possessed, if the charter Was terminated, a considerable revenues, arising from territories to which they long since became entitled, by grants and not by conquest. Of this description are Bombay, Fort St. George, Fort William, with their dependant territories, St. Helena, the northern Circars, subject to a question, and other possessions, the annual revenues of which in 1793 were estimated at 520,000l. —Upon a mere balance then of their capital wealth, compared with the claims upon them, after making all due deductions from the Assets for such claims as may be insolvent, and striking off the proportion of debt that must in equity follow the territories, and remain secured upon them till finally liquidated, the balance of such an account would, he had no doubt, leave the company in possession of ample means to discharge all demands upon them, including, their Capital Stock.—But the productive wealth of the Company ought to be measured, not merely by their capital, but by the ordinary produce of the concern in years of peace. In 1802, their net proceeds arising from Surplus Revenue and Profits of Trade were estimated at 1,500,000l. after defraying all charges, an estimate which, from subsequent experience, it appears would have been fully realized, had we remained at peace.—If we were, then, to look at this question as a mere matter of account, without reference to the more enlarged functions the Company were intended to perform, it would be impossible to contend, upon any fair view of their wealth point of capital, or upon their presumeable clear income in time of peace, even after their own immediate profits have been secured in the Shape of dividends, that the Company can be considered in a state any thing approaching to insolvency, however their affairs may at the present moment severely experience the Pressure of war, and the extent and nature of their debt require, in sound policy, the most vigorous measures for its reduction.—There were a few other points that had been touched upon in the course of the debate, which he should wish to notice, before he proceeded to state what, in his conception, would be the state of the finances abroad at the winding up of the war, and the course which ought to be pursued for the effectual relief of the Company's affairs. They might be classed under the following heads: 1st. The extent and nature of the Company's trade, whether profitable or not? 2ndly. Whether the commercial capital of the Company had become insufficient for carrying on their trade, and if so, from what sources the extra funds had been supplied? 3dly. Whether in the general management of the Company's affairs for a period of years, India stood indebted to Europe, or Europe to India? and 4thly, as connected with, and arising out of the preceding points, to what purposes, whether of commerce or government, the produce of the various loans made abroad since the renewal of the charter, had been applied?—And first, as to their Commerce, he conceived an hon. alderman (Prinsep) in endeavouring to lead the attention of the committee to a collateral question: viz. that of the Private Trade, one certainly of great moment in itself, but much too extensive in its bearings to be mixed with propriety or advantage in the present debate, had given not a very true or candid picture of the Company's commerce, either as it related to their own immediate profits, or to its effects upon the manufacturing prosperity of the empire at home. Their trade, but more particularly that with the continent of India, he had described as a losing commerce, in order to found upon this assumption the inference, that their monopoly ought to be put an end to, and their trade, at least with the continent of India, thrown open. That the trade either with India or China was carried on to a loss, lie must he permitted to doubt. He held in his hand an Account, prepared at the India house, of the clear profit on the prime cost of both the Indian and China investments for 15 years from 1787 to 1801, both Nears inclusive. By this it appeared, that the average of profit on the Indian Investments for the period in question, was 22l. 8s. 6d. per cent. for the whole period, and proportionably much higher in the later years since the shipping system of the Company was opened to a free and unrestrained competition. —The average Profit on the China Investment calculated upon the same principles and for the like period, is stated to be 37l. 14s. 4d. per cent. The committee would observe that this was the profit upon the entire commercial transaction, from the dispatch of the goods or fundes from hence till the return and sale of the investment, and that in order to determine how far the operation is commercially profitable, the above percentage must be compared with the amount of capital employed and the extent of time which is required in the ordinary course of business to complete this revolution, which may be taken at about two years and a half upon an average, the return from India being somewhat quicker than from China.—Another mode of looking at this question might be had recourse to, by reference to an account then on the table, which he had himself moved for in 1803, viz. of the actual annual Proceeds at home of the 4 years ending in March 1802, which were on an average 366,000l. per annum, after paying all charges, in this account, previous to the balance being struck, the dividends were included, which must be considered as in the nature of commercial profit, being in truth the return to the proprietors upon their capital stock employed in trade. This account, subject however to sonic adjustments would go to prove the Company's commerce eminently productive; but before we can consider this large annual surplus a clear commercial gain, in addition to the ten and a half per cent. the proprietors receive in dividends, we must first be satisfied, (and he would subsequently state his reasons for holding a different opinion), that no more capital was really employed in carrying on this trade, than that which was visibly assigned to this purpose; namely, the Capital Stock, the company's Bonds, and the other floating Securities for which an interest was paid. Whatever additional funds had actually found their way into the commercial concern, must be considered as part of the capital employed, and the return must provide for the interest of such funds, before the clear profit can be precisely ascertained.—It seemed, however, unjust to describe the Company's commerce as carried on at a loss. To what precise extent it might be profitable, after providing a liberal dividend to the proprietors, might be a matter of more difficult calculation, and must, like all commercial results, be in its nature fluctuating; but, in reasoning upon this branch of the Company's affairs, the worthy alderman must establish several preliminary facts, before he can expect to persuade parliament that the commercial existence of the Company is to be considered merely on grounds of mercantile profit. He must be prepared to shew that individuals would be as likely to carry on steadily the commerce of India, under all the fluctuations to which such a trade is liable, where the outgoings are great, and the returns distant, as a great trading corporation. He must he prepared to dispel the apprehensions which must be entertained with respect to the injurious influence on the prosperity of India, which may be the consequence of an unsteady and unequal demand for their produce, before he can expect to satisfy parliament that an intercourse, perfectly unrestrained, is preferable to that qualified intercourse, partly free and partly restricted, which now prevails. If he assumes, that individuals by using an inferior description of tonnage, could carry on the trade at less expence, and consequently at greater profit, he must be prepared to shew, that this is not merely by throwing the difference of the expence on the publick, by rendering numerous and expensive convoys requisite to protect their feeble vessels in time of war, whilst the Company's ships, with a comparatively slight aid from our navy, are competent to protect each other, and to set the enemy's ships of war, even when in considerable force, at defiance. He must be prepared to shew, that such an establishment as that of the Company, could he kept up without the protection of a qualified monopoly; or that such a system is in itself unnecessary to the political existence of the Company, and the management of large territorial revenues, when both in peace and in war Funds must be transferred through the medium of commerce from India to Europe and from Europe to India. He must also shew, before he can establish that the interest of the manufacturer at home is interested in such a change, that individual speculators would be disposed to send out British manufactures, even at some loss, as the Company have frequently done, or that there is any other limit to the amount of this description of Export, on the part of the Company, than the utmost quantity the Indian market can take off, which they have not hitherto been able, with their most strenuous efforts and some sacrifices, to carry beyond 2,000,000 a year. These, and many other important doubts must be solved, before any satisfactory or sound conclusion can be come to, on the great practical question, to which the worthy alderman, somewhat out of time, had been solicitous to point the attention of the committee. With respect to his position, that the commercial capital of the Company, properly so called, has in progress of time become inadequate to its purpose, that an accession of funds has been found necessary, and that the requisite encrease has been supplied by loans raised abroad, he had the satisfaction to agree with the worthy alderman, though by no means to the extent of his statement. Where the worth alderman found his principle, that it required four capitals, or 24,000,000l. to carry on the Company's trade, he knew not; certainly not from any thing he had ever said. He never had himself heard it before stated higher than two capitals and a half, or at the utmost three capitals; but without being able to trace the precise extent of the actual increase, he was persuaded that some considerable increase had taken place, partly from tracing the funds borrowed abroad to their probable destination, partly from a general but intimate persuasion that the Capital itself, even with the increased amount of the Company's floating securities, has gradually become unequal to the extent of their commerce; under the progressive increase of charge at which from the effects of war and other causes it has latterly been in common with all other operations necessarily conducted; but still more from a detailed examination of the extent and situation of the funds themselves, as distributed throughout the various branches of their trade. If he was right in his general position, it could not well be disputed, indeed it would be rendered less doubtful from some statements which he should subsequently refer to, that the funds requisite for this purpose had been raised abroad, and so far disadvantageously from the high rate of interest at which they were obtained, a practice which certainly nothing but a case of extreme necessity could in a commercial point of view justify.—This naturally led to the 3rd point of enquiry, which had been gone into at some length by his honourable friend the late chairman (Mr. Grant) and also by another hon. friend of his (sir A. Wellesley) viz. Whether upon the Balance of Funds passing between India and Europe for a series of years back, India stood indebted to Europe, or Europe to India? The former had stated the account between Europe on one side, and India and China on the other, and upon three several periods of years; viz. of 15 years, of 10 years, and of 7 years. From these statements the result was, that in the 15 years the accounts nearly balanced; on the 10 years the balance was about 2,400,000l. in favour of India, and upon the last 7 years, there was a balance the other way of about 536,000l.— The hon. general had taken somewhat a different view of the question. He had stated the same sort of balanced account between India on one side and Europe and China on the other, from the commencement of lord Wellesley's government in 1798; in order to shew, that India had supplied considerably more than she had received, and that down to April 1804 the increase of Assets, and the excess of her Supplies to Europe and China beyond the value received, nearly balanced the extraordinary funds raised. These two statements seem to lead to opposite conclusions. The first to establish an inference that the commercial treasury at home derived no aid of any consequence from abroad during the period in question, and the latter to establish a different inference. The two lead at once to the main practical question; namely, for what purposes were the loans raised abroad, and to what have they in point of fact been applied? It could not be expected that in a discussion of this sort, any very precise analysis could be given of so intricate an enquiry. He should, however, state generally his impression to the committee on that important point.—The first obvious fact that attracted attention upon an inspection of the Company's affairs, was the great increase of the Debts since the renewal of the charter: Indian Debt, April 1804 22,536,207 1793 8,074,63 Actual Increase 14,461,342 Estimated Increase to April 1806, about 6,000,000 Total Increase £.20,461,342 Debt in Europe, March 1794 7,006,500 1805 6,012,196 Total Decrease £.994,304 Increase in India 20,461,342 Decrease in Europe 994,504 Net Increase £.19,467;038 In considering to what purposes these Funds have been applied, it has already been stated that during the 4 years ending. in 1802, no loss, but on the contrary a profit took place on the Company's trade. The same fact is corroborated on a more extended period of years; viz. from 1795 to 1804 by an account now before parliament presented in 1804,*by which the Surplus Proceeds at home in the 10 years, amount 981,781l. From these documents it would appear, that no part of the produce of these Loans has been dissipated in the commercial transactions of the Company. Whether the may not have been employed in certain branches of them, and been invested goods or other articles for which a value remains, is a separate consideration, and will be examined hereafter. Neither is there any reason to suppose that any considerable proportion of the produce of these Loans have been sunk and expended on the defence and management of the territories. By the accounts above alluded to, it appeared that the Revenues realized in 10 years to April 1863, Amounted to £. 94,756,281 Actual 1803–4 13,273,044 Estimate 1804–5 13,558,509 Estimate 1805–6 14,279,533 Revenue, 10 years £.135,867,367 The Charges abroad for the same period, including Interest of Debt, and deducting Expence of Bencoolen, St. Helena, and the other settlements extra the continent of India as being rather connected with the commercial than the territorial charges, were as follows: Ten Years to 1803 £.91,416,635 Actual, 1803–4 14,748,872 Estimate, 1804–5 15,005,013 Estimate, 1805–6 16,664,672 £.137,835,192 Interest paid to Commissioners of Sinking Fund 730,000 Net Expenditure abroad 137,103,192 Revenues, 13 years 135,867,367 Charges, 13 years 137,105,192 Deficiency £.1,237,825 During the above period certain expences immediately appertaining to the territories were paid in Europe, which ought to be added to the charges. They amounted, on an average of years, to about 300,000l. per annum, or for the entire period 3,900,000l. On the other hand, the Revenues are entitled to have credit for whatever *See Vol.II. p. 1167. sums included in the Charges abroad were disbursed on account of government, and for which the Company either have or receive payment with Indian interest thereupon, perhaps to the amount of 3,500,000l. —Upon the whole, it appeared, that during the period in question, which was one of nearly uninterrupted war, the territories had nearly maintained themselves, and consequently but a very small proportion of the sums raised by loans had been sunk in their defence.—Where, then, did the great mass of the 19,467,038l. Extraordinary Funds raised by loans since 1793, go? By referring to the Account of Assets abroad to April 1804, and March 1805 at home, it would appear that a very large increase had taken place in both since 1793. Assets in India, April 1804 14,452,343 Assets in Europe,March 1805 20,442,659 £. 34,895,002 Assets in India, April 1793 8,339,362 Assets in Europe, March 1794 9,888,836 £.18,228,198 Assets 1801–5 34,895,002 Assets, 1793–4 18,228,198 Total Increase 16,666,804 This sum was liable to be increased by whatever proportion of the funds expended in the two subsequent years, viz. precious to April 1806, to which the debts have been stated On estimate, had been realized in the Assets. The amount would probably be considerable, though inferior to the Increase of Debt within the period.—It then appeared, that an increase had taken place in the Assets since 1793, to an amount nearly corresponding to that which had been made to the debt. It was plain such an immense increase could not have grown up from the commercial Profits. It was as clear, that during the period in question it could not have arisen from the Surplus Produce of the Revenues, absorbed as they had been by war: The only other possible source from which it could have arisen, was from the loans contracted within the period; with which in amount (without then inquiring how far it bad been invested in a description of value which could be realized or not) it in some degree corresponded.—If, then, the greater proportion of the 19,467,038l. added to the debt since 1793, was to be looked for in the Assets of the Company, it remained generally to be ascertained how far those funds had been appropriated to purposes connected with the commercial or territorial interests of the Company. That could only be done in a very general way, but he conceived with sufficient precision for any practical purpose. He apprehended, that to neither of these sources could its application he exclusively traced, but to both in their respective proportions. The Increase on the Home Assets was greatest. It amounted to 10,553,823l., that on the Assets abroad to 6,112,98l.—If the committee would inspect the items of which the Account of Assets consisted, they would perceive that of 20,442,659l. at home, with the exception of what was stated to be due from government to the Company, the whole was strictly of a commercial description. The Charge against government within this period was stated at 4,460,192l. which deducted from the increase of 10,553,823l. seemed to leave the increase strictly commercial to be 6,093,63l.—If the Assets abroad, amounting to 14,452 343l. after deducting the securities in the hands of the commissioners were similarly analized, the greater proportion would certainly be found to be connected with the management of the territories ; but still a considerable share must be referred to the commerce, viz. Export Goods £.1,022,007 Import Goods 1,156,228 Commercial Advances 2,131,172 Stores, in part 2,061,593 To which might be added some allowance for the share the trade might have in rendering large Balances of Cash necessary, in the various principal and subordinate treasuries abroad for the convenient conduct thereof. Supposing the same proportion to prevail between the commercial and political branches with respect to the 6,112,981l increase in the foreign Assets since 1793, which is observable in the general account; there would then be assignable within the period of increase, To Territories, about 4,112,981 To Commerce, about 2,000,000 £.6,112,981 If, then, to the increased Commercial Assets at home, viz. 6,093,631l. were added the proportion of the increased assets abroad, which might be deemed commercial, viz. 2,000,000l. the whole commercial increase would be 8,093,631l. since 1793, which might be taken to be about the proportion of the Debt which had been contracted for purposes directly or indirectly connected with the commerce, and to have been gradually invested in a larger and more valuable stock of goods and stores on hand both abroad and at home; in a commerce more enlarged, as well as necessarily conducted at a considerably increased advance of capital; and also in an extension of the buildings and other establishments connected with this branch of the Company's service. —Deducting the amount which appeared to have been thus realized in the Commercial Assets from the gross Increase of Debt, there was some reason to presume that the residue had been raised and applied to services either connected with the territorial government or the service of the state at home, Gross Increase of Debt since 1793 £.19,467,038 Assignable to Trade 8,093,631 Remains 11,373,407 Deduct Claims on Government 4,460,192 Remains £.6,913,215 The latter sum, liable to be increased by whatever proportion of the Claim on government is disallowed, may be deemed, upon grounds of general reasoning, the proportion of the Debt incurred since 1793 assignable to the territories, about 4,000,000l. of which may be found in the territorial assets abroad, having been invested partly in increased Cash Balances, partly in larger sums floating between the presidencies, as well as between the sub-treasuries within each presidency, partly to advances to native powers, or their creditors, as for instance, the advance on account of the Carrnatic Debt, the Loan to the Guicowar, &c. The advances on account of the public, he did not consider as a debt belonging to the territories, as the sum, when repaid, whatever it was, ought to discharge an equal amount of debt.—If this statement were sufficient correct for the purposes of reasoning upon, of which he thought no doubt could well be entertained, however the detail might, on a closer inspection, be varied, two observations naturally suggested themselves which it was important to remark, not only with regard to the past but the future management of the Company's affairs: First, the extent of Debt which had been contracted, and Secondly, that the entire increase had taken Place abroad, The obvious disadvantage of providing those extraordinary funds abroad, winch either the political or commercial service of the Company might require, at an interest nearly double that paid for money in Europe, at first sight might seem to call in question the prudence with which the Company's affairs during that period had been conducted; but, it was due to the Court of Directors, and to those who then presided over the Indian administration, to state, that the most serious obstacles stood in the way of their raising any considerable sum in the market at home, nearly throughout the entire of that period. He dwelt the rather on this point, as it, in principle, Connected itself immediately with the remedial measures hereafter to be recommended. with respect to the past, there was every reason to presume (to such a degree was the market at home preoccupied by the publick loans,) that the Company had then no other option but to borrow abroad. The serious evil however of raising money at 10 and 12 per cent. exclusive of a bonus to the subscribers, ought to suggest, for future consideration, if the requisite loans cannot, either in the whole or in part, be raised in time of war in Europe, and remitted to India; whether the amount of the money borrowed abroad ought not to be kept down as much as possible, even at the inconvenience of some reduction of the usual extent of the investment. He was fully aware of the importance of giving at all times the utmost support to the industry and prosperity of India, by the purchase of its manufactured produce; and of the objections to any check being given to the fall employment of the company's Shipping; but, if the funds for both the commercial and political services cannot be found at such a period, on terms less ruinous, it was of the last importance that the amount raised by loans abroad, should be kept within the narrowest limits possible.—He was aware that the extent of Extra Funds which he was led to suppose bad found their way into the commerce, more particularly in Europe since 1793, did not quite accord with the account of value transmitted to, and received from India during that period from which his hon. friend (Mr. Grant) had made his statement. He was not able to follow the items of the account so far as to judge whether it gave India credit not only for its ordinary advances on account of Europe, viz. to Ceylon, to the navy, to the Company's ships, &c. but also for the very large advances advances on account of government, with interest due thereon, which had been a subject of enquiry and settlement in the course of last session, or whether it gave credit for the commercial charges abroad not added to the invoices, and also for the funds remitted to Bencoolen, St. Helena, &c. which must be considered chiefly as commercial advances. It would require much pains and attention to reconcile these several accounts, and from the whole to deduce a consistent and satisfactory result. With this view, he was of opinion, that it would be desireable to charge a special committee sitting above stairs, with the task of investigating and reporting upon the present state of the Company's finances in all its details. If such an enquiry was instituted, not with any hostile or indirect view of shaking the Company's rights, or of innovating on their existing constitution, but with a sincere and candid desire to remove doubt, and to throw light on such points as were disputable in their financial system, he was persuaded the result would be highly advantageous to their general credit, and that a report coming from such authority would go far to prevent the publick mind from being hereafter misled with respect to the true state of the Company's affairs.—He was the more desirous that such an enquiry should be instituted, as he did not conceive, upon any grounds less grave and satisfactory than an investigation before a committee of their own members, that parliament would feel itself authorized to lend its aid to the Company in carrying into effect those vigorous measures winch could alone, in his judgment, afford an early, adequate, and effectual relief to their finances, the nature of which relief he should now lay before the committee; first, however, shortly explaining the actual state of their affairs, as calling for and recommending such a measure.—The Company's Debt in April 1802, to which debt the plan of liquidation which he had the honour of opening to parliament in March 1803 was applied, amounted to 18,654,381l. of which about 16,000,000l. bore interest. The Debt up to April 1806 was estimated at 28,500,000l. of which about 25,000,000l. might he considered as bearing interest. The annual Interest in the former period was 1,394,170l. In the latter, it would somewhat exceed 2,000,000l, The Surplus Revenue was estimated in March 1803 at 1,053,000, exclusive of 80,000l. interest payable on debt redeemed. By the actual accounts of 1802–3 the surplus, notwithstanding 500,000l. additional charge occasioned by assembling towards the close of the year the armies on the Mahratta frontier, amounted to 7,97,000l. which would have given a surplus of 1,297,000l. in that year, had this armament not taken place.—Calculating upon some further military reductions then in contemplation, and about 120,000l. a year which had since accrued to the revenue of Fort George from the fund antecedently appropriated to the Carnatic Creditors, had we remained on a peace establishment, they Surplus at this day, independent of savings from reduction of interest, would probably not have fallen short of 1,500,000l. Out of this Surplus, the Charge of Interest on Debt since incurred, must be defrayed. Taking this at 700,000l. the surplus likely to be forth-coming upon our return to a peace establishment, might then be estimated at about 800,000l.— This corresponded pretty nearly with the view which his hon. friend (sir A. Wellesley) had taken of this part of the subject; in which, after estimating the revenues from the late conquests and cessions at 1,200,000l. and the additional Charges of the same at nearly a like sum, he reckoned upon an annual surplus of 700,000l. when all the reductions were completed, exclusive of the interest payable on debt redeemed amounting to about 250,000l.—It would certainly be too sanguine to estimate the Surplus, upon the most favourable hypothesis, at more than 1,000,000l. It would not be necessary to waste many arguments in order to satisfy the committee, that to contend successfully against a debt of 28,000,000l. a more effective surplus is indispensable, and they must at once perceive that the Plan of Reduction which was framed in 1803 to meet a debt of 18,000,000l. must be comparatively feeble and inadequate as applied to the debt augmented us it now is by ten millions additional.—It was obvious, that the system of liquidation now to be pursued should be of a description to be rapidly operative in peace, else the Company, in case of an early recurrence of war, might be exposed to have its Surplus Revenue absorbed in defraying the charge of new loans, and thus find itself deprived upon a peace even of the existing means of liquidation.—The past intervals of peace since our connection with India, have not been found such as to justify us in being satisfied with paying off debt only at the rate intended in 1803, when the gross amount of debt did not exceed 18,000,000l. Under these circumstances, the natural remedy and resource for the Company to look to, was, on the return of peace, to repair, with the least possible delay, the misfortune of having been obliged to raise since 1793 all their loans abroad. For this purpose, he would recommend that not less than 20,000,000l. of the debt owing in India should be transferred to Europe, with as much rapidity as its transfer could be arranged, or funds remitted from hence for its liquidation. The immediate saving of interest on this transaction alone, would be nearly 4 per cent. at once adding about 800,000l. a year to the Company's. surplus. —Some gentlemen had spoken with alarm of the proportion of the Indian debt, of which payment was demandable in Europe: the amount was stated to be 17,000,00l, He believed the securities which gave an option to the holders to transfer their debts to Europe, might not fall short in the aggregate of this sum, but from the terms of remittance to which they were entitled, the amount which would really come home, he believed, was not likely to exceed 7,000,000l. He was not, however, disposed to draw any consolation from this circumstance. He should deem it rather desirable that the whole 17,000,000l. should come home, as it would additionally impel the Company to make arrangements for converting so much of the Indian into a European debt. He was satisfied that they had the means of doing so with great advantage to their affairs; and if he was desirous of seeing this measure thus in some degree forced upon them, it was from an apprehension that, where the inconvenience was operating at a distance, men were always less disposed to make an effort out of the ordinary course of management, than when it was directly pressed upon their attention.—The means of giving complete effect to this plan, he admitted to depend in a great measure on the return of peace. During war, the Company could not, with the same advantage, add to their capital, nor could they, without some inconvenience to the state, add materially to the amount of the loan, which time market was called on to supply for the public service. To a certain extent he was however of opinion, even in war it should be attempted; reserving till the peace the execution of the measure in its full extent. —The amount of funds required for this conversion of debt was much beyond what the Company, without great inconvenience, could obtain merely by an extension of their capital stock, as money thus raised was procured by creating a debt in its nature not redeemable. He was of opinion that the sum to be raised in this manner, ought not very materially to exceed what the Company were at present entitled by law to borrow, namely, 2,000,000l. which being subscribed for at 200l. per cent. and upwards, that not being too high an estimate of its peace value, would produce above 4,000,000l. sterling.—The remaining 16,000,000l. he should propose to borrow upon the security of the territorial revenues guaranteed by parliament, in such proportion as it might be required for remittance to India. The money to be raised in the first instance like any other public loan, and paid over to parliamentary commissioners, charged with its application to the reduction of the Indian debt, who should be authorized to receive the annual interest, together with the one per cent. sinking fund payable on account of the same, out of the Indian revenues, to be strictly set apart and paid over to them, or their order, in the precise order of payment, (that is, immediately after the Military Charges are provided for, and in preference to all other civil or commercial demands whatever) which is now by law provided in favour of the creditors of the Company.— This proposition might at first sight appear open to many objections, and seem to realize at once the prophecies of some gentlemen, that the distresses of the Company were become such as had at length compelled them to come to parliament for relief; but he denied that it was at all open to such a comment any more than the system which had been acted upon uninterruptedly for the last ten years with respect to the loans raised for the service of Ireland, even before the union. The amount annually required being invariably comprehended in the British loan for the year, was in the first instance Secured upon the British consolidated fund. It was then paid over by the British to the Irish treasury; the Irish treasury being bound to remit to the British treasury in each year, the Interest and Sinking Fund, till the whole capital thus created on account of Ireland was paid off.—In proposing a similar arrangement with respect to the Company, the committee would hold in mind, that the proposition in no degree originated with the Company, that it was merely the suggestion of an individual, not founded upon any existing failure of means in that body to meet, without the aid of parliament, every claim upon them, but offered for consideration as a measure calculated without loss to the public to add 800,000l. a year to the Company's income, and thereby obtain with more certainty for the public their annual participation of 500,000l. to which in the event of an adequate surplus existing abroad, they are entitled.—It really appeared to him that the public were even more interested than the Company in this measure, as their prospect of participation would be thereby at once improved so much, as to be placed nearly beyond the reach of failure; whereas the dividends to the proprietors were already secured, but both the public and the Company would largely feel the benefit of it, in the effect it would have in ameliorating the finances of an Empire in which they have a common interest, which is the only British possession that has never yet in war been a charge out the mother country, except so far as its naval protection is concerned, and which has ample means of sustaining itself, in all future wars, from its own resources, if wisely administered, and upon principles not less enlarged and liberal than those which have been already acted upon with respect to other leading branches of the empire.—That the general inducements in the present case were not less strong, and the risks not greater than in the precedent of Ireland, he thought might be successfully contended. As to the extreme case of either Ireland or India being lost to the British crown, he thought it one not to be contemplated in regulating one's decision upon a financial question of this nature. Parliament had not formerly suffered such a consideration with respect to Ireland, nor would they now suffer it with respect to India, to divest them from an important and beneficial measure of general policy. Short of the case of our absolute expulsion from India, it was impossible to call in question the nature of the security which the publick would have for the regular discharge of these loans. They would have revenues in the first instance mortgaged to them, the produce of which was not less than 14,279,000l. a year, out of which this payment would be set apart, next in order after the military charges of the government, which in the most expensive year of war did not exceed 8,970,000l. The charge for Interest and Fund, suppose on a loan of 16,000,000l. amounting annually to less than, 1,000,000l. would be received out of a residue of above five millions sterling. They would have not only the same security as the creditors of tin Company have lent their money on, but the same security in fact much improved by there being 800,000l. less to be paid on

HC Deb 18 July 1806 vol 7 cc1220-48

of the same means. They would also have if possible, better security than the publick had in the case of Ireland, as the large sums applicable in time of peace to the reduction of the Indian debt would in this case over and above the ordinary sinking fund of one per cent. be payable to the commissioners to be by them applied to the more rapid extinction of the capital created fob the service of the Company.—It might he said, if the security of the Company really as good as had been described, why was it necessary to come to parliament to negotiate a loan for them? why did not they at once raise it for themselves? The answer to this was, that the Company were not in the habit of borrowing in Europe to such an extent. Their security might be unexceptionable, yet individuals being unable, amidst so much controversy as to the nature of it, to form a decisive opinion of their own, might be disinclined to lend to them on the same advantageous terms as they would to the publick. In short, the same reasons for adopting the measure applied in this case, as did in the case of Ireland, and the publick had even a more direct interest than they had in that case to facilitate the execution of the measure.—But the obtaining the money on more advantageous terms in the first instance was not the only benefit that would accrue from its being raised as a publick loan. Being included in the general mass of the Funded Debt, the capital would be redeemable at the precise value of the funds at the time, whereas, were this sum funded in a three per cent. separate stock, although no corresponding advantage in the original terms would probably be allowed to the company by the subscribers, the magnitude of the sinking mg fund applicable to its reduction in peace, would force up the value of this particular stock to par much sooner than the other funds,and thus the Company would have to redeem it on much less favourable terms. —Whilst the advantages, then, were clearly in favour, not only of the transfer of a large proportion of the debt to Europe, but also of its transfer in this mode, he did not see any solid grounds of objection which could be urged on the part of the publick to the proposition. Ireland was not the only instance in which the credit of the publick had been interposed for the purpose of promoting and protecting the general prosperity. When the commercial credit of the country was embarrassed by temporary causes, parliament voted five millions of exchequer bills to be advanced by commissioners to individuals upon security to be approved by them. This measure relieved the prevailing distress, and cost the publick nothing. Loans of the same description had been extended to sufferers by the calamity of seasons in the West Indies. These seemed but two considerations in such a case to be weighed; first, whether the security was adequate, and secondly, whether the exigency, and the advantage likely to result, were such as justified an extraordinary interference? If the interest of the India Company was alone concerned, he thought parliament would have a very strong inducement to lend its aid to an arrangement by which the prosperity of so great a commercial body must be materially promoted, but in the present instance the publick were in truth themselves direct parties, not merely in the more limited pecuniary sense, as entitled to share in the surplus profits, but in the larger though more remote view of the Company being the instrument by which India was to be governed and preserved to the British crown, in failure of whose resources the charge of defending those possessions must in fact fall on the state.—The great object to look to in the management of the Company's finances, was, to have such a surplus in peace, as should make an effective progress in reducing the debt. If the suggestion which had been made added at once 800,000l. a year, to whatever the surplus might otherwise be, it was an augmentation of resource which, even in the more extended scale of the publick finances, could not but be attended with the most important and beneficial consequences. Those who had looked at the Company's finances with hope and confidence, as he had done, must feel disposed to promote a measure which was obviously calculated to accelerate and secure all the advantages which the public had been taught to expect from them, and in which expectation they would not have been disappointed under any other circumstances than those of a continued War Expenditure; but those who had been led to form mote gloomy conclusions, and to persuade themselves that India would yet prove a burthen, to the publick, ought to be the more eager, by these means, to postpone at least the evil day; the saving to be effected by this transfer of debt being in itself sufficient, without adding to the existing charges, to enable the Company to borrow not less than from eight to ten millions, if the exigency of their affairs should require it, and consequently operate proportionably to defer any possible demand for direct aid front the publick.—The noble lord concluded by saying, that he thought it natural and proper that his majesty's ministers should not be prepared till the actual accounts were received from India down to the close of the Mahratta war, to submit any conclusive plan to parliament upon this subject. He trusted however it would not be long delayed. It was to be presumed that the accounts which ought to have been before this time on the table, would arrive so as to admit of their being opened to parliament at the commencement of the next session. He should then hope that those immediately entrusted with the administration of India would be prepared to state the system upon which it was proposed to act. He trusted it would be one of energy proportioned to the necessity of rapidly reducing the debt abroad. He thought it ought to be preceded by a parliamentary enquiry. Whatever course his majesty's ministers might, upon full communication with the court of directors, think fit to pursue, provided it was founded upon enlarged and operative principles, it should have his cordial support. He only deprecated postponing the necessary effort too long: if made in due time, the debt might be kept within abounds; if not, it might hereafter, under the accumulating expenditure of war, prove fatal to the prosperity of the Company, and highly injurious to the general interests of the empire.

Dr. Laurence

said, he should not attempt to follow the noble lord through the long statement which the house bad just heard, but there were some points on which he wished to make a few short observations. If the Company could pay the 500,000l. annually, they should come and state to the house that they were capable of so doing. The noble lord (Castlereagh) had annually told the house, that the Company were in an absolute state of prosperity, and now he Venture it to come forward with a proposition for this country to relieve them by guaranteeing their loans! Mr. Dundas too, said, that it was more likely that India would come in aid of this country, than that she would become a burthen to her. All these fine predictions were however reversed, and there was now as decided a change as ever was known in this world. This was the jet and issue of all the fallacies that had been stated to the house from year to year! Such, said the learned gent. were the statements made in this little snug party! [only 27 members were present]. The noble lord called upon ministers to institute an enquiry; but why did lie not make such an enquiry while he was in office? With respect to the question of exclusive trade; when that cams before the house, the learned gent. said, he should look at it as a whole, and not as the hon. alderman (Prinsep) had done. The house had lately been told, that the government of the country had been guilty of a breach of faith towards the army, but yet we were not permitted to say that the Company were in a state of insolvency. What was insolvency but an inability to pay debts? And that he insisted, was the present state of the India Company. The Dead Stock, every stick and stone had been put together, and set off against a debt that might come upon them at a day's notice. In the name of common sense, how could this be the case, unless there was a deficiency of the means of the Company? Something must be done, he ventured to say, and that speedily. Whether what the noble lord (Castlereagh) proposed, or whether what had been suggested by the hon. alderman, he did not say, but he could not put his trust in the noble lord, after the many years fine prospects that had been held out by him.

Mr. T. Jones

said, that he concurred (notwithstanding his interrupting him as to putting questions) with the learned doctor in the opinion, that the Company ought to give some account of the payment of the six million charter-money due, which at best (as stated by hint and another member Mr. Martin) was a sum suspended, and as such could not be done away with, and it amounted to a sum, which, if paid, would relieve the public from that grievous and grinding tax, the Property Tax, which had been increased in bitterness and oppression by the ungracious mode, per saltum, of laying it on. He had often heard the late president of the board of controul (now lord Melville), state amidst his lavish praises of the Company's affairs, (while the figures told a different story) the immense sums which the mother country might soon expect from India. Has it ever come? Will it ever come? Must not (for that is the dread) the mother country bleed to support he offspring? The learned doctor observes this is a "snug party" to discuss topics in, a snug party of pleasure with all his heart said the hon. member, but this was a disgraceful party, twenty-seven members (alias creditors) met to adjust a debt of nearer 40 than 30 millions! and this he should prove on summing up. Where are his majesty's ministers, said the hon. member? Where are the directors [one only present, Mr Hudlestone]? Why do they not attend and assist the noble lord (Morpeth) in settling their own accounts? The Company is in a state of insolvency, and the noble ex president (lord Castlereagh) says, he consider them in the view of wanting "prompt and vigorous amelioration;" so that he, whatever he may think of his majesty's ministers, certainly does not imagine the director lay on a "bed of roses." The noble lord says, he compares them to manufacturers it embarrassment, who give in a list of then assets, So do I, said the hon. gent.; but honest manufacturers labouring under misfortunes call their creditors together: for instance, a coach-maker, who says "Here, I am in a bad way, take an inventory of all I have, barouches, landaus, gigs, tandems, telegraphs, &c. and come to some understanding." But have the directors of the East India Company done any such thing? The hon. member then proceeded to state, that lord Castlereagh had not succeeded, during his presidency, in getting a loan for some expedition (Egypt) and on that had recommended an enquiry into their affairs, —It was a matter of indifference, whether the debt was a commercial one or not. The noble lord had insisted much on that advantage; but the hon. gent. observed, that it was partly commercial and partly military, consisting of expensive staffs, and various expeditions as stated by him on the 25th of June 1801, and since considerably increased; and here he observed, that ever since the taking of Seringapatam, and the subsequent wars and acquirements, India had gained in aggrandisement of territory, but had improved only in poverty. Moreover, said the hon. member, to whom do these conquests belong? to the government or to the country? The hon. gent. then quoted, in proof of his assertions, Mr. Alderman Prinsep's speech, who had given an historical account of the Company, and in his asserting that they had always dealt in credit, Mr. Jones observed, that hitherto he had supposed them only as dealers in tea, nankeen, &c. He appealed strongly to the house on the comparison which had been made between the India and South, Sea House. He agreed with the hon. alderman, that the East India Company were in a state of insolvency, as they could not go on? They must borrow; they mast die—die all, die nobly," as in the Dramatist, die like demi Directors.—Then to the hon. gent.(Mr. Grant) who would not proceed until he had asked a question as to the amount of the debt, Mr. Jones made this statement, 31,000,000l.; the granted debt 6,000,000l. Sub-judice, at best, 2,672,440l. comprized in an account of above four millions with government, of which only part had been allowed to the Company, and consequently this sum might (as it was so in fact) be added, making the debt of the Company nearer forty millions than thirty. The hon. member then elmphatically said, "All that the grand defender of the Company (Mr. Grant) can say is, that he thinks theirs "an extricable case." These are two very remarkable words, and all I shall say further is, I think (and I believe the world thinks with me) theirs—an inextricable case.

Mr. W. Keene

thought, that the excessive military charge of nearly 9 millions had caused the embarrassment of the Company's finances, and that prosperity might now fairly be anticipated.

Mr. Johnstone

thought the prosperity of India was calculated on estimates never to be realized, and he thought it too much for human patience to hear the arguments urged in their support.

Mr. Grant

in answer to Mr. alderman Prinsep said, that after having already engaged for some time the attention of the house, he would decline following the hon. gent. through all time details of his extraordinary speech, which contained the most extravagant and most unfounded views of the Company's affairs. It had little or no reference to the ultimate object of the discussion now carried on by the house, which was the improvement of the Company's state; its aim was evidently not the amendment but the abolition of the whole of the present system of the Company, and indeed the Company itself. For this he had pressed into his service facts altogether irrelevant, and had employed them in the most unfair and hostile manner. He was the professed advocate of another system, that of enlarging or rather entirely opening the Private Trade, a question not simply commercial, but involving one of greatest state concerns which could engage the attention of parliament, namely, on what principles India should continue to be held and governed by Great Britain. All that he had said respecting the loss with which he alleged the Company carried on their trade, amounted to mere assertion, and was disproved by the statements, he (Mr. Grant) had submitted to the house. The Company's Profits had, indeed, been diminished, but it was owing in part to the competition of the private traders, who had thereby injured both themselves and the Company. He had equally failed in his attempt to shew that the Company traded on it Revenue Capital. Nothing could be more loose and fallacious, than the data on which he endeavoured to support this idea. But the most surprizing of his assertions was, that the Company required 24 millions sterling to carry on their trade, that is to say, according to him, 21 millions for active capital, and 3 millions for dead capital. Whence did this enormous capital come? It was impossible for the hon. gent. himself to maintain that it was derived from the revenue; the hon. gent. affirmed that the Company possessed no property of their own—"that they had not a single shilling of their stock;"—it was evident that their debts in England never amounted to any thing like this sum; how, then, was the existence of such a capital to be accounted for? The fact was, such a capital did not exist. The investment of one year out and home, amounted on an average of 10 years ending with 1802–3, to little more than 5, millions, and the trade did not require an investment of four successive years before the returns of the first year were ready to he employed again. Nor would the allowance of 3 millions which the hon. gent. was pleased to make for Dead Stock or dead capital, added to all the circulating capital, bring the aggregate amount to nearly the sum of 24 millions. But, according to the hon. gent.'s mode of stating things, the Dead Stock, which he had been pleased to reduce in value from 9,900,000l. to 3,000,000l. must be taken at its full amount, because, whatever it may be worth, it actually cost the Company the sum at which it stands, and therefore he ought to compute the capital invested in their trade at 30,990,000l. instead of 24 millions. Mr. Grant supposed that the capital actually employed by the Company in their commerce, independent of their floating credits by India Bonds, Bills of Exchange, and goods bought on time, might, on an average of the 10 years before mentioned, be from 10 to 12 millions. Of capital to this extent, the hon. gent.'s own statement allowed the Company to be actually possessed, although he was pleased to affirm that they had no resource for investment; they likewise still enjoyed the credits just noticed, although he had further affirmed, that their faculty of borrowing seemed completely extinguished. It was the hon. gent.'s object to disparage the Company as an organ for carrying on the national commerce with India, and to extol the channel of the private trade in which he was personally interested; to supersede a tried and steady channel which had answered its purpose for two centuries, and had contributed to raise the prosperity of tie country, in order to favour another channel very uncertain in its extent or permanence. This was not the time to enter into a question which could not be justly treated without taking a comprehensive view of many topics connected with it, but such vague and unwarranted assertions as the hon. gent. dealt in, could have no weight in settling this question. He had boasted of the great Exports sent from this country to India when an experiment was allowed to be made by the private merchants. The fact was, the experiment did not increase the exports of the country, but only shifted them for that time from Company's to private ships, which by sailing sooner, anticipated the exports the Company's ships would otherwise have carried out.—The hon. gent. professed to give the history of the capital of the Company ab ovo, and begun with the year 1698, in which, according to him, the first capital was founded. But, unfortunately for him, he had begun a century too late, the Company, as every body knew, having been first incorporated in 1600. The Company formed in 1698, was a second Company, the first still continuing, and an instance very unhappily chosen by the hon. gent.; because that second Company was composed of merchants who envied the first, and the consequence was, that by the effect of rivalship and competition, raising the prices upon each other in their purchases, and lowering them upon each other in their sales, they were both brought to the brink of ruin, and at length, for self preservation obliged in the course of a few years to coalesce, which produced the United East In- dia Company, subsisting at this day. The hon. gent. affected to consider the active capital of the Company as at all times contemptible. The detached circumstances he mentioned to prove this strange assertion, did not at all establish it, and still less the annual amount of the Company's trade which was the true question; but without entering minutely into this point, was it not universally known that the Company had carried on their trade for a century and a half without any aid of capital from revenue or government; that they had become great by their trade, and had at length acquired territory and dominion, chiefly by their own commercial resources? What more could be necessary to show that their means had been equal to the production of great prosperity and power to themselves and the state? It was with great injustice therefore, that the hon. gent. attempted to degrade their means, their profits, their solvency, or their stability, by such rash and unwarranted assertion as he had ventured to utter. They could have no weight with those who knew or would examine the subject, but they were nevertheless highly reprehensible as used in that house, because it might be supposed no member would use them without some degree of authority, and they were most of all reprehensible from such persons as the hon. gent. who was fostered under the Company's wing, and now turns his influence against that body to whom he entirely owes the fortune which introduced him into notice in this country.

Mr. Alderman Prinsep

concluded the debate, by observing, that if the expressions he had used, of which such heavy complaints had just been made by the hon. ex-chairman (Mr. Grant), were felt to be either disrespectful to the great body whose affairs were now again under their annual investigation, or stronger than the occasion called for, (and even in this case they could riot justify the use of invective as a reply where confutation was felt to be impossible,) he trusted, that in the one case, allowance would be made for some degree of provocation he had met with at the beginning of the debate, in a fresh attempt to preclude him from expressing his sentiments at all in the committee, and in the other case, the the committee would think with him, that, feeling as he did, the importance of the facts, and of his deductions from them, it became both his right and his duty, to enforce conviction, by the strongest language that the subject suggested to his mind.—The Resolutions were then agreed to, and the house having resumed, the Report was ordered to be received on Monday.—Adjourned at one o'clock on Saturday morning.