Court of Directors with indignation and alarm. The new assumptions had
not even the air of being for their benefit, but were exclusively for
the advantage of their servants. They therefore, in order to repress
the evil, on the 8th of February, 1764, sent out an order to put an
end to the inland trade in salt, betle-nut, and tobacco, and all other
articles produced and consumed in the country.
It was soon after this order was resolved upon that, the news of the
massacre of Patna, the war with Meer Cossim, and other events, having
reached England, and diffused the greatest consternation every where,
and especially at the India House, Lord Clive was solicited once more
to return to Bengal, to restore peace and stability to the empire of
which he was the founder. In his letter to the Court of Directors[73],
accepting of the government, fully aware of one great source of
misrule, he recommended an entire abolition of the inland trade in
salt, betle-nut, and tobacco, as having, with other circumstances,
concurred to hasten and bring on the late troubles.
But, soon after the date of this letter, the Court of Proprietors,
among whom were numbers favourable to the claims of the servants, and
who saw with alarm a stop likely to be put to a trade which, in the
short space of four years, had already sent many large fortunes to
England, had come to a resolution[74] to recommend "to the Court of
Directors to reconsider the orders sent to Bengal relative to the trade
of the Company's servants in salt, betle-nut, and tobacco; and that
they do give such directions for regulating the same, agreeably to
the interest of the Company and the Subah, as to them may appear most
prudent; either by settling here at home the restrictions under which
this trade ought to be carried on, or by referring it to the Governor
and Council of Fort William to regulate this important point in such a
manner as may prevent all future disputes betwixt the Subah and the
Company."
The orders of the 8th of February had been dispatched previously to the
arrival of the news of the new treaty with Meer Jaffier; "the terms
of which, however," the Directors justly observe, "appear to be so
very injurious to the Nabob, and to the natives, that they cannot, in
the very nature of them, tend to any thing but the producing general
heart-burnings and dissatisfaction;" it is therefore directed, that the
orders of the 8th of February remain in force, till a more equitable
plan can be formed; the Governor and Council being directed to consult
the Nabob as to the manner of carrying on the inland trade of salt,
and other articles produced and consumed in the country, which may be
most to his satisfaction and advantage, the interest of the Company,
and likewise of the Company's servants, and to form and transmit home
an equitable plan, to enable the Court to give directions. It is to
be remembered, therefore, that in this view there was a threefold
interest to be considered; that of the Nabob, of the Company, and of
the Company's servants.
This letter was carried out to India in the ship which conveyed Lord
Clive; though a copy, sent by another vessel, arrived some time before
him.
When Lord Clive reached India, one of the first objects that engaged
his attention was the manner in which the public servants were to be
remunerated.
At that period, their direct salaries were very trifling; that of
councillor being only 350_l._, and the others small in proportion.
The Company was originally strictly a trading Company, and its clerks
and servants were paid chiefly by being allowed to trade on their
own account. When the Company found it necessary to have troops for
the defence of their factories, their military officers were paid in
the same way. All were merchants and traders, from the governor, the
commandant, and the chaplain, down to the youngest writer and ensign.
Now that they were princes with a large territory, and a formidable
army, the steps by which they reached that eminence had been so sudden,
and the consequences so unforeseen, that their servants still continued
to be civil, military, and ecclesiastical traders: the old system
remained unchanged.
But a change of circumstances necessarily called for a change of
regulations. The relative situation of the English and natives was no
longer the same: for instance, the receiving of presents from native
princes, or men of rank, had quite altered its nature. While the
Company were mere traders, there could be no good reason for hindering
their servants and the natives from mutually receiving and bestowing
presents. The parties were on a level, bound to each other by common
interest, and presents were nothing more than a mark of the good-will
that subsisted between them; the consequence of their friendship or
relations in trade, exhibited according to the usage and fashion of the
country, of which the giving and receiving of presents formed a part.
In the altered situation of the Company, when their servants concluded
treaties, influenced the fate of provinces, and made and unmade
princes, things were essentially changed. Presents were now liable to
become, not the sign and consequence of good-will, but the motive, and
sometimes the guilty motive, of public acts; and great sums might be
thus extorted, to the injury both of the natives and of the Company:
and, indeed, this natural effect did ensue. The paramount influence of
the English authority was abused, for purposes of private interest and
selfish rapacity. Great fortunes were made in this way during the five
years that Lord Clive was absent in England, and these benevolences
became a most heavy burden on the men of rank and wealth in India.
To check this evil, the Court of Directors, as we have seen, ordered
covenants against receiving presents to be entered into by all their
servants.
The orders issued regarding the inland trade nearly shut up another
great source of gain. During the five years in which the public
servants had carried it on with such amazing profit, the export trade,
as an inferior branch, had been left chiefly to free merchants and free
mariners. The orders excluding the Company's servants from the inland
trade now drove them back, once more, to foreign and general trade, but
in more unfavourable circumstances.
They complained to the Directors that, by the course of events,
which had done so much for the Company, they were placed in a worse
situation than ever, and engaged in an unfavourable competition even
with the free traders: that, instead of benefiting, they suffered by
being in the Company's service, as they were confined to one spot by
the Company's concerns, while the others could run over the country,
and had nothing to engage them but their own interests. In this
representation there was much truth; though the conclusion might have
reached farther than either the Company or their servants would have
been willing to allow.
Men who had been accustomed to look to great and immediate returns
for their capital, or for the mere use of their name, looked upon the
restrictions under which they were now placed as the height of tyranny.
The habits of indulgence and expense which they had acquired from the
rapid influx of wealth, and the golden prospects which their situation
had seemed to hold out to them, were bad preparations for returning to,
or for acquiring, the patient, sober, and steady habits of business
which general commerce requires. Lord Clive found the settlement in
a ferment; and all ranks of the Company's servants resolved to throw
every obstacle in the way of executing the Company's orders.
How he triumphed over the civil, as well as military, combinations
which threatened ruin to the British ascendency in India, we have
already seen: but if he triumphed, it was not by firmness alone; it was
equally by the justice, the consideration, the policy, which guided all
his measures.
He had all the powers of mind necessary for his new situation; but
his instruments were very imperfect. He saw that a grand crisis had
arrived in the Company's affairs; that their servants were brought into
contact with men possessed of the greatest wealth and power, and whose
fate they really held in their hands. "Without proposing a reasonable
prospect of independent fortunes," says one of his friends[75], "it was
ridiculous to hope that common virtue could withstand the allurements
of daily temptation; or that men armed with power would abstain from
the spoils of a prostrate nation."
Clive was particularly desirous, as we have seen, that the chief men in
the administration of affairs, but especially the Governor, should be
withdrawn from trade, and from whatever could warp the freedom of their
opinions: it is a subject to which he often reverts in his private
correspondence.
But to expect that the Directors would directly sanction large salaries
to their servants from the profits of the Company's trade, or from
their territorial revenues, was vain. It was quite at variance with the
old maxims by which they were accustomed to regulate their concerns.
There seemed to be no alternative, therefore, but either to let things
proceed in the ruinous course in which they now were, to enforce the
covenants, and enter, unaided, on a hopeless struggle between private
interest and public duty; or to find means, from such resources of the
country as were not yet claimed by the Company, to pay the superior
servants in an adequate and ample manner; and this last he resolved to
attempt.
"It was not expedient," says Clive himself, in his speech in the House
of Commons[76], "to draw the reins too tight. It was not expedient
that the Company's servants should pass from affluence to beggary. It
was necessary that some emoluments should accrue to the servants in
general, and more especially to those in superior stations, who were
to assist in carrying on the measures of Government. The salary of a
councillor is, I think, scarcely 300_l._ per annum; and it is well
known that he cannot live in that country for less than 3000_l._ The
same proportion holds among the other servants. It was requisite,
therefore, that an establishment should take place; and the Select
Committee, after the most mature deliberation, judged that the trade
in salt, betle-nut, and tobacco, under proper regulations, might
effectually answer the purpose."
One difficulty had been removed when, about the time of the grant
of the dewannee, the young Nabob, Nujum-ed-Dowlah, had yielded up
to the Company the whole of the revenues of the three provinces,
in consideration of a fixed annuity. The question, after that, no
longer regarded the Nabob, or his revenues; it was only between the
Company, their servants, and the natives; and Clive believed that, by
an arrangement regarding the salt trade, the interest of all could
be conciliated: and it is to be recollected, that the Directors had
ordered that the new plan should have a view to "the interest of the
Company, and likewise of the Company's servants."[77]
It is unnecessary to enter into all the details of the plan finally
adopted in September, 1765, which were chiefly arranged by Mr. Sumner.
The salt trade was to be conducted solely by a society composed of all
the higher officers of Government, civil and military; their capital
was to consist of a certain number of shares; the civil servants, as
low down as factors, the military, as low down as majors, were to hold
shares; chaplains and surgeons had also their shares; the capital for
carrying on the trade was to be furnished by the sharers, in their due
proportions. The affairs of the Society were conducted by a committee;
the salt was to be furnished to them by contractors, and was to be sold
at various grand stations by agents, generally Europeans, appointed by
the Committee, the purchasers from whom could carry and sell it over
the country at pleasure; 35 per cent. on the price was allowed as a
tax to the company[78], who had now come into the Nabob's place; the
selling price, at the different remote stations, was also fixed at
rates 12 or 15 per cent. below what was found to have been the average
rate of the twenty years preceding.
Besides providing ample allowances to the chief of the Company's
servants, the great advantage of this plan was, that it allowed them
to withdraw their attention wholly from trade.[79] They were sleeping
partners of a sure and profitable concern, the whole details of which,
without any care on their part, was managed by a committee devoted to
the business.
The profits of this Society were, as might have been expected, very
great. "The capital of the salt trade," says Clive, writing to Colonel
Call[80], "is 32 lacs of sicca rupees, upon which the most moderate
expect to make 50 per cent., clear of all charges; others, 75 per
cent.; and the most sanguine, 100 per cent. Take the lowest, and a
councillor's and a colonel's profit will be 7000_l._ sterling per
annum; a lieutenant-colonel's and junior merchant's, 3000_l._; majors'
and factors', 2000_l._ These advantages, and a free open trade,
are in lieu of all presents from the natives, and all perquisites
disadvantageous to the Company, and dishonourable to the servants." And
in a letter[81] to Mr. Palk, the Governor of Madras, after mentioning
the large allowance that the trade would give to the different sharers,
he adds, "This extraordinary indulgence is in lieu of perquisites; for
I intend the Governor and Council shall take a most solemn oath at the
Mayor's Court, in presence of all the inhabitants, that they shall
receive no perquisites whatever, or other advantages, excepting what
arises from their trade; and to this shall be added a penalty-bond of
a very very large sum of money. These articles, upon my arrival, were
altogether in the hands of the Company's servants and free merchants,
and only yielded to the Company 60,000_l._ per annum, and to the Nabob
nothing, for they did not even pay the 2-1/2 per cent. duties. Neither
will the method we are pursuing be attended with the least disadvantage
to the inhabitants: the same hands who made and worked the salt are
still employed at the same rates; and the salt in general will be sold
at a much lower price than formerly. Formerly the salt was sold dear or
cheap, according to the demand for that article; we shall endeavour to
fix upon a price for every market, and always sell it for the same."
The result of the first year's sales was very prosperous, and even
exceeded expectation: insomuch that, in forming the plan for the
following year, it was resolved to diminish the profits of the
proprietors, and to raise those of the East India Company, the duty
to whom was now fixed at 50 per cent., which, at a low valuation of
the salt, was to produce about 160,000_l._ Clive had, however, in the
course of his progress through the country, observed the inconvenience
of employing European agents in the trade; and a very material
improvement was introduced, by dispensing with their agency altogether,
and selling the article at Calcutta, or where it was made, to the
natives only, with permission to convey it wherever they pleased. In
this way Europeans were totally removed from any direct interference
with the natives in the interior, and the trade was as free as any
monopoly can be. This second year's Society commenced in September,
1766.
Not long after it began its operations, letters from the Court of
Directors reached Bengal, disapproving of the plan of the first year's
Society, and commanding the trade to be thrown open, and left entirely
to the natives. In coming to this resolution, they were not so much
influenced by any views of the particular merits or demerits of the new
plan itself, as by consideration of the mischiefs which had for several
years attended the general system of internal trade carried on by the
English gentlemen with a high hand, free of duties. Their orders,
repeatedly sent out, to pay the legal duties to the Nabob, and to keep
within the meaning of the Emperor's firman, had been totally neglected,
or provokingly evaded. Repeated revolutions had been the consequence,
and immense suffering to the country. "We are fully sensible," say the
Court of Directors[82], "that these innovations, and illegal traffic,
laid the foundation of all the bloodshed, massacres, and confusion
which have happened of late years. We cannot suffer ourselves to
indulge a thought towards the continuance of them, upon any conditions
whatsoever. No regulations can, in our opinion, be formed, that can be
effectual to prevent the like consequences which we have seen." They
desire, however, that the duties, as forming part of the revenues of
Bengal, should not be abolished. In a letter of the same date, to Lord
Clive, the Directors, after bestowing the greatest and most merited
praise on the penetration with which he had at once discerned their
true interest in every branch of their concerns; the rapidity with
which he had restored order, peace, and tranquillity; and the integrity
which governed all his actions, proceed to give their resolutions on
the inland trade. "The vast fortunes," they observe, "acquired in the
inland trade have been obtained by a scene of the most tyrannic and
oppressive conduct that ever was known, in any age or country. We have
been uniform in our sentiments and orders on this subject, from the
first knowledge we had of it; and your Lordship will not, therefore,
wonder, after the fatal experience we had of the violent abuses
committed in this trade, that we could not be brought to approve it,
even in the limited and regulated manner with which it comes to us, in
the plan laid down in the Committee's proceedings. We agree in opinion
with your Lordship on the propriety of holding out such advantages to
our chief servants, civil and military, as may open to them the means
of honourably acquiring a competency in our service; but the difficulty
of the subject, and the short time we have at present to consider
it, have obliged us to defer giving our sentiments and directions
thereupon, until the next despatch." The letter concludes with
entreaties to him to remain for another year in India, and with holding
out the prospect of some solid permanent retribution, corresponding to
his most important services.
The real causes of the resolutions of public bodies do not always
appear in their public acts. To deprive their servants of their
principal means of subsistence, without substituting any authorised
allowance in its place, was bad policy in itself, and was reducing Lord
Clive, in the midst of his exertions, to a very painful dilemma. Mr.
Scrafton, in a letter[83] to Lord Clive, explains their secret reasons.
The Proprietors had begun to clamour for an increase of dividend, which
the Directors thought unsuitable to the situation of the Company's
affairs. "This," says he, "has induced the Directors to defer the
consideration of the gratification of the servants on abolishing the
salt trade. Such consideration could not be but for a vast sum; and if
it had got wind that such gratifications were ordered, the Proprietors
would be outrageous for an increase of the dividend. Though we cannot
open our minds upon it, yet it appears to me an increase of dividend
must take place at the Quarterly Court in June; and then the Court will
be under no restraint, but will give a per centage on the revenues,
in which the Governor will have a great share, in lieu of trade; the
rest among the Committee, Council, colonels, and ten below Council,
but no lower."--"Your Lordship may be assured it will take place; for,
when the last paragraph was added to the letter to you, the Committee
declared it was their meaning and intention to do it by the next ship."
The letters of the Directors, the first which Clive had received
in answer to his communication on the plan which he had formed, as
directed by them, for carrying on the internal trade, reached him
only in December, 1766, a month before he left India. He had for some
weeks been confined to his chamber by a very severe illness, from
which his life was in danger. He now felt himself placed in a most
painful predicament, between the Court of Directors and the immediate
difficulties of his situation with the civil and military servants.
He believed that, with long attention and care, he had succeeded in
disarming the salt trade of most of its evils, and by its means had
secured to the Company's superior servants a lawful for an unlawful
income. But the commands of the Directors were positive; and, though he
was of opinion that they were founded on mistake, it was his wish to
conform to them. The Company, though aware of the address and spirit
of command with which he had checked the machinations of their civil
servants in 1765, were still ignorant, when their orders were given,
of his still more difficult triumph over the mutiny of their military
officers. They had, most justly and wisely, deprived their servants
of their means of illicit gain; they now rashly deprived them also of
what had been substituted as a lawful provision; they referred these
discontented and powerful men, who had vast wealth within their reach,
to a future and uncertain time, when their masters should be at leisure
to pay some attention to their immediate and urgent necessities.
An inferior man would have hesitated and faltered: Clive saw that
decision was necessary for the crisis. He could not undo his own work
of pacification and reform. The affairs of the Society were too far
advanced to be discontinued all at once. He therefore confirmed the
grant to the Society, but declared that it was to terminate at the
conclusion of the current year, the 1st of September, 1767.[84] At
the same time, the Select Committee of Calcutta, by their letter of
the 26th of January, 1767, while they mentioned that the orders for
discontinuing the Society had been complied with, remonstrated strongly
with the Court of Directors on the occasion; calling on them to review
their opinion.
Such is an outline of the history of the Society of Trade during
Clive's government. He formed a society in unison, as he supposed,
with the spirit of the orders of the Court of Directors, which desired
him, in the new plan of trade intended to be formed, to consult the
benefit of three parties--the Nabob, the Company, and its servants.
The Nabob's interest had merged in the Company's. The interest of the
natives, however, the most important of all, was consulted by their
restoration to the benefits of the trade, from which recently they
had nearly been excluded; and by the exclusion of Europeans from any
participation in the details of it. How the interests of the Company's
servants were to be consulted by any plan that admitted them to the
profits, yet excluded them in every shape from the trade, it is not
easy to imagine. Lord Clive and the Committee did, therefore, what
then, and in all succeeding times, it has been found necessary to do,
in India, and in every distant possession, to form and execute a plan
on their own responsibility, and to leave the future approbation or
disapprobation to their distant masters. Inconvenient as this may be,
it is an inconvenience inseparable from distant legislation.
A few words may here be said on the future history of the salt trade.
The Court of Directors, after receiving the letters of the Select
Committee, still persisted in their desire of abolishing the Society,
and of removing Europeans from this and all other concern with the
inland trade of the country. They therefore, by their letter of the
20th of November, 1767, written eighteen months after their former
letter, ordered the Society of Trade to be abolished, and the salt-pans
to be sold by public auction, excluding all Europeans from being
bidders or owners, directly or indirectly. Instead of the benefits
resulting to the senior servants from this trade, an allotment of
2-1/2 per cent. on the net revenue of the dewannee was assigned to
them in certain shares; and a small increase of pay to captains and
subalterns.[85]